COVID-19, schools and academies: To furlough or not to furlough?

Last updated 20 April 2020

The issue surrounding Furlough has been a big discussion point and we were seeing a few more questions from schools on the subject too. The government’s guidance on the Coronavirus Job Retention Scheme includes an expectation that public sector bodies (schools and academies) will not use the scheme as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak. The continuing grant funding schools/academies receive should be used to cover staff costs.

But confusion still existed, particularly where a school/academy has staff working solely in a football development centre, whose wages are usually paid out of the earnings of the centre. In these cases, it is always important to “step back” and consider the “spirit” of the furlough scheme – this will help ensure it is not being abused.

Thankfully though the government have now updated their guidance to make things a little clearer. Where schools receive a separate private income stream – for example, catering, boarding or lettings income – and this income has stopped or reduced significantly they should consider if they have staff who are paid from these income streams. If they do, then the furlough of staff is a possibility.

Firstly, schools must consider their existing budgets and look to re-deploy staff ahead of furlough. If this is not possible then furlough can be explored by the school. However, the following conditions must be met:

• the employee works in an area of business where services are temporarily not required and whose salary is not covered by public funding
• the employee would otherwise be made redundant or laid off
• the employee is not involved in delivering provision that has already been funded
• (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
• the grant from the Coronavirus Job Retention Scheme would not duplicate other public grants received and would not lead to financial reserves being created

If all conditions are met, then a grant from the Coronavirus Job Retention Scheme can be sought based upon a percentage of private income which is best illustrated in the example below:

If a school’s average monthly private income stream (for example, from parent-paid school meals) provides 5% of the schools’ overall income, the school could claim support through the CJRS for up to 5% of its paybill This would be done by furloughing staff (for example, catering staff) whose usual salary or combined salaries are linked with the income lost and come to no greater than 5% of the provider’s total paybill.

Schools are not expected to consider each stream of private income separately so a school should consider its total income from private sources, as a proportion of its overall income, and the pay of all the staff it proposes to furlough, as a proportion of its total paybill.

Please be reminded that you should only claim a CJRS grant if the criteria above is met and this can be proven. It is highly likely the government will undertake some reviews of claims once normality resumes to ensure schools are not going against the “spirit” of the grants. So do ensure you have the paperwork to support any claim. We would also recommend making trustees/governors aware before any such claim is made.

We have also seen queries regarding exam invigilators who are on zero-hour contracts and only turn up for exam season – of which there will none in 2020. For these persons their pay can vary – so following the gov.uk guidance is important.

Some institutions have nailed their colours to the mast. Notably the Association of School and College Leaders (ASCL) who have released their guidance here and states academies are not allowed to furlough.

Guidance though, continues to be updated, and you may have a question that is yet to be answered. It is definitely worth time and money in bouncing your thoughts off colleagues, fellow business managers/HR advisers, as well as your trusted financial and legal advisers. Using your advisers is particularly important when it comes to employment laws and if there are any unintended consequences of your decisions.

Academy Trusts must also consider also the Academies Financial Handbook in any transaction they undertake, for example considering if it is a novel or contentious transaction. It might be considered contentious if you claimed funding through the job retention scheme for staff members who were also paid through core funding.

If you would like to discuss any of the above, contact us here.