Hi everybody, this is another bonus episode of Vet chat where we look at one of the hot topics that's affecting many of us across the profession at this moment in time, which is furlough. We hope that the information that comes across in this podcast is helpful to you and provides clarity on the topic so that you can at least be able to sleep a bit better at night knowing how it's going to affect your own personal circumstances. We hope it helps.

Hi everybody, and in light of the coronavirus outbreak in in recent weeks and months, we've decided to put together some emergency podcasts, based on the information that we've got available to us. And today's hot topic is this, almost new word to many of us, of furlough. Now the only time I'd ever heard the term furlough before is when I've been watching American prison series on Netfx.

Flicks and they've sort of referred to furlough as time out or time away from prison for good behaviour. Now, of course, most of us in this circumstances mean that furlough will, will apply to us almost being being put into prison in house arrest. So, joined today by by Simon Whitehead, who's one of the partners at Bradner's law firm in Liverpool.

Simon, thanks so much for, for, for joining us and trying to make sense of this particularly. Ambiguous topic for everybody. I just wonder, first and foremost, could you just tell us what furlough is?

Yeah, well, furlough ultimately is just means a leave of absence. So, this is a new term that's come about as a result of the government's announcement last Friday now, seems like a lifetime ago already. But last Friday, basically announcing this coronavirus job retention scheme.

So clearly in an attempt to try and stabilise the economy, just because there was a, a huge number of potential redundancies that were about to happen and it clearly would have got worse, as we know now we've gone into more of a lockdown situation. This was his attempt to basically say, look, we need to get the money out there to the people who are not going to be able to work as a result of this virus, and this is my plan. So.

It's all to do with the coronavirus job retention scheme to try and keep the economy moving whilst we're in the middle of this pandemic crisis. OK, so the point is really to try and keep that economy moving, keep people employed rather than employers having to make them redundant then. Yeah, absolutely, and it's a way for the government to pump money out to the people who ultimately need it and the people that aren't able to work because of it, so, .

Obviously, in the financial crisis, the money went into the top of the system, if you like, into the banking system. This time it's going in, more at the bottom so that they, that the people who are sat at home unable to work, the idea being that they've got enough money to come through. So the idea is that rather than making redundancies or laying people off, this new concept of furloughing, will be available to employers.

And if you er take advantage of it, then you'll be able to put your employees on a leave of absence whilst the crisis er is at its height, and then ultimately pay a minimal amount back to the employer and and basically fund an element of, that furloughed employee employee's salary for the period of time that they're out of work. OK, and, and obviously from the information that's been released, we're aware that the government are going to cover up to 80%. Of your salary to a maximum of 2500 pounds a month, that obviously sort of covers people up to, you know, essentially around about 300 pounds is a salary, which most people are of course on on more than that in the veterinary profession, although that not, not significantly more.

In terms of sort of people getting access to that cash, how, how do they get it, you know, in order to pay for their bills? Yeah, so if you really the decision to furlough has to sit with and sits with the employer, whoever the employer is, whoever is ultimately paying the salary and making the deductions and paying tax and national insurance over to the government on your behalf, is the, is the company is the body that will ultimately make the decision about whether they are going to need to furlough, you, er, whilst the crisis is at its peak. So, so they're the ones that would make the decision.

You can't access it. Sort of personally, obviously you can go and talk to your employer and say, look, you know, I've got no work to do, am I going to get furloughed? And clearly if there starts to be a conversation around redundancies or reduction in headcount, then clearly that's an option that that employee will have to consider then, to try and avoid a redundancy and to retain the jobs in in the system.

And, and if you are furloughed, does that mean that, you know, at, at the end of this outbreak or this period of furlough, you just go straight. Back to work basically on, on the same settings as were in place beforehand. Yeah, I mean, ultimately there's two choices at the end of this furlough period.

It's either back to work as normal and get on in in doing the job that you were doing on the same terms and conditions that you enjoyed before. Or alternatively, a decision, well actually we don't need as many people, because clearly it'll depend on just what the economy looks like at the end of this crisis period. And, you know, if it's a.

Situation where the employees saying actually we don't need you moving forward, then you have all your rights preserved with regards to unfair dismissal and redundancy and proper consultation would have to be carried out to that part at that stage before any decisions were made. OK, so, so it's still, you know, a little bit ambiguous as to the state of the economy really at the end of this and the state of businesses as to whether people will be able to go back in as they, as they were. So if you are furloughed.

Can you, can you sort of do a part furlough where you maybe got, you know, say for instance you're a veterinary employer who've got 6 vets working for you, could you split that team, furlough everybody and, and have people working almost in a, in a part furloughed capacity, or does it have to be? So it has to be all or nothing, yeah, it's an all or nothing type scheme, so ultimately, you would have to in that situation, say where you've got 6 and the reality is you only need 3 vets moving forward, you'd have to make a decision then as to which 3 vets are you going to furlough, and that is very clear from the guidance that was released last night that ultimately that That test is subject to normal employment law principles, so discrimination, equality and fairness. So really you, you'd have to do some sort of pooling type arrangements and decide which three were the ones that you were going to furlough and keep 3 working in the business.

And when you furlough someone, it's for a fixed period. Of 3 weeks, so that's the basis on which you will claim, that's the basis on which they will be furloughed, and then you'll review it after 3 weeks' time to see whether the situation has changed and and and how how that needs to, to be adapted. OK, so each individual furloughing episode is only for 3 weeks and it gets reviewed.

Yeah, so it's, so each period is for, for 3 weeks and you can't do it for any less than that. You could do it for more, ultimately, it's the, the scheme is open for a 3 month period. At the moment, it could be extended, but ultimately, I think it would be safe to do it for each 3 weeks because then at least you're checking in and reviewing the situation and see whether anything's changed because things are so fluid at the moment, we, we really don't know, do we, as to, where we're gonna be in 3 weeks' time or 12 weeks' time, as the case maybe.

OK, so, so they can do it for longer, but, but sensibly do it at 3 week intervals and potentially review each time we do that. That's fantastic. So, obviously we've touched on the fact that, you know, people will get 80%.

What, what happens to the other 20% of their salary? It's very much up to the employer. So the government have been very clear that there is no obligation on employers to increase that to 100%.

Or if obviously you're earning more than 2500 pounds per month to whatever you were earning above 2500 pounds a month, you can do that. And it's, they've been very clear that if an employer decides that they want to make sure that their employees are furloughed on their full salary, then they absolutely can do that, and they can use the grant that they would get, to offset the cost of that. But they've also been very clear that there's absolutely no.

Obligation on employers to do that and it's very much on a case by case basis depending on on the circumstances. OK, so that's sort of very much looking at the, the case for practises to do that and and for for individuals who are furloughed. Obviously that's a great way for practises to reduce their monthly expenditure and try and remain solvent in the short to medium term.

And what Well, for instance, in the veterinary profession, obviously there's a lot of people who are self-employed. In terms of the major three criteria, obviously we've got umbrella workers, we've got sole traders, and we've got limited company workers. If we just have a look at each of those individually, how, how are umbrella workers affected by these, these potentials for furlough?

Who makes the decision as to whether they're furloughed or not? Well, presuming that the umbrella worker is on a PAYE scheme. Which normally there will be, and that PAYE scheme, and it's all, UK based, and the company, the umbrella has got a UK bank account, and the PAYE scheme was up and running on the 28th of February, then ultimately, technically it's the umbrella that will make the decision about whether the employees furloughed, and clearly that decision is going to be guided by where they're gonna be able to finance the furloughed salary.

Costs until they're able to claim. So, if we think about it now, the, the intention is that the scheme will be up and running towards the end of April. So, you know, potentially if someone went off on the 1st of May, you've got 2 months' worth of, of salary that you're going to have to fund, before you're able to process your claim, and we're not particularly clear how quickly that claim will be processed and the money will actually hit your bank account.

So, you know, for an umbrella, the problem will be clearly that there's no right to invoice the agency for, the hours because there's no hours being worked. And likewise, the agency doesn't necessarily have an automatic right to invoice the client for the hours that have been worked. So if there's no money flowing down around the supply chain, then the umbrella, and you know, this is where it might not work for umbrellas, but certainly the government's position generally is.

If you need to finance that, you've got, you need extra working capital to finance your payroll costs while it's being processed and the first payment's been made, then you need to look to the business interruption loans, which are, the interest free loans for 12 months that the government have put in. And certainly I think up to 100,000 pounds are sort of guarantee free, if you like. So in normal circumstances with normal employers, that's what the government would ask you to do, and clearly that would be open for an umbrella to do, but I would have thought an umbrella would be quite cautious.

To borrow money unless they've got a clear agreement that they're going to be able to recover that money, at some point and you know that that ultimately they can afford to do that and someone is prepared to lend it to them. So, I think umbrella workers it it's gonna be interesting theory definitely it applies to them. In practise I think it will very much depend on the relationship between umbrella worker, umbrella.

Company, agency, and ultimately the practise that they're working for. And you know, if they can come to an agreement then absolutely it can work and you would be entitled to furlough pay if you can get everyone agreed that that's the right way of proceeding. OK, but if you're, if you work for the if if you're freelancer working through an umbrella, you can't turn round to the umbrella company and say, I want to be furloughed.

No. You would have, I mean, you express an opinion and asked to be furloughed, but you can't make your employer, and in this case that would be the umbrella company because they're the ones that that deduct and make the payments of PAYE over to HMRC. You can't make them do it, it has to be by way of agreement and, and likewise, they can't make you as an employee be furloughed either.

There has to be a level of agreement there, before, before. It can be put in place and and you can move forward. OK, OK.

So if, if you're operating through a limited company, as many people in this sector do, what are, what are the implications and what are the options to, to either furlough yourself or continue to work given given the schemes that are available? Yeah, well, this has been a big hole in, in the sort of announcement that was made last Friday with regards to . Furloughing and the job retention scheme was what was going to happen to the self-employed and ultimately how do we define the self-employed.

And obviously yesterday the Chancellor came out with his self-employed support package. Now, it's quite restrictive ultimately. So the way that it would work for anyone that is operating through a limited company, so they're a limited company contractor running through a personal service company.

And they pay themselves in the normal way, which is a relatively minimal salary, and then, dividends. What the Chancellor said last night was that in those circumstances, because you are an employee, and presumably you would be running a, a payroll, PAYE payroll for that minimal wage cost, then you would have to avail yourself of the, job retention. Scheme, which obviously then means that you'd only get 80% of the minimal salary that you're paying if you were taking most of your remuneration via the dividends route.

So, in reality what he's saying is there that anyone that's that PSC limited company, the self-employed support scheme isn't available for you, you'll have to look at the job retention scheme, but I can't see that that's going to be particularly viable because clearly, . You know, 80% of of the minimal earnings that you pay yourself a salary is not going to be that particularly attractive, I would have thought. Yeah, because of course if they do take that option, they then can't work during the period that they're furloughed, so if any shifts did come up, they wouldn't be able to accept them.

So, so that makes sense from that side of things. In terms of so. Traders which do still exist, then, then, you know, what are, what are the options from that side of things for people?

Well, in those cases, and this is exactly the, those sort of small sole traders is exactly what what the self-employed support package I think is designed to to help. So if your, earnings for the last 3 years, last 3 tax years have averaged, below 50,000 pounds a year, then you can go into the self-employed, scheme, and in that situation, there'll be a grant paid then for 80% or 2500 of those. Average earnings, over that period, and if you've not been trading for 3 years, then you'll, you'll go for a less period.

Now there is a bit of confusion here because if you listened to the Chancellor, last night in his press conference and you read what came out initially from, from the government in respect of how this would work, they were very clear if you had not, submitted a, to your tax return for January, in January this year, as you should have done, there was an extra 4 weeks for you to do that. And then I was watching Question Time last night and it was question was put to a, a, a, a government minister, which is, well, what about those people that have only just started trading, so they wouldn't have had to, they wouldn't have . Required to put a tax return in in January this year.

Now the Chancellor's view was, well, sorry, but it's just tough, you're going to be in a small minority of people that this scheme is not going to help. Whereas on Question Time last night, the government minister was asked repeatedly and said, no, absolutely, they would be helped and HMRC would look at whatever documentation was available. So, For those people that haven't got 3 years or or weren't trading last year, returning, it's gonna have, I think we're gonna have to watch this space and see just quite how that works out.

But the idea is, as I say, the average of your 3 years earnings, provided that your earnings are under 50,000, then you can avail yourself of the self-employed support scheme. OK, that's fantastic. So obviously that gives a a a good degree of cover to, to most people within the profession.

If, if you're a practise owner, and obviously, you know, you're worried about keeping the business running essentially, what, what sort of criteria. Do you have to factor in when you're considering whether to furlough staff? Well, I mean, ultimately, clearly there's a requirement that when you furlough someone, the idea is that there there's no work for them to do.

So I think that's probably the first thing is to take a step back and have a look and just have a see what what we think the business is going to do over the next 3 weeks, bearing in mind we're working in 3 weekly periods. If you've got no ability and, and sort of normal appointments clearly will be suspended, so the reality is you best you'll probably need people to do emergencies and things that desperately need to be done. It's then work out and model that and look at what does that mean for your staff requirements, who can cover that, and, you know, that's your core staff and that's who ultimately you will need to, to keep, and then obviously look at what that provides you then as to the number of people that, that need to be furloughed, and then start the conversations with those people to say, look, you know, in normal circumstances, we couldn't continue to pay you.

That might lead to a redundancy or a layoff situation depending on what their contract. Look like and to avoid that, we can, we can avail ourselves of, of the job retention scheme, but this is what it means. If they agree with that, then ultimately what you need to do is ensure that you write to them and that's recorded and that you have an audit trail of, of that, some communication, and then ultimately, you know, that's it, you're done, and then you review it again in another 3 weeks' time and see, see how you're progressing.

If during that three week period you need them to do something, so in the guidance it refers to asking them to do some online training, or you know, other, other work or providing services, then it seems to suggest that you can potentially do that, as long as you pay them at least the national minimum wage for the, the task that you asked them to do. Now clearly, you're not going to be able to ask them to just work as. Normal, because that undermines the purpose of the scheme.

But it does seem to envisage the situation where there might be an urgent requirement to do something or they're asked to do something at home, where ultimately then you can, you can pay them. So again, that probably needs a little bit more of a steer from the government to know exactly what the parameters of that are, but certainly it's a concept that exists as, as things stand. Yeah, and, and if you're, if you're an employee at a practise, and you know that that practise is maybe steering towards difficult times, but the boss hasn't approached the topic of furlough or or or redundancies even at that stage with the the the employees.

Can you go to them and request furlough? Oh well, you can go and and have the conversation, yeah, and you can request it. You can't make them do it as we said earlier, but yeah, you can go and have the conversation.

And, and to be fair, that's what's happened in, in lots of cases. So, you know, and even people that are on significant, significantly more than 2500 pounds a month net in their, in their take home pay, are saying actually we'd quite like to be considered for furlough if that's something that's there. And, and some of my clients have been very surprised by that.

But actually, it's, it's quite logical when you think about the fact that if they've got children, they'll be doing homeschooling and they'll be trying to, to, to make sure that that's all. All dealt with properly, that actually if you take out all the travel costs and incidental costs of actually going to work and you, you're sat at home doing nothing, then actually, you know, 2500 pounds a month is, is, is not a bad for some people, it's something that actually they, they would prefer to take and to, to take the opportunity to have a few weeks off. So absolutely have the dialogue and keep the communication channels open.

But as I say, they say. I know you can't force it, but I think most employers have been reciprocal to people and in some cases very surprised that people have come forward and said actually that's something that they are prepared to consider. Yeah, and I suppose in some respects it's one way of of employees trying to say, look, you know, I know business is a bit dead at the minute, this is my way of trying to help you as my boss.

I think that's encouraging. On, on the flip side of that, can an employee refuse furlough, and if they do, what are the ramifications there? Well, they can.

And yes, they can refuse to be furloughed, and I suppose it's then what's the alternative to furloughing. So if a business is in a situation whereby it cannot afford to continue to pay the wages because there's no income coming in to facilitate those payments of wages, you know, potentially it's a redundancy situation at that point. So, you know, that's the choice really, is look, we can do this furlough scheme where we keep your job open and you'll receive, 80% of your salary.

To, 2500 pounds a month, or alternatively, we go down the redundancy path. And I would say anecdotally that most people at the moment are going for the, for the furloughing. I have had a client this morning that had said to me that they've had someone very senior who's got a very long, period of notice that actually would prefer to go down the redundancy path.

And, you know, they're now needing to look at actually what they do and whether that's, that's. Something that they can afford or want to do if they're refusing to furlough. So, yes, people can refuse to be furloughed, but I think in most circumstances it would be better to keep your job open and receive income rather than put yourself in an employed, unemployed situation, trying to look for a new job in the current climate.

Yeah, I suppose it's that balance between looking after yourself and your family and you know, the sort of er the moral implications for, for your employers. You know, whether you're, you're looking after everybody's interests, I suppose, at the same time. I, I think that's, that's fantastic, Simon.

I think we've covered pretty much most of the topics that we can associate with furlough. I just want to take a moment to say thank you very much for giving up your time to try and help educate people about the, the content that obviously for many of us is a little bit confusing and potentially even ambiguous in places. So thank you very much for your time, and, and yeah, fingers crossed that can.

Provide some clarity to people. Yeah, and if people have any questions then feel free to contact me. It's going to be confusing.

We're still working a lot of it out and there are still ramifications and liabilities for people and for businesses if they don't get it right. So, don't think that this is a sort of a, a, a blank check just to get out there and do whatever. You still need to make sure you're complying with all your legal obligations.

So happy to help anyone that's got any problems in that regard as well. That's great, thanks, . OK, great, thank you.

We hope that today's episode was helpful and provided you with some clear insight as to how furlough might affect your own personal circumstances. Remember that as a profession, we are in the very fortunate position to have vet life. So if you do have financial or other concerns at this most unsettling of times, please do get in touch with VetLife, and they'll be able to help you or point you in the right direction for someone who can.

Stay safe, everybody.