Coronavirus: Job Retention Scheme

The Government has released new guidance for employers and for employees, in relation to the ongoing situation with coronavirus. Our Employment team provide some comments on the guidance below.

1. It is for the employer to designate affected employees to go on furlough so employees cannot decide that they should stay at home (unless self-isolating etc., of course). Employees might prefer to take 80% of salary (up to the cap but unfortunately the exact calculation of such 80% and the resultant cost to the employer is not clear at this stage) and remain at home. It is for the employer to decide or agree that an employee should be on furlough. Note that an employee on furlough is not to undertake any work; obviously, if an employee can work from home, the employer should facilitate that as soon as possible but in that situation the employer will continue to pay the employee as usual (or negotiate reduced hours or pay etc.) and that is outside the scope of the job retention scheme.
2. If the employer needs to retain some staff and decides to put other staff on furlough (or lay-off; neither are legally defined terms), the employer should be aware that they have a continuing obligation to act fairly towards all employees and should have fair and objective reasons for the selection.
3. The employer can choose whether to top up any furloughed employee’s salary or not. If the employer wishes to withhold the additional 20%, then that would be a variation of the employee’s terms of employment and the employer would need to obtain the employee’s express consent. If consent is not given, then enforcing a reduction in salary will be a breach of contract. However, in the current situation it is likely that many businesses will not be able to fund that 20% and if the alternative is likely to be redundancy, we consider that many employees are likely to agree to the reduction in salary.
4. The reimbursement relates to the worker’s “wage costs” which could include national insurance contributions, mandatory pension payments, etc. It is anticipated that more detail will be forthcoming very soon on this and how the 80% cap would work in practice.
5. The contract of employment of anyone on furlough is kept going which means that holiday pay would accrue (unless this is clarified to the contrary in due course by the legislation).
6. The scheme is not compulsory and does not prevent an employer from making redundancies if that is considered necessary, and some employers may wish to commence consultation or talk to unions.

The situation and the information available is rapidly changing. Please seek advice from your adviser or please contact Louise Grendon or Emma Clark using the below details.