Is there a cap on the number of employees on Flexible Furlough?

If a business has been provided with a loan from 23 March on commercial terms, providing the borrower meets the CBILS eligibility criteria, lenders have been asked to bring these facilities onto CBILS wherever possible (e.g. where the lender is accredited to offer the same facility through CBILS) and changes retrospectively applied as necessary. Please contact us if this applies to you and we can review facilities and advise upon the potential changes that may be made retrospectively to the benefit of the business.

This would depend on the reason as to why the employee is refusing to come into work. An unauthorised absence is where an employee fails to attend work and they do not have a statutory or contractual right, or their employer’s permission, to do so. An employer will not be obliged to pay employees their normal pay for periods of unauthorised absence.

There are some absences which may be viewed as authorised which would entitle the employee to their full pay. For instance, employees who believe that they are in serious and imminent danger by coming to work would be entitled to stay at home and receive pay if their belief is deemed reasonable.

An employer should always try to discuss any unauthorised absences with an employee. They may then consider whether to take disciplinary action against the employee.

We hope that all organisations will come out of lockdown successfully. However, the current economic crisis means that many organisations will face very difficult trading conditions.

Employment costs are one of, if not the, largest cost to your organisation. These costs will have an effect on your financial well-being – and many organisations are now considering how to reduce employment costs. That said, your workforce is also your most important asset and as we get back to business, you will need your workforce to run the organisation, produce your goods, deliver your services and deal with your customers.

As a result, many organisations are facing a very difficult situation – how to reduce or flex the cost of the workforce whilst also maintaining an ability to service customers. This difficulty is enhanced by the uncertainty of when the pandemic will be controlled and the threat of lockdowns end.

Employees with visas should be treated consistently with the wider workforce. When their furlough leave ends, they should return to work and their pay should be reinstated. If you agree a pay cut or reduction in working hours, you need to ensure that sponsored workers are still earning above the minimum salary for their role and working in excess of the minimum number of hours (see above).

The flexible furlough scheme is now in place and can be used for employees who have previously been furloughed for a consecutive period of at least three weeks. The flexible furlough scheme remains in place until 31 October 2020.

With the exception of the Covid-19 Corporate Financing Facility (see below), there was initially little dedicated financial assistance for medium-sized and larger businesses affected by the coronavirus outbreak (the so-called “stranded middle”); however, from 20 April 2020 such businesses (with a turnover above £45 million) have been able to access finance via the Coronavirus Large Business Interruption Loan Scheme (“CLBILS“).

CLBILS operates in a similar manner to CBILS except that a lender can provide:

• up to £25 million to businesses with turnover from £45 million up to £250 million; and
• up to £50 million to businesses for those with a turnover of over £250 million.

Finance is available in the form of:

• term loans
• revolving credit facilities (including overdrafts)
• invoice finance and
• asset finance,

in each case available on repayment terms of up to three years.

Several changes to CLBILS took effect from 26 May 2020. The maximum amount available through CLBILS to a borrower and its group increased from £50m to £200m. Term loans and revolving credit facilities over £50m will be offered by CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance and asset finance facilities remains at £50m. Companies borrowing more than £50m through CLBILS will be subject to further restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Further information on the most recent changes, including new provisions on seniority of CLBILS facilities, can be found on the CLBILS page on the British Business Bank website. There is also an in-depth FAQs section for businesses, which has the full details of the changes to the scheme.

Unlike CBILS, the UK government will not make payments to cover the interest and any lender-levied fees in the first 12 months of any facility so these larger businesses will not benefit from the no upfront costs and lower initial repayments that smaller businesses eligible for CBILS benefit from. The other key provisions of CLBILS, such as the eligibility criteria, the 80% government-backed guarantee and security, are similar to those of CBILS.

Eligibility is similar to CBILS and businesses must:

• Be UK-based in its business activity
• Have an annual turnover of more than £45 million
• Have a borrowing proposal which the lender would consider viable, were it not for the current pandemic, and for which the lender believes the provision of finance will enable the business to trade out of any short-term to medium-term difficulty
• Self-certify that it has been adversely impacted by the coronavirus (COVID-19)
• Not have received a facility under the Bank of England’s Covid Corporate Financing Facility.

Businesses from any sector can apply, except the following:

• Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive), insurers and reinsurers (but not insurance brokers)
• Building Societies
• Public-sector bodies
• Further-education establishments, if they are grant-funded
• State-funded primary and secondary schools

All lending decisions remain fully delegated to the accredited lenders.