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24-03-2020

Coronavirus (COVID-19): Furloughing Employees - What You Need to Know

sarah-rushton

Furloughing Employees

Furloughing employees is something that has been introduced by the governments Job Retention Scheme.  Instead of making staff redundant they will be ‘furloughed’ instead. 

 

What We Know

Employers will be able to claim up to 80 per cent of the cost of an employee up to a maximum of £2,500 per month.

Any employer can claim the only criteria is that they have employees who are placed on furlough leave.

The scheme will last for 3 months backdated to 1 March 2020 but may be extended if necessary.

An employee cannot carry out work whilst on furlough leave.

 

What We Don’t Know

Will this include pension costs or employer’s national insurance contributions?

Will the payments to employees be subject to normal pay roll deductions?

 

Can you force an Employee to take Furlough leave?

Only if their contract of employment permits it, but if the alternative is redundancy an employee may well agree. 

 

How does this work with redundancy?

The coronavirus crisis does not negate normal employment law rules.

Redundancy is a potentially fair reason for dismissal but there needs to be (a) a genuine redundancy situation  (2) consultation and (3) a fair procedure/selection.  Since an employer must consider alternatives to redundancy, furlough leave may be such an alternative.  If an employer is not topping up salary whilst an employee is on furlough leave, furlough leave is unlikely to add much to the costs of any eventual redundancies but it may help to defer such costs to a later date.

 

So is it Helpful?

For the right staff in the right circumstances - yes.  It will be less help where employers have long serving expensive employees.  The cap on the payment means that in reality once an employee is earning more than £30,000 a year, the option of furlough leave becomes less attractive.

 

About the author:

Sarah Rushton is a Partner at Moon Beever LLP.

If you have any questions regarding the article or would like some advice, please contact Sarah on srushton@moonbeever.com.  

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