InsightsInsight - Education - UPDATED: April 29, 2020 12:00 am
Should educational establishments furlough staff?
Schools will continue to receive their budgets for the coming year, as usual, regardless of any periods of closure.
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In this article we look at whether educational establishments should furlough staff during the coronavirus pandemic.
An update published by the DfE on 17 April 2020 confirmed that local authority maintained schools and academies will continue to receive their budgets for the coming year, regardless of any periods of closure. This also includes free schools and pupil referral units.
Core funding for schools through the Dedicated Schools Grant (DSG), to ensure business continuity and payment of staff will continue. Local authorities will also receive high needs funding as part of the DSG. They should continue to pass this on to providers (including the top-up funding in respect of individual children and young people) at the normal rates.
To furlough or not to furlough
It is suggested that local authority maintained schools and academies should not furlough staff whose salaries that funding could typically be considered to fund, and therefore will not need to access the Coronavirus Job Retention Scheme (CJRS). Where activities have changed, staff should be redeployed to best support the coronavirus response. They should continue to be paid as normal, even if typical duties cannot be carried out.
Where there is a separate private income (for example catering, sports facilities lettings, boarding facilities funded by parents in a state funded boarding school) which ceases or has reduced, and, staff are paid from those private funds, it may be appropriate to furlough staff.
However, the DfE have made clear that this is subject to five conditions being met:
- the employee works in an area of business where services are temporarily not required and where their 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 CJRS would not lead to financial reserves being created.
Where the conditions are met, schools should receive a grant from the CJRS in line with the proportion of the pay bill which would have been funded by private income.
How does this affect independent schools?
Many independent schools are likely to have closed to most pupils. As with other businesses, they may be facing a sudden and substantial loss of income. In these situations, it may be appropriate to furlough staff and access the CJRS scheme. However, if there are any activities where independent schools receive public funding, the DfE expect schools to continue to pay those staff in the usual fashion and not to furlough them.
When considering furloughing staff, you should take a fair and reasonable approach, reflective of good HR practice. This minimises the risk of successful employment tribunal claims, such as if your choice has been made on a potentially discriminatory basis – for example selecting all part-time workers.
What about exam invigilators?
This is likely to depend upon how the invigilator is engaged. The most common scenarios are via an agency (usually where the invigilator will be an employee of the agency) or directly engaged by the school under a zero hours contract.
The DfE’s guidance is understood to suggest that where schools have agency workers on live assignments who can continue to work, they should continue to make previously agreed payments to agencies and, the agency should not furlough these workers. However, this only covers live assignments. Therefore, for most exam invigilators they are unlikely to be on a live assignment and there is not now the demand for that work. In those circumstances, the agency as the employer can consider the CJRS. It is advisable that the requirement for work and possible need to furlough is discussed between the agency and school and, any agreements are recorded in writing.
Government guidance suggests that zero-hours contract workers would be eligible under the CJRS and all other guidance that applies to those cases should be followed. However, unless a school can show that there is a separate private income to fund invigilators, it is not anticipated that the CJRS will be relied upon. Apart from this, there is no specific Government guidance around zero-hours contract workers.
Guidance issued by the ASCL suggests that exam invigilators who have been issued and accepted work for the summer of 2020, should be paid. However, there is no guidance to suggest how this should be calculated. Presumably, this would be on full pay as per any contractual agreement.
For invigilators engaged under zero hours contracts, with no obligation to offer or accept work, and, where no offer and/or acceptance has been made by the school or invigilator, the school can argue that there is no work. This will mean there will be no offer and therefore, no obligation to pay the invigilator.
Even taking account of ongoing public funding, educational establishments are expected to have adequate and effective governance arrangements in place to ensure that public funding is spent effectively and appropriately. The Academies Financial Handbook sets out to ensure regularity, propriety and value for money in the organisation’s activities, and ensure that spending decisions represent value for money. Schools should safeguard public finds and ensure value for money. All arguments support that it would not be in the financial interests of the school to pay an exam invigilator who has no work to be undertaken.
However, there is an alternative argument that schools receive Government funding each month to help towards their overall costs. This includes costs for staff and overheads for example. These costs also include exam costs, which is why secondary pupils receive a slightly higher per pupil funding rate. In addition, schools will have already budgeted for these costs in their 2019/20 budget. Therefore, with invigilator costs already covered, arguably, exam invigilators should continue to be paid even if they have not been engaged and there is not the need to carry out work. This would be in line with the ‘spirit’ of the Government’s decision to continue providing full funding to state-maintained schools.
If as a school you took a view that you are not obliged to continue to pay exam invigilators engaged on zero hours contracts, commercially this may cause difficulties. If those individuals are trusted and reliable invigilators engaged year upon year, taking a decision not to pay them may mean that you lose a valuable source that would never be prepared to work for you again. It is worth considering therefore whether this something that realistically you would want to do.
If you continue to pay exam invigilators, then how much?
There is no legal formula or guidance as to how to calculate this. Arguably, if you have budgeted for those costs at full rate of pay, you should pay at full rate and as budgeted.
Alternatively, schools may echo the furlough rates, in which case you would then use the formula for employees whose pay varies and can claim for the higher of the same month’s earnings from the previous year or average monthly earnings from 2019-2020. You may choose such a basis, or an alternative basis upon which you could argue would be a reasonable means of assessing pay. For example various suggestions have included the hours that they would have worked in 2020 or, the same hours for the same period in the previous year. There is no ‘right way’ of doing this but you should ensure that HR best practice is followed and you minimise potential arguments of discrimination as far as possible. Whatever you choose, we would recommend recording why you have chosen this method and, making clear that this is being done as a gesture of goodwill and, not because there is any contract right and/or because the individual has been furloughed.
In summary, there is currently no clear answer to this question and, guidance is constantly changing so, it is important to keep your position under review and before making any decisions ensure that you have reviewed current guidance and we would recommend taking appropriate legal advice.
If you require legal support and guidance on any of the issues covered in this article, please get in touch with our Education team today.
Since publication, the DfE published guidance on 28 April 2020, ‘Actions for schools during the coronavirus outbreak‘ (section 11.2), which now suggests a formula for calculating pay for direct employees on a zero hours contract.
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