Apr 2020


Coronavirus Job Retention Scheme: What are the employment law issues?

The Coronavirus Job Retention Scheme allows employers to access financial support to continue paying part of their employees’ salary that would otherwise have been laid off due to COVID-19. Essentially, it’s a way of preventing layoffs and redundancies.

If you have any employees who have been placed on a leave of absence, they would be considered a furloughed employee. Changing the status of an employee to a furloughed worker remains subject to existing employment law. Earlier guidance said you had to give employees notice of being placed on furlough. Most recent guidance stated that you have to provide written notice and you must keep a record of this for 5 years.

BrightPay have put together a template letter that employers can use to give to employees that are being placed on furlough leave.

Generally, where an employee’s contract contains a layoff or short term clause, employers should be able to place employees on furlough leave. However, where there is no such clause, it is best advised to get agreement from the employee. Where employers are not topping up the 80% government payment, employers should write to their employees seeking agreement from the employee, as a 20% reduction in salary will be a change to the terms and conditions of their employment.

Given the current situation, it’s expected that most employees would agree to the changes, as the alternative probably works out worse for the employee. That said, employers are advised to get agreement from their employees as part of their furlough leave process.

On another note in relation to employment issues, if an employer is making a decision on who to offer furlough to, equality and discrimination laws apply in the usual way.

Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment, i.e. redundancy. Any redundancies at the end of this scheme will still have the same statutory obligations attached, as these individuals are still treated as being employed while they are furloughed.

Additional Resources:

Join BrightPay for a free COVID-19 webinar where we discuss what you need to know about remote working, processing SSP, the Coronavirus Job Retention Scheme and placing employees on furlough leave. 

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