COVID-19 Furlough

Employee Furlough

COVID-19: Coronavirus Job Retention Scheme

For employers requiring advice on furloughing staff and redundancies, Knight-Webb Solicitors offer a competitive, fixed-fee service based on the number of affected employees.

As a result of the economic impact of the COVID-19 pandemic, the government has introduced the Coronavirus Job Retention Scheme. The scheme is intended to avoid redundancies by alleviating the pressure on employers to continue paying wages in full during the crisis period.

Employers who have been severely affected by COVID-19 are able to ‘furlough’ employees and claim 80% of their usual monthly wage costs up to £2500 per month for each employee.

The scheme applies in respect of employees who have been furloughed, meaning that they have been put on a period of leave during which they are not required to work. Under the scheme, the employee remains employed but is put on a temporary leave of absence (furlough leave).

Given that the reimbursement that employers can seek per employee is limited (to the lower of 80% of wage costs or £2,500 per calendar month, plus employer national insurance contributions and employer auto-enrolment pension contributions) it is anticipated that many employers will seek to amend the contracts of those put on furlough leave to match the level of reimbursement that can be obtained.

The scheme is backdated to 1 March 2020. It has been extended until the end of October 2020. From the start of August, furloughed employees will be able to return to work part-time with employers asked to pay a percentage towards the salaries of furloughed staff.

Government guidance on the Furlough Scheme can be found at:

https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

ACAS guidance can be found at:

https://www.acas.org.uk/coronavirus/if-the-employer-needs-to-close-the-workplace

HMRC guidance can be found at:

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

A summary of the main points includes:

Furlough Eligibility

To be eligible for the scheme, employers will need to:

  • select and tell (‘designate’) the employees affected that they’re furloughed and keep employees on the employer’s payroll
  • make sure furloughs last at least 3 consecutive weeks

 

Employees must have been employed as at 19 March 2020

The Furlough Scheme is open to all employers operating payroll on 19 March 2020. The scheme applies to employees and the wider category of ‘workers’ provided that they were on the employer’s PAYE payroll on 19 March 2020.

If someone was dismissed on or after 28 February 2020 whether for redundancy or another reason, an employer can decide to rehire them and put them on furlough.

Normal employment laws apply

In furloughing employees, employers should bear in mind that the normal employment laws and regulations including on contractual variation, unfair dismissal, constructive dismissal and discrimination, continue to apply. Employers therefore have to implement these changes within the law.

Employers must select employees for furlough in a fair way to avoid any discrimination.

They need to obtain the agreement from the employee to do this, unless the change is covered by a clause in the employment contract. However, even if the change is permitted by an express term in the employment contract, if the employer unilaterally imposes the change, it could be in breach of the implied trust and confidence obligation. The employer should obtain the agreement of the employee to be furloughed during which they would not be required to carry out any work. Wages during the furlough period should also be agreed. Whilst the government will pay employers 80% of wages, the employer should decide whether they will top up the wages to 100%. If the employer decides not to top up the wages, they should tell the employee and explain why not and obtain their agreement to the reduced salary. Employers may wish to explain to employees that if they refuse to agree to furlough, they could be put at risk of redundancy.

Employers should be careful in furloughing employees. Getting it wrong could result in  claims such as constructive dismissal, unfair dismissal, discrimination, unlawful deduction from wages and  breach of contract.

Furlough agreements

Any furlough agreements must be in writing (or confirmed in writing), and will constitute a variation to the employee’s employment contract. The agreement must specify the main terms and conditions upon which the employee will cease all work in relation to their employment. It’s a good idea to include:

  • the date furlough starts
  • how much the employee will be paid and when it will be reviewed
  • how to keep in contact during furlough

The employer must retain the written agreement or confirmation until 30 June 2025.

ACAS have produced template letters for a furlough agreement, extension of furlough agreement and ending of furlough agreement which employers can download at: https://www.acas.org.uk/furlough-letter-templates

 

The above information is for guidance only and is not a substitute for legal advice in individual cases. 

Knight-Webb Solicitors are specialists in employment law. We pride ourselves in providing a first-rate, cost-effective and personal service to clients. 

Contact Sunita Knight-Webb on 020 7207 6195 or at sunita@knightwebb.com