One of the biggest economic impacts of Covid-19 is the high risk of widespread job losses. Organisations are experiencing significant drops in revenue and, unfortunately, for many businesses, making redundancies is a logical first step to protect cashflow and help secure company survival.
The Government’s Coronavirus Job Retention Scheme (CJRS) is designed to avoid job cuts by helping businesses pay staff wages.
Here’s five key things to know about furlough.
Furloughed
The CJRS is open to any workers at risk of being laid-off and employees enrolling on the scheme are known as furlough workers. Once they join the scheme, an employee remains on business payroll, but will be unable to actively work for the business. However, they can still take part in training and personnel development tasks whilst they are in the scheme.
Pay and payroll
The CJRS will pay 80% of an employee’s wages, capped at £2,500 per month. A company will pay furloughed workers via the usual payroll processes and then claim money back from the Government. Employers need to be registered for PAYE Online to do this and will also require the National Insurance number for each employee they are claiming for.
Timings
The scheme opened from 1st March 2020 for an initial four-month period. Businesses can make claims for any furloughed workers provided they were already on payroll on or before 19th March 2020. This also means organisations have the right to consider reinstating and furloughing any employees who’ve been made redundant due to Coronavirus business disruption.
Contractual terms
Unless a business decides otherwise and makes agreements with employees, there’s no requirement for furlough to change employment terms beyond adjustments to salary and PAYE. Furloughed workers will still be entitled to accrue holidays and take annual leave during the furlough period, as per the usual terms of their employment.
Clear communications
Employees, as with any change to employment contracts, have the right to refuse to be furloughed. Organisations should clearly explain to employees how their business is being impacted by Coronvairus, the risk this presents to jobs, measures they’ve taken to protect the business and how furlough is intended to help secure employment in the long-term. This will help in negotiations with staff and their acceptance of being furloughed. Businesses should then maintain regular communications with furloughed workers to keep them updated about how the business is adapting, and what this means for jobs. Businesses should also confirm furlough in writing to employees.
Emma Swan is head of commercial employment law at Forbes Solicitors.
