‘Furlough’ was a term hardly known when Chancellor Rishi Sunak introduced it as an emergency measure to guide businesses through the coronavirus outbreak. The program – known as the Coronavirus Job Retention Scheme – is now live and is designed to help firms protect jobs and ease the strain placed on cashflow as a result of the enforced lockdown.
With increased pressures on cash flow, businesses will soon find themselves in difficulty without the ability to pivot, access government support and other forms of forbearance from banks and other suppliers.
Eligible businesses can ‘furlough’ staff and claim a grant from the government of 80% to cover the employee’s salary – up to a cap of £2,500 a month or £576.92 a week. An online calculator has been launched by the government to help understand what you may be able to claim.
To qualify, an employee must be furloughed for a minimum period of three weeks and they cannot do any work for their employer during that period. They can, however, access training resources and it is considered good practice for the employer to remain in contact from a well-being perspective.
The government has announced that once an application is approved it will take six working days to process payment. When the dedicated Coronavirus Job Retention Scheme online portal went live on 20th April, there were more than 140,000 businesses applied for the scheme.
As well as the scheme’s financial aspects, it’s important to consider legal implications. As a new concept under employment law there are considerations that must be made, such as how you select employees to be furloughed, and what implications there may be on contractual terms and conditions.
You should also consider the impact on workers not furloughed, such as an increase in their roles and responsibilities along with the emotional impact on both groups.
Employers should be mindful of employees who may not be in attendance at work during the consultation regarding furlough leave, such as those on maternity or long-term sickness.
The status of those employees does not change. These workers cannot be furloughed but can be furloughed once the period of maternity or sickness comes to an end.
For atypical employees working variable hours, additional considerations will need to be given. Analysis of past working patterns will need to be considered to determine the level of pay whilst they are furloughed.
James Leo, Partner & Head of Employment Law at The Wilkes Partnership Solicitors, comments: “There are many aspects to the scheme including others introduced since it was announced. For example, the scheme was initially due to end on 31st May but has now been extended to 30th June.
“Speaking to a lawyer will ensure that you, and your furloughed employees, are fully compliant with the scheme and do not fall foul of the regulations.”
The Wilkes Partnership has launched a COVID-19 resource centre to provide commentary on employment issues particularly relevant for businesses in these uncertain times.
It also offers a no-cost, no-obligation initial consultation to help you understand any issues facing you or your business so you can map out the best route forward.