Following the COVID-19 pandemic, if you need to lay off employees then, rather than laying them off you can designate them as furloughed workers. This enables you to continue the contract and claim 80% of their wages back from the Government in due course. There are a few matters to consider.
The first question is whether you have the contractual right to lay-off employees. If you do then the terms and conditions of employment document or written contract of employment will contain a lay-off clause.
The Government has suggested that you may need to re-negotiate contracts to allow for lay-offs and hence to use the designation of furloughed workers. Employees could resist what is, in effect, a variation in their contract. If you force the issue, then the employees in question could resign and claim constructive dismissal. It is important that you obtain their agreement to furlough. From a practical viewpoint, resigning would leave an employee without any income and a constructive dismissal claim would be very difficult for them to pursue in the current climate.
Resistance to an agreement may come from those for whom £2,500 per month puts them in financial difficulty.
However we suggest there are several reasons why an employee will agree to be furloughed. Please see this blog:
If you do have a lay-off clause then you have a prior agreement and that provides you with the opportunity to lay-off those employees and therefore to “furlough” them if you would otherwise lay them off. You must nonetheless obtain their agreement in writing if you wish to reclaim furlough pay later.
Some employers are funding the difference and making up the Government-financed portion to contractual pay.
If a lay-off runs for four weeks (or in certain cases 6 weeks), then employees may be able to claim redundancy and the appropriate payment. The Government has not yet clarified whether this would apply to furloughed employees.
Another short-term option:
Holiday is an entitlement, so you cannot necessarily insist that it be taken. However, if you give employees two days’ notice for every day you want them to take then you can require them to take holiday at a time of your choosing. You can furlough workers and still ask them to take holiday.
Updated 20th April 2020
*Please get in touch if you need any support with regards furloughed workers, we are advising employers on this process daily and have developed communication that can be sent to affected employees.
Malcolm Martin FCIPD
Author Human Resource Practice
Blogs are for general guidance and are not an authoritative statement of the law.