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COVID-19 - Employment Law Update 1: Furlough Leave


The Government announced on Friday 20 March 2020 that they will be providing assistance to all UK employers to obtain access to financial support to help to prevent employees from being made redundant under the Coronavirus Job Retention Scheme.

In essence the scheme will allow employers to claim 80% of their employees’ wages from HMRC up to the value of £2,500 per month.  It is believed that this refers to take home pay but this is subject to clarification.  Employers would need to notify HMRC of those workers who have been classed as a Furlough Leave worker alongside information in relation to their wages via a new online portal.  At the time of writing this article the new online portal had not been created.

However it is important for employers to note that once the employer has identified the employees who could potentially take Furlough Leave they must notify the employee and subject to provisions in their employment contract this may well be subject to negotiations as it is unlikely that an employer will have a contractual right in the employee’s contract to do this.  An employee therefore has to agree to take Furlough Leave, however if there is a right to remove work in an employee’s contract then the employer will probably only have to notify the employee.

An employee is highly likely to accept the offer to take Furlough Leave as the other options that they may face would be redundancy; having to work reduced hours; or being made to take paid or unpaid leave.

In order for an employee to qualify under the scheme they must not undertake any work for the employer during their Furlough Leave.  This will allow the employer to obtain a grant from the Government of up to 80% for all employees’ costs including pension contributions etc.

There is not an obligation upon employers to top-up their employees’ wages under the government scheme and this is therefore at the discretion of the employer.  However, the employer must have a contractual right to withhold 20% of the employees wage and they must have the employees consent to do so.  An employer can protect themselves from having to pay the top-up 20% wage by presenting  Furlough Leave as a whole package of 80% pay and nothing more or the employee may face redundancy, short time working or unpaid leave as referred to above.

Disclaimer – The above facts are accurate as of 18:15 on 23 March 2020.

For advice on this, or any other employment matter, contact the litigation team on 01905 723 561 or email: Guy.salter@smesolicitors.co.uk or Sonia.ali@smesolicitors.co.uk.

Added: 26 Mar 2020 15:51


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