UHY Hacker Young | Chartered Accountants

Coronavirus Job Retention Scheme: furlough in schools

08 April 2020

UPDATE: Please also see our updated post on 23 April which provides further clarification: Furloughing now an option for some academies and nurseries?

We have started to receive questions from some schools about the Coronavirus Job Retention Scheme (CJRS) and furloughing of staff.

There is an important distinction to make here. Independent schools can make use of the scheme and several of our clients have already made the decision to furlough staff. Many independent schools are struggling, with some faced with repaying a proportion of the summer term fees and many more expecting to see incomes fall in September, especially if the number of foreign student boarders drops. Independent schools can view our general guidance and support on Covid-19, including our FAQs on the CJRS, here.

Academies are not expected to make use of the scheme. The government guidance includes a clause stating an expectation that public body entities ‘substantially’ funded by government would not use the job retention scheme. This is on the basis that they continue to receive their usual funding in full throughout the Covid-19 crisis.

Most schools are clear on these rules, but with guidance being updated every day, there perhaps remains a few grey areas for academies. At the moment the mechanics of the scheme and how HM Revenue & Customs will police it are unclear, and therefore it is not known whether any academies who choose to make an application would see their claim automatically rejected.

The following areas relate to some specific questions that clients have asked:

  • Nurseries within an academy trust may receive some of the their funding from parents, but the substantial funding rule, when looking at the academy trust as a whole, is likely to mean no claim can be made.

Any academy trust operating a nursery in a separate trading subsidiary company may potentially have a different argument. This may depend on the relative levels of government funding and parental fees. If an academy is two thirds funded by the Government is this substantial, or would a proportionate claim for one third of their workforce be eligible? I don’t think anyone knows the answer yet but this would seem reasonable. The principle that businesses should not be seen to gain is important here, so if your nursery subsidiary has suffered a significant drop in income then it would appear to be a good argument that a small claim could be made. Time will tell.

  • Other subsidiary companies. These are separate, individual companies, so any other subsidiaries which do not receive their funding from government and that directly employ their own staff would be able to make use of the CJRS.
  • Zero hour or casual relief contracts. Following the cancellation of all 2020 examinations one recurring question in this category concerns exam invigilators. The nature of a zero hours contract means a school would be unlikely to have any obligation to pay the invigilator since the employer does not have to give a minimum number of hours. This potentially would be dependent on each individual contract and so HR/legal advice may be required.

The rule on substantial funding almost certainly means that it would not be possible to furlough invigilators or other casual relief workers, although this has not been specifically covered. It is worth noting that the ASCL has released guidance making it clear they do not believe academies can furlough. Remember too, that academies have an obligation to obtain permission from entering into any novel or contentious transactions. Could claiming through the job retention scheme be classed as contentious? Possibly given the substantial funding clause.

If you would like more information on furloughing in schools, please speak to your usual UHY adviser, or contact me directly.