COVID-19 – Laying off staff / ‘Furlough’ leave

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Government advice and guidance in response to the COVID-19 Global pandemic is developing on a daily basis. Employment Law is one of the areas most significantly affected by the ongoing changes.

 

The Government announced on Monday 23rd March that all non-essential retail outlets are to close with immediate effect, following the earlier imposition of similar restrictions upon places including pubs, bars and restaurants.

 

Many employers will now be questioning where this leaves them, both in terms of their own financial security, as well as for their workforce.

 

The Government is currently in the process of implementing the Coronavirus Job Retention Scheme – more information here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

 

The Scheme aims to subsidise the wages of those members of staff that would otherwise have to be ‘laid off’ as a result of the Government measures imposed. In summary, to access the Scheme Employers will need to:

  • designate affected Employees as ‘furloughed workers,’ and notify those Employees of this change (NOTE that in the absence of a provision in an Employee’s contract allowing an Employer to impose furlough leave, an Employee cannot be compelled to accept furlough leave, and their prior consent must therefore be obtained, both in relation to the leave itself, and in relation to any reduction in levels of pay)
  • submit information to HMRC about the Employees that have been furloughed and their earnings through a new online portal (HMRC have confirmed they will set out further details on the information required in due course)

 

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not yet set up to facilitate payments to employers. The guidance does state however that once the scheme is operational, payments claimed under the scheme can be backdated to 1st March 2020. At present it will run for 3 months from that date, subject to it being extended further if necessary.

 

It is up to the Employer whether they choose to supplement the remaining 20% of the furloughed workers’ salary, which is not covered by the scheme.

 

Our Employment Law team at Hewitts have prepared a template letter for Employers to utilise when contacting staff that have provisionally been selected for Furlough leave. Please email bengreen@hewitts.co.uk for your free copy. Please note however that this document will not be relevant to every situation, and must be utilised in the context of your individual circumstances (and in particular to the specific contractual provisions that exist between you as an Employer and your relevant Employee(s)).

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