Furlough employees

The employer guidance states that to access the scheme you will need to:

• “Designate affected employees as “furloughed workers” and notify your employees of this change – changing the status of employees remains subject to employment law and, depending on the employment contract, may be subject to negotiation
• Submit information to HMRC about the employees that have furloughed and their earnings through the new online portal (HMRC will set out further details on the information required). 

HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. 

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan”.

The employer guidance suggests this is something business can just tell employees but this is not the case according to the employee guidance on furloughed workers. The two sets of guidance should be read in conjunction with one another.

Furloughed workers isn’t presently a concept in employment law. Alternative shorthand for this status might be “government backed standby workers”. How staff are managed to get to the status where business can claim the 80% is important.

Furloughed employees will be kept on payroll and importantly, should not undertake work for the employer during the furloughed period. The employer has a choice as to whether or not to fund the 20% pay differential.

The scheme will run for at least 3 months backdated to 1 March 2020 – potentially being extended.

As always the devil is in the detail and we do not yet have the regulations available. We expect these to be published shortly. What is clear though is that furlough leave is subject to existing employment law so please take advice before acting. In particular you may wish to consider the following:

• What are the options whether furlough, lay off or other agreements with staff?
• If opting for furlough leave how many employees will you furlough and how many are affected? Will collective consultation apply?
• Do you have a lay off or short time working clause you might rely on instead?
• If you don’t offer furlough status but opt for lay off will this lead to a constructive unfair dismissal?
• What about if you wish to make redundancies later on?
• What payments are potentially included in the £2500?
• What about zero hours contracts?
• How does this work with maternity absence and pay?

For answers to these questions and for further information please don’t hesitate to get in touch with joan.pettingill@luptonfawcett.law or telephone 0114 228 3252 or any member of our multi award winning team.