On 20 March 2020, the Chancellor announced the Coronavirus Job Retention Scheme to help both businesses and employees during the current financial difficulties caused by COVID-19.
The Scheme allows employers to obtain a grant to cover 80% of the salary of employees who would have otherwise been laid off, up to a total of £2,500 per month for each retained employee. During this period of ‘furlough leave’ employees will not be asked to undertake any work for their employer. Employers do have the option to ‘top up’ the remaining 20% of the employees’ salary, however there is no obligation to do so.
The Scheme has been backdated to 1 March 2020, and will continue for at least three months until 1 June 2020, however this will be extended if necessary. Any employer can qualify for this Scheme, whether small or large, and any employees be eligible for furlough leave providing that they were on the payroll as of 28 February 2020.
Due to many businesses operating at a reduced rate, or not operating at all, it is likely that you will be overstaffed and not have sufficient work for your employees. In addition to this, a lack of work may mean that you are not financially able to retain all of your employees and you would be faced with a redundancy situation. The Scheme’s purpose is to prevent you having to make redundancies and allows you to retain your employees through a difficult, unprecedented time.
In theory by designating your employees as furloughed workers you are changing the status of their employment and it is unlikely the existing employment contract allows you the right to do this considering it was only recently introduced. You may therefore be worried that employees will not agree to this and they will say they would rather come to work and receive their full salary. The important thing to remember is that if you are faced with a shortage of work the alternative to furlough leave would be redundancy, and it is unlikely that an employee would rather be made redundant than receive 80% of their salary to sit at home.
A furloughed worker is expected to be available for work and you can ask them to return at any time should there be a change in circumstances.
If you need to place employees on furlough leave, in the first instance it would be advisable to have a meeting with staff and explain the reason for having to take such action, and follow up in writing with a letter to confirm their change of status to a furloughed worker.
At FTA Law we understand that this will be a stressful and uncertain time for your business, and we would be happy to guide you through the process of placing an employee on furlough leave. We are also providing a template letter informing an employee they are being placed on Furlough Leave. We are currently offering a COVID-19 Support Service at a significantly reduced cost to guide you through the difficult times we are faced with. Contact us on 0330 088 2275 or employment@fta-law.com for more information.
The team at FTA Law provides advice to clients across the commercial and healthcare sectors with many of our instructions coming from referrals from long standing clients and industry contacts.
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