The F Word…

Empty offices: What is Furlough?

Before last Friday had someone said to me “please don’t use the f word again in the workplace” there would have been only one word I thought they meant but this week it seems to be a very different word that is bringing stress and sweat to any HR or Employment Law expert!!

‘Furlough’ – who even knew it was a word before last Friday?!

The word ‘furlough’ (pronounced furlow – not furloch) means “give a leave of absence to.” This is not a term which has previously had any specific meaning in UK employment law.

Employers are hoping to be able to take advantage of the newly announced Coronavirus Job Retention Scheme (which is applicable from the 1st March) to ensure any staff that otherwise would have been laid off – either temporary or permanently (currently furloughed) can continue to receive up to 80% (or £2,500 whichever is the lower) of their normal wages during the period of furlough.

The government hopes (there’s a lot of hope in there isn’t there?!) that the first grants should be paid within weeks. The scheme will apply (as far as we can tell at the moment) in respect of all employees on PAYE, including those on casual/zero hours contracts.

However, due to the ever-changing pressures and developments, at the moment the guidance is thin and, as such there are a lot of unanswered questions.

The things that we do not know yet are as follows:

  1. The eligibility rules – will there be a requirement to follow a redundancy/selection process and be able to evidence this or is the beginning of a consultation process sufficient; are people starting after the 1st March and then immediately placed on furlough eligible
  2. What anti-fraud measures will be in place? This scheme could be open to abuse and therefore we do expect strict anti-fraud measures and are waiting guidance on what penalties may be applied
  3. Whether employees who have already been made redundant as of 1st March onwards are eligible for this scheme and can therefore be reinstated – if the employer agrees
  4. Whether the 80% (or cap of £2,500) includes employment costs i.e. NI and pension
  5. Whether employers need to pay the amounts and then claim it back or they can wait for it to be paid before paying employees

A lot of my clients are and have taken action based on what they believe is the right thing to do with the information available and in line with their personal situation. We are hoping there will be a degree of sensibility if actions haven’t been taken quite as directed once the scheme comes out. Watch this space.

If you are considering changing employee status to furlough and accessing the scheme these are the steps we would suggest you take (as far as we know!):

  1. Designate employees that are considered as furloughed employees. Remember this is for if there is no work available and/or they cannot attend work because of a shut down. It isn’t applicable to those self-isolating or off sick or covering childcare responsibilities whilst work is available and offered. You should consider whether you need to consult with employee representatives or trade unions in certain situations – in line with normal redundancy/lay off procedures
  2. Consider the contractual position – is there a contractual right to lay an employee off? If there is not, you should try to obtain consent and written agreement from the employee.  Depending on the urgency this may not always be possible but exercise caution
  3. Once you have agreement from employees in respect of the 80% salary (subject to the cap of £2,500) being paid as a furloughed worker you should send them home and then submit details as required (to be confirmed!) to HMRC on the portal when it is set up. We don’t have a date but hope this will be very soon
  4. Keep in contact with your staff – zoom meetings, facetime, phone calls, emails – keep the morale up as best you can in these difficult times.
  5. Continue to review the situation – in line with new updates form the Government and with your business and staff

It is still very much a work in progress, and this is correct of the 26th March 2020 at lunchtime! Please do keep an eye on developments.

Please note, this isn’t legal advice; it is our interpretation of the guidelines available so far. If you would like any further advice or have staff that you need to furlough, please don’t hesitate to give me a call and I will assist where I can.

We’re in this together but as I always say, treat your staff right – they will remember how you made them feel not what you said to them. When all of this is over the way you treated them will determine whether they continue to stay with you or they jump ship as soon as possible.

Keep safe all.