COVID-19 and your job: Furlough – The Basics

In our second post of the week we will look at the furlough scheme in outline.

My employer says I must go on ‘furlough’; what does this mean? 

‘Furloughing’ is the term which is being used to describe the effect of the Government’s Coronavirus Job Protection Scheme. Under this Scheme, subject to some conditions, employers can claim a grant to cover 80% of the salary (or a maximum of £2,500 per month) of any employees who are told they are not required to work owing to COVID-19. 

One of the conditions is that they notify the staff affected in writing which is why employees will receive a letter or email saying that they are being ‘furloughed’. 

Do I have to go on furlough? 

In the majority of cases you cannot be obliged to go on furlough.  

In some industries it is common for your contract to contain a clause which allows your employment to lay you off temporarily where there is no work. If that is case then your employer may exercise that right (or a similar right to reduce your working hours) and you cannot object. There is a right to claim a very modest payment if these provisions are implemented but they fall far short of the 80% promised under the furlough scheme. 

Mostly however, your contract won’t have such a clause in which case you can only be ‘furloughed’ if you agree. 

Brilliant! So if I refuse I can stay at work and be paid in full? 

Sadly, almost certainly not.  

The whole point of the scheme is the recognition that because of COVID-19 nearly all businesses have had to cease trading temporarily or are seeing business considerably reduced. As a result, those businesses would almost certainly have to cease trading altogether if they had to keep paying all their staff but without any income. 

If the business collapses then all employees will probably lose their jobs. Even if the business can formulate a survival strategy the downturn in business is a legitimate reason to consider making some staff redundant. 

In short, the message you are likely to receive is that unless you agree, you will be made redundant. Faced with that choice, going on furlough may well seem very attractive. 

But there is still work to be done. Why should I be made redundant?

he underlying principles of employment have not changed. Therefore, if an employer is considering redundancies, it must consult and must select those being made redundant fairly.  

Individual circumstances will be different for everyone but the reality is that is not easy to challenge the process and the selections unless there is clear evidence of unfairness. 

Provided the employer has a rational (and non-discriminatory) approach a Tribunal is very unlikely to be able to rule it out as being unfair. 

What is more, in the current situation, employers are likely to be given a good deal of leeway if they have had limited consultation perhaps over a very short period. The word ‘unprecedented’ is in danger of being over-used but it will feature high on employers’ list of reasons why they acted quickly. 

OK then, but if I go on furlough what about the missing 20%? 

Somewhat misleadingly, the Government has told employers that they are not obliged to top up the extra 20% (or more for those earning more than £2,500 per month).  

Arguably this is bad advice because, as noted above, nothing has changed basic employment law and this is clear that your employer is obliged to pay you your agreed salary. If this is not paid you may treat it as constructive dismissal and/or bring a claim for the unpaid amount. 

The only way an employer can avoid this consequence is by reaching an agreement with you effectively to reduce your salary so that  you are only entitled to the 80% (or £2,500 per month).  

Brilliant! So if I refuse I can be paid in full? 

Once again, the legal principle risks being undermined by practical reality. 

It is true that if you refuse, you will be entitled to be paid in full. However this may be for a limited time because, in all likelihood, if you refuse, your employer will dismiss you. 

This is the ‘nuclear’ option when an employee declines to accept a variation of their contract and in this situation is relatively risk free.  

First, an employer has a reasonable chance of justifying the dismissal if the changes were needed for a legitimate business reason. In these ‘unprecedented’ times (I told you … ) when the 20% may make the difference between a business surviving or failing, this may well be the case. 

Secondly, even if the dismissal was considered to be unfair, the loss flowing from it is fairly low. There will be a basic award which is the same as a redundancy payment and so not huge. There may be a claim for loss of earnings (assuming you don’t find another job) but this will be limited to the missing 20% as you would have been able to continue in post for 80% so that is all you have lost. 

Once again, while in theory it is a negotiation your options are fairly limited and it will be prudent to consider carefully the consequences of refusing. 

So I just have to accept what I am offered then? 

Not entirely. Any agreement should be clear about how long it will apply for e.g. it should be a temporary measure and not a permanent change. Some employees are having due bonus payments withheld and here too agreements need to be clear e.g. ensuring payment is only deferred and entitlement to the bonus has not been lost altogether. 

In short, if there is anything you are not clear about when you get a notice you should take some advice and resist agreeing anything until you are happy the arrangements are clear.  

It is inevitable that a scheme introduced urgently was unable to consider every possible permutation in advance so it is feature of the scheme that the guidance has had to change and become more complex as time has passed. As a result many employers are themselves confused and you may receive conflicting information. 

It is true that your bargaining position is not strong given the climate but, as noted above, the critical thing is not to agree anything unless you are very clear about what it means.  

A link to the current employee guidance document is set out below but if you are concerned about any point then do get in touch for advice. 

Employee’s Guide:  

https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme 

For more information please contact Nick Hanning – nha@anthonygold.co.uk

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*