Your legal position for ‘Furloughing’ employees and other staffing matters – COVID-19

26th March 2020 (Information correct at the time of publication)

You will have seen from government announcements and our email summarising the financial offerings from government that there is an opportunity for you to receive 80% of an employee’s wages back from government if you ‘furlough’ the employee and give them no work but continue to pay them at least 80% of their salary.

This seems a very good benefit but there is a very important point that you MUST address before you decide on this route. That is your legal ability to take such action.

The Government has been clear, this announcement does not create a legal right to place employees on furlough leave and does not apply to self-employed contractors. The employee’s status will continue to be subject to employment law. Put simply, unless your contracts of employment have a ‘Lay-off Clause’, which allows you to send employees home without pay, you need to proceed cautiously.

If you just send employees home because there is insufficient work, your employees should continue to be paid. If they are not paid or there is no contractual right to send them home in the absence of work, then you could face claims for the unpaid wages (breach of contract or unlawful deduction from wages claims) and potentially constructive dismissal claims at some point in the future.

If you don’t have the contractual right to place staff on temporary leave you will need their consent before you place staff on furlough leave or amend their pay. If you unilaterally place your employees on furlough leave, you run the risk of a constructive dismissal claim, (right now the risk of a claim may be low when the alternative is possibly the loss of their job entirely).

We use a third party company to assist us with our own staff matters as they are knowledgeable and cost effective. Due to the recent advice issued by the Government we have arranged for them to offer a free consultation to any of our clients who have employees. They understand that this is a testing time for you so we have put an action plan in place so that if you require support we can arrange this free consultation to discuss any issues you may have with your staff regarding sick pay, self-isolation, working from home or furlough issues.

If you would like to arrange for a meeting with a consultant via video conference call please contact us and we can put you in touch to arrange this.

 

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