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Furlough and employees loans owed to employer

Furlough and employees loans owed to employer

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Does anyone know:  for employees placed on Furlough who have been having £50 per week taken from their net pay, in order to repay a loan given earlier in the year from the employer.  If it is still permissable to deduct the weekly amount as a 'pay back loan' figure, at this time.  These are from employees who are not on NMW and the deduction is not impinging on NMW rates.

The Gov.UK page talks of 'you must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.'  I am assuming this means, a charge for processing it perhaps?  Rather than the example I am giving above?

 

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By Duggimon
14th Apr 2020 19:58

The guidance thus far published does not, so far as I know, cover this eventuality.

Presumably the employer has already docked the employee 20% of their wages, it would seem in those circumstances to be a bit unreasonable to further dock their pay by £50 a week, but that's just my opinion.

If they have not docked their pay, I would imagine the £50 could come out of the extra 20% above the minimum level the employer is paying to the employee and so there's no issue.

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By Carolynne
15th Apr 2020 08:51

Sadly, because they are a smaller company, they cannot afford to pay them the additional 20% of pay, but want to deduct the loans they are owed back, if it is still permissible.

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Replying to Carolynne:
By Duggimon
15th Apr 2020 09:16

Well there's no specific guidance on the situation, but what there is does say

"Furloughed staff must receive no less than 80% of their reference pay (up to the monthly cap of £2500)."

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By paul.benny
15th Apr 2020 09:04

There's no legal obstacle to continuing to deduct the £50 repayment.

But have a bit of consideration for the employees. Their finances are already going to squeezed. Perhaps the loan repayments should be suspended until the employees are back at work.

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By Carolynne
15th Apr 2020 11:05

Unfortunately, the employer has stated, if it is permissible, they want their money back, it is not my decision to make. I have just been asked if they are permitted to continue to do so. I can't find anything against it, and feel it should be suspended for now, but was hoping someone might know of something written somewhere that says no. Anyway onward and upward, thanks for your responses everyone.

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ALISK
By atleastisoundknowledgable...
15th Apr 2020 09:06

I would say it’s reasonable for the employer to keep deducting the £50 from net wage - the employee might not think so though.

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Routemaster image
By tom123
15th Apr 2020 10:41

I have suspended any deductions for this time.
(like many in manufacturing, little subs to cover urgent costs at home are quite common)

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By SteveHa
15th Apr 2020 11:13

As others, we only have one client with outstanding employee loans, and repayment of those loans is suspended whilst the employees are furloughed.

However, I don't believe that there is any barrier to collecting repayment of the loan (it's basically just short cutting the process of paying the employee the full amount, and the employee then making their loan repayment).

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