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    Furlough but not fair well - what’s it all about?

    Furlough but not fair well - what’s it all about?

    As we know, last week the Chancellor, Rishi Sunek unveiled a further Government scheme to support people, jobs and businesses in light of the economic crisis brought about by Covid-19.

    The new ‘Coronavirus Job Retention Scheme’ will be available to all UK businesses to apply to HMRC for a grant to reimburse up to 80% or up to £2,500 of wages per month, for each employee who would otherwise have been laid off from work in full or otherwise made redundant. It is important to note here that these selected employees must not carry out any further work for the business for the period of their furlough (horrible word!) and only applies to those with continuity of service of a month or more.

    The employer will first need to designate the affected employees as “furloughed workers”. Official advice is that this should involve a meeting with the affected employees to discuss the proposed changes to their employment status, giving them reasonable notice of the implementation of the change, and informing them that they will be kept on the payroll. The reality is likely to be different – it will be a question of implementing the change immediately to avoid redundancy.

    It is understood that the scheme will be applicable for all employees on the PAYE system and on zero hour contracts. Where there are no ‘lay off’ or ‘short time working’ clauses within the contract of employment, the employer must seek agreement, preferably in writing with the employee that they will become workers for the purposes of receiving this grant. The reality again is a Hobson’s Choice for the employee of accepting the deal or losing their job.

    Currently, it is understood that employers will have discretion over whether or not to top up the workers’ salaries from the 80% grant in line with their normal salary expectation. In the first instance, they do NOT have to do so IF in the employment contract they have a contractual right to lay off an employee without pay. If there is no such clause, then the employer must seek agreement with the employee with regards the topping up payment, but once more in many cases it will boil down to a discussion over acceptance or dismissal. Ideally the employee should be made aware that they may be eligible for financial support through the welfare system, including universal credit, should they receive any reduction in their wages.

    As for applying for the scheme itself, we are told that the Government portal is being set up imminently for employers to submit required information regarding employee earnings. Where possible, employers should continue to pay their employees’ wages, at the agreed sum, and HMRC will reimburse the employers ‘within weeks’ and it is hoped ‘before the end of April.’

    If the employer business finds itself unable to pay the wages, and in need of short term cash flow, then they may be eligible for the Coronavirus Business Interruption Loan.

    Wages under the job retention scheme may be backdated to 1 March 2020.

    If you have any questions or queries arising out of the above information then please do not hesitate to contact one of the Employment Law Team who will be happy to assist.

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