Furlough Arrangements – Employers Take Care

We still do not have a full picture from the Government as to exactly how the Coronavirus Job Retention Scheme (the furlough scheme) will work. However, it is clear that “ordinary” employment law will continue to apply if an employer wants to implement the scheme.

It is very clear that the employer and employee must agree that the employee will be on furlough. This might be covered in the existing employment contract but, if not, it might not be enough for an employer to write to staff to confirm that they are on furlough, if there is no evidence of an agreement with those staff.

Ultimately, in the urgency of the times, it might be sufficient to have an employer’s letter confirming the furlough arrangement, but the available guidance is that an employer should ensure that it has the agreement of each and every employee who is to be put on furlough. This might not be practical or achievable, but it may subsequently help if the employer can show that it tried.

Twenty affected employees is an important threshold. If twenty or more employees are put on furlough without getting agreement and one of them complains to an Employment Tribunal, the employer risks a protective award. This could be 30 days’ pay for every employee on the payroll (and not just those being furloughed). The protective award can be given regardless of whether an employee ultimately loses his or her job in connection with this.

Remember also that sending an employee home and denying the employee the right to work, along with paying a reduced salary (even in line with the furlough scheme) can be a fundamental breach of the employment contract.

We are advising therefore that it makes good business sense to consult with staff if at all possible and to bring them along with you. Experience suggests that employees will agree to accept changes in order to save their jobs in an emergency and that going through some extra legal hoops at this stage can save money and stress in the long run. We have straightforward draft documents available that can be used to deal with these points. If your furlough arrangements have already started and you think you may have missed one of the steps, it is worth trying to remedy the position now. If employees have given their agreement by the time the employer approaches the Revenue for indemnity, the timing of the agreement is likely to be less of an issue than failing to get agreement at all.

Clare Richards and Dermott Thomas

Clare Richards is a solicitor and partner, specialising in corporate law in the Business Services department at Barker Gotelee, Suffolk business solicitors.

Dermott Thomas is a solicitor and partner, specialising in litigation and employment law in the Business Services department at Barker Gotelee, Suffolk business solicitors.

Barker Gotelee are continuing to offer a full range of legal services in Ipswich and beyond. For more information, please call the team on 01473 611211 or email bg@barkergotelee.co.uk