Employment Law - Update - Covid-19 - Furlough Leave
Prior to Friday did you know the word ‘Furlough’? I must confess that I have been an employment lawyer for over 30 years, and it wasn’t a word that I was familiar with. As you will undoubtedly have heard, the Government has introduced a scheme whereby if an employee is laid off i.e. kept on the book but not given work, it will pay 80% of wage costs up to £2,500 currently for a 3-month period, but potentially to be extended. So far those are the headlines, the detail isn’t there as yet. This will be relevant to an awful lot of employers in the private sector and the detail will be much needed. For now, the following may assist: -
It is not entirely clear, but the payment would appear to be a maximum payment of £2,500 per month, so this would mean an employee normally paid just over £3,120 per month would get paid 80% of full pay. An employee who earned more than that would get a capped amount of £2,500.
• Unless there is a contractual right to lay-off – which some but only a minority of employers have – the Furlough leave needs to be agreed. However, in the current crisis we have, it is hard to conceive that employees will reject the opportunity of Furlough leave.
• It doesn’t appear as if employers will have to top up to 100%, although some unions are pressing for this. The reality is that most employers using this measure will be in a difficult situation and will want to be seeking to prioritise payments to those who remain working and therefore topping up those that aren’t working is not likely to be a viable or indeed sensible option.
• Applications will need to be made via an HMRC on-line portal. To date, it is not set up. It is planned to have it in place by the end of April but then to have payments backdated to the start of the month.
For those sectors where they have been closed down this scheme will be invaluable. Others will need to use it too. However, when Government looks at the detail, I would strongly ask that it considers a refined and nuanced scheme. At present, a lot of employers still require employees to work, but the work is gradually slowing down. Also, employers have concerns about customers’ ability to pay. Loans are only a partial solution. There are already many scenarios where an employer will need an employee to work and cannot afford full pay. It may propose reduced hours. The challenge is getting the ‘key’ employees to provide necessary input if they may be receiving the same or even less pay than those who have been placed on Furlough leave. Subsidies allowing employers to keep employees at work on reduced pay seem to be a key part of the jigsaw.
Further, it would be helpful if the payments will apply to relatively short periods of Furlough leave enabling employers to share around remaining work.
Watch this space!
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Nigel Tillott, Head of Employment and Regulatory Law ,DDI 01452 689100