The world has changed significantly over the last few weeks and businesses are facing huge challenges in coping with the effects of COVID 19.  Schools have shut, businesses have closed and people have had to self-isolate. This has put pressure on employers and brought the challenge of what to do with staff when work load drops. Employers and employees were faced with either being laid off with no pay or made redundant, both of which would have a significant impact on the economy. To address this issue and to maintain employment on at least some pay, the Government  announced its ‘Coronavirus Job Retention Scheme’ which is designed to cover some of the wages of employees who are temporarily sent home because there is no work & might otherwise have lost their jobs. This is called “furlough leave” and employees falling within this scheme will be designated as furloughed employees.

This is a temporary scheme open to UK businesses for at least 3 months starting from 1 March 2020 and will enable employers to claim for 80% of an employee’s monthly wage cost up to £2500 a month plus the associated employer national insurance contributions and minimum employer auto enrolment pension contributions. This scheme is open to all UK employers which had a PAYE scheme in place on 28 February 2020. In addition, furloughed employees must have been on the employers PAYE payroll on 28 February 2020. Those wage costs will be reclaimed via a payment from HMRC which will be accessed via an on-line portal. It is expected that the portal will go live at the end of April, though there may be more information or legislation published before this, on how to use the portal to make a claim.

Employers can only claim this money for employees who have been sent home and are not working. Once an employee is placed on furlough leave, they must not do any work for the employer at all and in order to claim, the furlough leave must be for a minimum period of 3 weeks. Employees are, however, allowed to carry out  training or to volunteer, so long as they do not provide services or generate any income for the employer.

In order to “furlough” employees, and in the absence of an express clause allowing for this (which is not the case in most employment contracts), employers will have to get agreement from employees to furlough them and pay them at a lower rate, whilst not working. However, given these extreme and unusual circumstances, and the alternative to agreeing, most employees are not expected to disagree.

Any employer making a claim under this scheme must be mindful not to discriminate against certain groups when offering this, for example, only offering to furlough male employees but not female employees. That said, although it may appear to be discriminatory to offer furloughed leave to those employees who are vulnerable or with health conditions, this may be justifiable, given the current circumstances. Given the detail of the scheme, employers should take legal advice on their specific circumstances to make sure that it is implemented correctly and they recover the wage costs.

Things are changing daily, so if you have any queries, please contact Moorcrofts employment team.