This is a follow-up article relating to the Coronavirus Job Retention Scheme.
What practical steps must be taken to put employees on furlough leave?
NB: Placing employees on furlough leave involves changing their contractual entitlements. You should consult a specialist HR professional before doing so.
- Decide which employees to designate as furlough employees;
- Notify those employees of the intended change;
- [Consider whether you need to consult with employee representatives or trade unions]
- Agree the change with the furloughed employees. You are probably not able to alter their contracts unilaterally (depends on the wording of the contract). Faced with the alternatives, your employees are likely to agree to being placed on furlough leave, however.
- Confirm the employees' new status in writing. Ideally, you should indicate how long you expect the furlough leave to last, though this may be difficult in the current climate. It might make sense to choose an initial period and review that period in good time.
- [Submit information to the HMRD Coronavirus Job Retention Scheme Portal - when it launches]
- Ensure that the employees do not carry out any further work whilst furloughed.
Do I have to top up the remaining 20%?
The official guidance states that ‘your employers could choose to fund the difference between this payment and your salary, but does not have to’.
NB - withholding this 20% will amount to a breach of contract unless the employee consents to the change.
Can employees request furlough leave?
They can, but you don't have to agree. You may decide to make them redundant instead, or to continue to employ them normally. Potentially-redundant employees may not demand furlough leave instead.
What do I say to my employees?
Start simply. These are unprecedented times. Open discussion (maintaining social distancing, of course) is the best starting point. Explain that you would like to keep their job available for them but that there isn't sufficient work.
Explain that the process involves them going on leave (they can stay at home and look after their families / school their children) and receiving 80% of their salary (or £2,500 per month gross, whichever is higher) without going to work.
[If you are going to pay the additional 20% (which you don't have to), or more if they are a higher-income employee, you can tell them this too.]
Explain that they will not be able to continue to work for you whilst on furlough leave. This isn't a way for you to cut the price of your workforce whilst keeping them employed.
The Government has produced helpful advice for employees:
If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.
To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.
If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
At present, the Scheme is due to last for three months from 1 March 2020 (after which time, the employee would return to work as usual at the beginning of June). The Chancellor has said this will be extended if necessary.