I am sure I am not the only both confused and very used to hearing the term ‘furloughed worker’ without having any clear guidance on what this means. The below is something we received from an employment/HR lawyer in Leeds which I thought I should share with you. There is still no clear guidance on whether Directors will be able to furlough themselves, though I really do doubt that this is going to be a scheme stretched out to Directors, especially those who are sole Directors of companies with no other employees.
On Friday afternoon the Chancellor, Rishi Sunak, announced an unprecedented package of measures to support the UK economy through the COVID-19 crisis. The government aims to help employers to retain their staff when they may otherwise have had to make them redundant.
At the time of writing we have scant information on how the Coronavirus Job Retention Scheme will work in practice. What we do know is that the government will pay 80% of the salary of any employees who would otherwise have been laid-off.
Whilst we wait for further details to be announced, our initial understanding is that:
Any employer in the UK can apply to the Scheme, which will be backdated to 1 March and run for an initial period of 3 months.
Employers will have to 'furlough' employees who have been or would otherwise be laid-off or made redundant. Employees who have already been dismissed can be re-engaged to benefit from this Scheme.
Affected employees need to be informed by their employer of the change in their employment status, and in most cases (where the contractual right to lay staff off does not exist) must consent to the change in their terms and conditions.
Furloughed employees remain employed and bound by their terms and conditions of employment so they are not entitled to a redundancy payment and must not do any work during the furlough period.
Employers can continue to pay the furloughed employees and will be able to reclaim 80% of their salary (up to a cap of £2,500 per month) from HMRC. There does not appear to be any obligation on the employer to 'top up' the payment from the government to 100% of the employees' usual salary, though it seems an employer would be free to do so.
This Scheme forms part of a wider package of measures to keep businesses going during this difficult time.
Our initial advice is for employers to review their staffing needs and identify those members of staff who could be furloughed to enable them to access the Scheme as and when the details of it are known. Contracts of employment should then be reviewed to identify if the contractual right to lay staff off exists. If there is no contractual right to lay-off conversations will need to be held with employees to obtain their consent to be furloughed as an alternative to being made redundant.
We have also received an example of an ‘Employee furlough letter’ which can be adapted to your own letterheading and sent out to staff. I have attached this as an example for you to send out to employees you plan on making furloughed, but please remember that nothing is set in stone yet and so these letters may not be 100% accurate.