Coronavirus News: Furlough for Employers
On the 21st March 2020 the UK Government announced a series of measures to assist employers and employees in the coming months during the current Covid-19 crisis including Furlough Leave which is set to be up and running by the end of April.
What is Furlough Leave?
Furlough is an American word used as we might use as “leave”, or “sabbatical”. Employees on furlough leave can do volunteering or training, providing it does not generate any money for their employer.
To be placed on Furlough requires that the employee is sent home without any work for a minimum of 3 weeks. Employers are expected to pay employees on Furlough 80% of their normal salary wage which is capped at £2,500 per month (gross pay).
Which employers can claim Furlough?
Any employer, whether they are a sole trader, limited company, partnership or limited liability partnership can claim this benefit. The only criteria to claim Furlough 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 their contract which permits 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 their contract then consent will be needed. However, if the 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?
It is advisable that you use a selection similar to a redundancy selection criteria which may be previous appraisals, or a selection matrix based on relevant skills.
If the employee refuses Furlough, then the employer could then select them for redundancy and the basis would be on a fair basis.
Employees taken on after 1st March are excluded from the scheme.
Employers can re-employ people who have been made redundant since 1st March, and then furlough them.
If on Furlough, does the employer have to top-up the 80% wage to 100% for the employee?
No. The employer can choose to do so but they do not have to. But there is a risk that that the employee could make a claim for deduction of wages but in our opinion this risk is small. We would advise employers that they get written consent to this.
If an employee refuses to take Furlough, can the employee be made redundant instead?
Yes they can, but the employer must ensure that they use a fair selection process and criteria.
What will the employers' process be for getting the wage payments back?
The Government is setting-up a portal for this which it yet to be running live.
Furlough pay will be 80% of normal wages but there is a cap of £2,500 per month, which is the figure being paid to the employee, not their usual wage. This cap includes pension and NI contributions.
If you have any questions regarding Furlough and if the employee has objections, then please contact one of our employment team members here. We're here to support you with employment advice at this time.
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You can also complete our online enquiry form here.
At Lawson-West, we provide a national UK employment service.