On Friday night, after a sad week of knee jerk dismissals and job offers being withdrawn, Rishi Sunak announced the Coronavirus Job Retention Scheme.
Is it the perfect solution? No. Are there questions about how it will work in practice? Yes. But it gives hope and without doubt the scheme is, as it is being described, a “safety net” for these times.
The Americans are more familiar with what a “furlough” is. I read that it comes from the Dutch word “verlof” which means “leave of absence” and this is what it is – a temporary leave of absence arising from an economic downturn.
So how do we get familiar with the idea of furloughed workers here? Immediate questions spring to mind. Who can be furloughed? Can employees choose to be furloughed? What will a furloughed worker be paid?
It’s about agreement
The starting point is that an employer can opt to furlough a worker and it is an employer-driven choice. There is no automatic right for an employee to a portion of salary under this scheme.
Affected employees will be notified about the possibility of being furloughed. Most of the time a change to the employment contract has to happen as not many employment contracts have clauses permitting employers to send employees home with no work and different pay.
But will there really be any other option for an employee faced with being furloughed or being made redundant? The furlough option is likely to be the more attractive of the two. It would make sense for employers to have the agreement in writing, so that there is no issue about unpaid wages.
Pay could be reduced
The government has said that HMRC will reimburse employers, through an online portal, for 80% of a furloughed worker’s wage costs up to a cap of £2,500 per month. This includes pension and NICs. Employees have to be sent home and not be working at all.
Can an employee look to have salary topped up to the full 100%? The employer can choose to do this but does not have to and again, employees may not be in a strong negotiation position here. Agreeing to 80% of pay rather than losing your job at a time when it could be very difficult to find another job would seem to make sense. It’s a way to stay employed.
We do not yet know how long the scheme will last for. It is set to run for at least 3 months and is backdated to 1 March. All UK businesses are eligible for the scheme.
Is it all or nothing?
It will be simpler when an employer decides to furlough its entire workforce. But what if that is not the case? How to decide who is furloughed and who is not? It is to be expected that a selection process would happen much like in a redundancy consultation where objective selection criteria are set. As with any employer decision about staff, consistency is important, as is avoiding differential treatment which can then raise discrimination issues.
Scams
There is already talk of scope for the scheme to be abused. What if businesses claim to have sent workers home when this is not the reality and they are claiming wages under the scheme whilst the employee does not know he or she has been designated as furloughed? This will need to be carefully thought through.
So a glimmer of hope in these challenging times at work. Watch this space as we get to grips with furloughs and the changing workplace.
For advice on employment matters, please contact Rhian Radia an expert from our Employment Team on 020 7631 4141 or email rradia@bishopandsewell.co.uk.
