The Coronavirus Job Retention Scheme (Furlough Leave)

by Hollie Whyman

Please note: This information was accurate as of 12pm on Tuesday 24 March 2020, however, will quickly become out of date. Please check the government guidance for the latest information, or get in touch with one of our employment lawyers.

 

As the announcement came that all 'non essential' retail businesses must shut their doors, more and more employers will be looking to the government's Coronavirus Job Retention Scheme to support their salary expense and avoid having to make redundancies. We take a look at this scheme and what we know about 'furlough leave' so far:

 

Key features

  • All UK employers with a PAYE scheme (including sole traders, partnerships, LLPs, limited companies and charities) can claim a grant from HMRC to cover 80% of the wages of 'furloughed' employees who are not working, but kept on the payroll, up to £2,500 per month.
  • The scheme will be backdated to 1 March 2020 and open for at least 3 months, with scope to be extended if necessary.
  • Employers will be able to claim furlough pay through an online portal.

 

Does the employer need to top up salary to 100%?

No, although businesses can choose to do so. However, without a contractual right to do reduce salary, there is a small risk that an employee would bring a claim in the future for unlawful deduction from wages for the remaining 20%. In the circumstances we would hope that this risk (and chances of a claim) would be small. To mitigate this risk further we suggest that, where possible, businesses obtain written consent from the employee to the terms of the furlough leave.

 

Can an employer insist on putting an employee on furlough leave?

The employer has to designate employees as furloughed workers. However, unless there is a right to remove work in the contract, then the employer will need to agree furlough leave with the employee; where the alternative is likely to be redundancy, most employees are unlikely to refuse.

 

Can employees put themselves on furlough leave?

No, the employer has to agree that an employee can go on furlough leave. This may well cause problems where some employees are put on furlough leave and some are not. Employers would be prudent to use a fair and objective selection criteria when selecting employees for furlough leave. It may be possible to then use this as a basis for selecting employees for redundancy if they subsequently refuse to go on furlough leave.

 

What if an employee refuses to go on furlough leave?

Businesses may need to make the employee redundant, however should ensure that a fair selection process and fair procedure has been followed.

 

Can an employee work part time whilst on furlough leave?

We don't yet have guidance on this, however our current understanding is that it will not be possible for an employee to work at all whilst on furlough leave.

 

Practical tips

  • Use a fair and objective selection criteria when selecting employees for furlough leave.
  • Obtain written consent from the employee to the terms of the furlough leave; ACAS recommends that furlough agreements should include the date furlough starts, when it will be reviewed and how to keep in contact during furlough.
  • Do not allow furloughed employees to carry out any work.
  • Watch out for new developments and sign up for the online portal when it becomes available.

For further advice, or to discuss your employment matter, please contact Hollie Whyman.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

24 March, 2020
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