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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 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. Therefore, we recommend that you obtain their agreement. 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. A reduction to 80% of wages might even be considered a fair variation in the contract and therefore not a dismissal or as a fair dismissal for sound business reasons.

For these reasons we suggest an agreement should be attainable.

Most resistance to an agreement is likely to come from those for whom £2,500 per month puts them in financial difficulty.

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.

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.

*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.