The government’s radical undertaking to pay up to 80% of “furloughed” employees’ wages is unprecedented. Inevitably it raises many questions not all of which can currently be answered.
However I am sure many share my view that, irrespective of political persuasions, this is not a time where sneering or criticism for criticism’s sake is helpful or appropriate. I'll restrict myself then to summarising what we do know, having made a few assumptions and comments.
Employers can designate “furloughed employees”
"Furlough worker" is a new term but appears to mean an employee who the employer tells not to do any work (laid off is probably the nearest term in common parlance but I am using this very loosely).
As a means of avoiding redundancies the government will pay 80% of the wages of furloughed employees up to a maximum of £2,500 per month.
This appears open to abuse: if an employer designates an employee as being furloughed, claims the government salary payment and then benefits from the employee working then presumably that’s fraud.
Designating someone as a furloughed employee is not a magic solution that supersedes employment rights. Unless an employer has the contractual right to lay off staff (most don’t) then forcing the employee to stay at home and paying them 80% of salary or considerably less (given the cap) would be a breach of contract. Accordingly employer and employee have to agree this and self-evidently the higher the salary the more difficult that may be.
The expectation is that many staff will happily agree to this (i) as an alternative to redundancy and (ii) 80% salary not to work may seem quite attractive particularly given the cost savings associated with work (e.g. child minding or travel).
Ironically, it may be some staff who are not furloughed who complain.
Whether employers offer to top up the government payments towards salary is something each employer has to consider. Clearly this would make agreement easier and significantly reduce the breach of contract claim risk.
If employers do top up, the HR challenge may be paying people the same irrespective of whether they work. The financial challenge may be for those staff on considerably more than £2,500 per month.
I assume that staff have to be furloughed as opposed to there being another reason they are not working e.g. illness, family leave or holidays.
I understand employers we will not receive the cash for some time (May?). The government’s offer of short term loan support may be relevant here.
Although there are lots of questions it is clear that this is a radical government intervention and for at least 3 months gives employers a means of protecting staff and preserving the core of their business.
As anyone following the news will know this is of no assistance to the self-employed - but more announcements are expected this week for that group.
Lots of known unknowns and no doubt some wholly unknown ones too. This is a subject the Ledingham Chalmers employment team will be monitoring closely.
“Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis”