2 weeks ago
This update is written and posted on Saturday 21st March 2020 and will quickly become out of date. We will endeavour to update it as soon as information becomes available.
Yesterday, 20th March 2020, the Government announced a series of measures to assist employers and employees in the coming months during the current Covid-19 crisis. Very little detail is available at this point but it has been confirmed that the measures outlined below will be backdated to 1st March 2020.
What is Furlough Leave?
Furlough is an American word used as we might use “leave”, or “sabbatical”.
To be classed as on Furlough, the employee must be sent home without work, it is not available to employers where the employee continues to work or simply works from home instead of their normal place of work.
Which employers can claim it?
Any employer, whether a sole trader, partnership, limited company or limited liability partnership can claim the benefit. The only criteria is that you have employees, and you send them home without work.
Can an employer insist on putting someone on Furlough?
If the employer has a clause in the contract which allows for the employer to either introduce lay off, or short time working, then the answer is Yes. No consent is required.
If the employer has no lay off clause in the contract, technically consent will be needed. However, if an employee refuses to consent to be sent home on Furlough, then they risk being made redundant. The employer could make an employee redundant if they refuse, provided they have selected the employee for redundancy fairly.
How do you select for Furlough?
We advise that you use a shortened version of a redundancy selection criteria (i.e. some form of objective selection criteria). It might be from productivity records, or previous appraisals, or managers completing a score matrix based on relevant skills.
The reason for this, is that if an employee refuses Furlough, the employer could then select them for redundancy and the basis would already be on a fair footing.
Can we put people on Furlough part time, and have them work Part time?
At the time of writing, we simply don’t know but it seems unlikely given an employee must be sent home and not available to employers.
Does the employer have to top up the 80% wage to 100% for a Furloughed employee?
No. It can choose to do so but is not compelled.
However, there is a future risk of a claim for deduction of wages. We think that the risk is small, and the chance of the employer losing such a claim also small, but to avoid the risk, the employer should attempt to get written consent from an employee to the terms of the Furlough. We suspect it won’t be hard, given the alternative will be redundancy.
If an employee refuses Furlough can we make them redundant?
Yes, providing that a fair selection and a fair procedure has been applied. See above.
What will be the process for getting the money back?
The government are setting up a portal. It is not up and running yet but we suggest the following as a general process:
- Select your employee for Furlough;
- Gain written consent to 80% pay;
- Send the employee home without work;
- Register for the Furlough Pay using the online registration portal (when up and running).
Are there other limits?
Furlough pay will be 80% of normal wages.
There will be a cap of £2500 per month, which is the figure being paid to the employee, not the normal wage.
The cap will include pension and NI contributions.
What if an employee gets difficult?
Call one of the solicitors at Sherbornes.
We expect there to be stringent anti-fraud measures and we warn all business owners that in the event of abuse of the system, they should expect public naming and shaming for what will be, after all, a form of illegal profiteering from a national crisis. We expect heavy penalties to follow for those who abuse this benefit.