What is Furlough?
Furlough is not a term that will be familiar to those in the UK. It is a US term and is being used to describe the entirely new situation of the Government contributing to people’s wages if they can’t work from home due to pandemic measures and are not ‘essential workers’ (who should continue to go to work as usual). The scheme is known as the Coronavirus Job Retention Scheme (CJRS). Its aim is to prevent mass redundancies and a shock to the economy.
Here are the key features of furlough:
- The current contribution to wages is 80% up to a maximum of £2,500 per month.
- Emergency legislation means that the employer does not have to pay the 20% difference.
- Payments will be backdated to 1 March 2020.
- The initial period is until 1 June 2020, it may later be extended.
- The employer designates certain staff as furloughed using a HMRC portal, yet to be set up
Q Can the furlough rules be used for short-time working or just lay-off situations?
A Just lay-off situations. It’s awkward because some employers would prefer to have a reduced output and may still need employees to do some work, albeit on reduced hours. They may need furloughed employees to provide intermittent work. But these situations are outside the furlough rules.
Affected employees will not be considered as “laid off” and they will not be entitled to statutory guarantee pay. No contractual clause is needed to implement furlough.
There is usually no legal right for employees to be paid under circumstances of workplace closure, or if an employee is required to care for a dependent. However the government’s emergency measures mean employers can apply to have 80% of workers’ wages reimbursed by the government.
Q Do we have to be careful about who we select? For example, is it dangerous to pick and choose employees from the same category of employee?
A Kind of but the risk is slight. There is always the risk of discrimination claims when staff are treated differently.
As for the risk of resignation and unfair dismissal, we are not aware of any case where an employee has succeeded in showing that merely being treated differently breached the implied term of trust and confidence. The legal test is whether the decision was arbitrary, capricious, perverse or irrational. So it should suffice to create an internal note (that might be disclosed if there is a dispute) explaining why the decision was taken. Of course, this doesn’t guarantee that employees won’t bring claims that are unlikely to succeed.
Image used under CC courtesy of Kat Masback