Arguments for using the furlough scheme to keep fixed-term staff in jobs in universities

By BUCU Committee

The University of Birmingham management has taken the view that the Government job retention (furlough) scheme does not apply to all fixed-term contract (FTC) staff, including where staff were not already scheduled to be re-hired.

This is a matter of interpretation and we (BUCU) take a different view.

The purpose of the job retention (furlough) scheme is, in part, to allow employers to shield the employee from being pushed into a job market which simply does not exist. As Rishi Sunak put it in announcing the scheme, the intention is to ensure that, “workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary.” Many staff on fixed-term contracts could expect to have had those contracts renewed, even if that renewal had not been agreed before the lockdown. On the same basis, the University could now agree to extend the contracts of all FTC staff, on the grounds that they could not have known prior to the lockdown which contracts would have been extended.

The furlough scheme pays the employer directly 80% of the staff costs for those FTC staff who are furloughed. There is, therefore, no reason why the University should not extend the contract of any FTC staff so that they are simply re-hired until the Coronavirus crisis is over, or until the Government ends the job retention scheme.

One potential objection is that the furlough scheme does not apply to publicly-funded staff. But, as Government guidance makes clear, it is not possible to separate out which university roles are funded by public funds and which are funded by commercial or non-public funds:

we do recognise the complexity of HE revenue and the role that cross-subsidy plays. If it is difficult to distinguish whether staff are funded through public or commercial income for the purposes of meeting the first 3 conditions as listed above, and some staff will be funded through multiple sources, as a guiding principle, HE providers should not seek to furlough a higher proportion of their wage bill than could reasonably be considered to have been generated through commercial income, including from non-public research grants and contracts.”

This therefore allows the University to furlough a proportion of their workforce that amounts to no more than the amount of revenue secured through non-public funds. This is largely in the form of commercial income and international student fees – which we calculate from the most recent University accounts to total around 30% of the wage bill. At present, it looks very unlikely that the University will get anywhere near this amount of furlough, and so it would be entirely plausible for all FTC staff at risk of redundancy to have their employment extended for the duration of the lockdown/furlough scheme.

The most obvious step for the University to take would be to extend those on FTC contracts, where those contracts are due to end, by 3 weeks and on a rolling basis. This would be entirely within the terms of the scheme.

This is from the Government advice:

“If your employee is on a fixed term contract

Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended before their natural conclusion during the furlough period without breaking the terms of the scheme. There is no minimum period which must be left to run on a fixed term contract to enable it to be renewed or extended, but it must not have ended. The furlough period must be for a minimum period of three consecutive weeks. Where a fixed term employee’s contract ends because it is not extended or renewed before its natural conclusion you will no longer be able claim grant for them once the contract ends. Fixed term contracts which ended, without extension or renewal, on or before 19 March 2020 will not qualify for the grant once they have ended.”

Source: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

In a recent email to members, Jo Grady (UCU General Secretary) said:

“Today, we have received some positive news in higher education, with the minister for universities publicly confirming that where employers cannot retain staff on insecure contracts, they can apply to the government’s job retention scheme link. This is a welcome response to the campaigning which we’ve done on this issue at all levels of our union. However, if employers are going to access the scheme, we would want to see all institutions top up the 80% of staff pay funded by the scheme to 100% as some institutions, such as the University of Sheffield, have already pledged.”

In that email, Jo Grady linked to this statement from the Universities minister, Michelle Donelan:

“I know there may be large numbers of staff who are on short-term, casual or hourly paid contracts, as well as those employed by outsourced services. They will of course be anxious about how they will manage financially. 

In most circumstances I expect employers will be able to continue paying staff. But where this is not the case, workers can rely on the package of support announced by the chancellor, including the Coronavirus Job Retention Scheme, which will help pay staff wages and keep people in employment. This allows employers to claim for 80 per cent of the usual monthly wage costs for employees who are placed on a leave of absence, up to £2,500 a month. HMRC is working urgently to get the scheme up and running and we expect the first grants to be paid in weeks.”

Source: https://www.researchprofessionalnews.com/rr-news-uk-views-of-the-uk-2020-4-donelan-message-from-the-universities-minister/ 

Thompsons solicitors have also issued advice on the furlough scheme, in which they share the interpretation summarised above – i.e. that the furlough can and should be used to retain staff, including those on fixed-term contracts (whose contracts can be extended during the lockdown, to avoid FTC staff being pushed into a labour market which simply doesn’t exist).

Thompsons say:

Fixed term workers are also eligible to be furloughed if they were on the employer’s PAYE system on or before 28 February but only up until the end of the fixed term period. The government has confirmed, however, that a fixed term contract that was due to come to an end during the period of furlough leave can be extended or renewed.”

Source: https://www.thompsonstradeunion.law/news/lelr/issue-667-coronavirus-covid-19-special-edition/more-advice-on-furlough-leave

We have also confirmed that HE providers can access the Coronavirus Job Retention Scheme (CJRS) to safeguard staff jobs. This includes access to support for those staff with short term or hourly paid contracts (source: government support package for HEIs and students).

In sum, the correct, fair, and inclusive way in which the University should deal with staff on fixed-term contracts whose contracts are due to expire during the lockdown period is as follows:

  • To extend the contract of those staff, by a minimum of 3 weeks;
  • To re-extend that contract (again for a minimum of 3 weeks), should that become necessary and should the Government job retention scheme remain in place;
  • To pay at least 80% of wages to those staff, and ideally to top it up to 100%;
  • To guarantee that no staff on fixed-term contracts will have their contracts ended during the lockdown period whilst the University is being supported by the Government’s job retention scheme.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.