What should I pay my furloughed employees who have just come back from maternity and paternity leave?

Update: On 3rd March 2021, Rishi Sunak announced in his Budget that furlough leave would now be extended until the end of September 2021.

On 31 October, it was announced that the Coronavirus Job Retention Scheme would be extended until the end of March 2021.  You can find out more about the extension in our latest Updated Coronavirus Job Retention Scheme Guidance article.

All businesses are facing different challenges as we find our new normal in light of the coronavirus pandemic, but one area of life that has continued as normal is the fact that some of our employees still require maternity, paternity and adoption leave.  Since the launch of the Coronavirus Job Retention Scheme (CJRS) there has been some confusion over how the concept of Furlough Leave applies to family leave; our Employment Law team here discuss how the two work together, how the pay is calculated and how we can help support you through the coming weeks and months. 

What is Furlough Leave?

Furlough is special type of leave introduced by the Government to enable employers to retain staff who are unable to work during the pandemic.  You can claim 80% of your employees’ normal pay, up to £2,500 per month, under the CJRS.

If an employee is furloughed they are still entitled to take maternity, paternity, adoption or shared parental leave.  The Government guidance states that furloughed employees have the same rights as they did previously and that being on furlough leave will not impact their eligibility for:

• Statutory Maternity Pay (SMP),
• Statutory Paternity Pay (SPP),
• Statutory Adoption Pay (SAP),
• Shared Parental Pay (ShPP) or
• Maternity Allowance (MA).

How is furlough pay calculated for those who have returned from family leave?

Your employee’s eligibility for this will be calculated based on their usual earnings (the amount they would have been earning had they not been furloughed), not the pay their received during their family leave.

Their furlough pay will be 80% of their ‘usual earnings’, i.e. the amount they would have been earning had they not been furloughed, before their family leave.  It is not 80% of their SMP, SPP, SAP, ShPP or MA entitlement, as this meant that those on family leave were being penalised by having their salary docked by family leave and then docked again when furloughed

Furlough Leave and ending family leave

Usually, maternity leave entitles an employee to 52 weeks of leave.  The first 26 weeks are known as Ordinary Maternity Leave, and the remaining 26 weeks are known as Additional Maternity Leave.  However, an employee is only entitled to Statutory Maternity Pay (SMP) for a period of 39 weeks.

An employee may wish to end their family leave early and be placed on furlough leave instead.  For example, if an employee on maternity leave has exhausted her SMP entitlement after 39 weeks and any Company Maternity Pay entitlement, she may wish to end her maternity leave early and be furloughed.  She would then be entitled to 80% of her pay rather than be on unpaid maternity leave. If any employee wishes to return from a period of family leave earlier than planned, they must give you at least 8 weeks notice of such intention unless you agree otherwise.  

You should note that your employees must take a minimum of 2 weeks’ compulsory maternity leave. You should also discuss with your employee that the furlough scheme is only open until 30 June 2020 and once they have given notice and ended their maternity leave they cannot go back onto maternity leave.  They may therefore only be furloughed for around 3 weeks and then the scheme ends compared to their 8 weeks of remaining maternity leave.

Furloughed employee going on to a period of family leave

It has been established that it is permissible for you to place a pregnant employee on furlough leave without this affecting her right to be paid SMP. This will mean that when the employee does commence her maternity leave, as planned, any SMP will be based on the employee’s normal earnings and not her furloughed wages. Their pay therefore will be at least 90% of their earnings for the first 6 weeks and then the statutory rate for 33 weeks unless this is enhanced by you in accordance with your policies.

The topic of furlough leave has been one of great discussion since the pandemic began and the CJRS was launched.  You can find out more information about the scheme via our additional articles below, alternatively you can contact the Employment team with your questions on 023 8071 7717 or email employment@warnergoodman.co.uk:

• What is Furloughed Leave and how does it work?
• Can my apprentices continue learning while on furlough leave?

To receive regular Employment Law updates from the team regarding recent tribunal cases and legislation updates, you can subscribe to our weekly Employment Law Newsletter by completing our subscription form or emailing us at events@warnergoodman.co.uk. 

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.