With the world currently in lockdown, it is no surprise that many employers are looking for different ways of keeping their businesses running and retaining their staff. The Government’s Coronavirus Job Retention Scheme (or “furlough”) aims to help those businesses with just that. But what is the scheme? How does it affect you? And who makes the decisions?
What is furlough?
The government scheme applies when employees have been “furloughed”, this means that they have been put on a period of leave during which they are not required to work. The employer can then recover a proportion of the employees pay from HMRC. The reimbursement that employers can seek per employee is limited to the lower of 80% of wage costs or £2,500 per calendar month. Employees and workers must be furloughed for a minimum of three weeks.
Who is covered by the scheme?
The scheme covers both employees and workers, provided that they were on the employer’s PAYE payroll on 28 February 2020:
- Full-time employees.
- Part-time employees.
- Employees on agency contracts.
- Employees on flexible or zero-hour contracts.
Employees who were made redundant after 28 February 2020 can also qualify if they are re-engaged by their former employer. Employees on unpaid leave cannot be furloughed, unless that unpaid leave started after 28 February 2020.
What steps must your employer take?
Your employer should discuss the proposal of furlough with you and make the temporary changes to your employment contract by agreement. It is a condition of eligibility for reimbursement that furlough leave is confirmed to you in writing.
Ideally, your employer should advise you how long it expects the furlough leave to continue, however this is not currently essential and may be difficult in the current climate.
Your employer must ensure that you do not carry out any further work for them while they are furloughed. However, furlough applies to each employer individually and if you have more than one job, your employments are treated separately for the purposes of furlough leave.
Can you request your employer puts them onto furlough leave?
Whilst you can request to be put onto the scheme your employer does not have to agree. It is ultimately the employer’s decision which employees to place on furlough leave, if any.
Can your employer defer payment to furloughed employees until they receive reimbursement from HMRC?
It is likely that some employers will not be able to continue to pay 80% of employees’ salaries until they have been reimbursement by HMRC. They therefore have the option of:
- Making the employees redundant;
- Putting the employees on unpaid leave until reimbursement is received; or
- Reaching an agreement with the employees that payment of their salaries will be deferred until reimbursement is received from HMRC.
Is your employer obliged to top up the remaining 20% of your pay?
Employers can continue to pay you in full pay during furlough leave if they wish, but they are not obliged to do so.
Can furlough be unfair?
Whilst your employer has discretion to choose who they place on furlough leave, they must be careful not to make this decision based on discriminatory factors (such as age, sex, race etc.) unless it can be justified.
Your employer must also ensure that they have your consent before putting you on furlough leave. By reducing your salary and not providing work, your employer is making changes to your employment contract, and as such this could amount to a breach of contract in the usual way. However, you should note that refusing to give your consent may leave your employer with no other option but to terminate your employment.
Is it an unfair dismissal if an employer makes someone redundant rather than placing them on furlough leave?
At this stage it is difficult to determine whether such a dismissal could be unfair as these matters are decided by the employment tribunals. The answer will depend on the particular circumstances of the case, including the size and resources of the employer. However, employment laws such as those surrounding discrimination and breach of contract still apply in the usual way.
If you have a query relating to furlough or require assistance in relation to an employment issue, please contact me on 01702 238514 or [email protected]
Email: [email protected]
Telephone: 03300 585 222 (24/7)
