What does “Furlough” mean for employers?
Furlough is not a term that we would usually use in UK employment law and therefore there is no legal definition, so don’t worry if you have never heard the term before! It is a term that appears to derive from US labour law and means mandatory suspension from work without pay. We now know furlough to be a temporary leave from work for a specific period of time whereby the furloughed worker will not be able to carry out any work but will remain an employee.
On 20th March 2020, the Chancellor launched the Job Retention Scheme which is essentially a safety net for those employees who would have otherwise been laid off, made redundant or dismissed in response to the current pandemic. The Scheme offers employers a grant to cover up to 80% of the furloughed employee’s usual monthly wages (capped at £2,500). In addition the employer will be able to claim the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions. The Scheme will last 3 months from 1st March 2020 until 31st May 2020. This may be extended.
In order to take part in the Scheme, employers will need to be severely impacted by the COVID-19 pandemic and fairly select those to be furloughed i.e. all if there is no work or closure, or fairly select those who would have been laid off or made redundant. Employers would then need to agree the change to the status to furloughed with those employees and notify the employees once the change has been enacted. Steps to take:
- Select for furlough;
- Agree with employees – there are different ways of doing this and employers will need to act quickly;
- Notify employee in writing; and
- Keep a record.
For more information on Furloughing and The Job Retention Scheme please click here to view our FAQ’s.
Our Partner and Head of Employment, Kate Brooks, is available anytime to provide advice on The Job Retention Scheme and is offering a free initial conversation. If you would like to discuss your options with Kate please call our Employment Hotline on 01202 057754 or simply request a call back via email firstname.lastname@example.org.