This post is updated to 12:00 25/03/20
‘Furlough’ of Employees who are not Working due to the Coronavirus Restrictions.
In Summary, this relates to:
PLEASE NOTE: YOU MAY NOT WISH TO SOLELY RELY ON THIS ADVICE. YOU MAY WISH TO HAVE YOUR OWN LAWYER AND / OR HR SPECIALIST TO ALSO REVIEW and GUIDE YOU AS THIS RELATES TO EMPLOYMENT LAW
An employee furlough refers to a temporary leave or modification of normal working hours for a specific amount of time. It’s a leave of absence given to an employee with the promise that they will still have their job once the leave is over.
Employee furloughs are becoming common practice in both public and private sector organisations. There are numerous reasons why employers implement a furlough employee policy – in this instance it is due to reduced demand due to COVID-19.
An Employer should not rush into implementing an employee furlough policy without talking to your lawyer or HR specialist first.
Government guidance advises of the following steps to be undertaken by employers in order to obtain a CJRS grant:
If you decide that putting employees on furlough is the best option for you and your employees, then you need to prepare a notification letter. Your furlough notice letter should contain the following:
If you wish an example of a furlough letter please contact us via this Web-site or email@example.com
The CJRS will allow UK employers to apply for grants to reimburse Employees for up to 80% of the salaries of furloughed workers.
We will update you once the government confirms whether this means £2,500 a month before or after tax. Our understanding is that the CJRS will run from April 2020 (date to be confirmed) but will be backdated to 1 March 2020 (such that anyone who has been laid off since 1 March and has not left the business under redundancy can be caught by the scheme) and is expected to run for at least 3 months.
The current guidance around the CJRS talks about “reimbursing” employers for wage costs. Therefore, our expectation is that employers will need to pay their employees at least 80% of their normal wages during any lay off period and then they apply for a grant which will reimburse them. This means that employers are likely to have to deal with cash flow issues in the interim. (Note the availability of the Coronavirus Business Interruption Loan which may be of assistance.)
As always, we are happy to answer any questions you may have. Please feel free to contact us.