At this point in time it goes without saying that COVID-19 has presented of number of challenges to us all. However, several employers are trying to manage the financial toll that the pandemic is having on their business. In this regard, those who have prepared well in advance by consulting employment lawyers and drafting a series of policies to account for various scenarios, including emergencies, have been the least affected. Further, several businesses have been able to operate more or less as normal, with staff simply working remotely in order to implement the government’s advice of social distancing.

However, a number of industries have been forced into temporary closure in order to contain the spread of coronavirus, this was already the case prior to the government’s decision to close pubs, clubs, theatres, cinemas, gyms and restaurants on Friday 20 March which has accentuated this issues further.

Therefore, in light of these challenges, the government also announced a significant relief scheme on Friday which involves designating employees as ‘furloughed workers’.

What is Furloughing

Workers who are furloughed are not being dismissed or made redundant. The definition of ‘furlough’ is a mandatory suspension from work. Quite simply, an employee no longer carries out any work but remains on the company payroll. It doesn’t take an expert in economics to figure out how this could be detrimental to businesses, especially given that we are presently unaware of how much time will pass until all industries are up and running again.

What is the scheme

Under the new Coronavirus Job Retention Scheme, all UK employers, regardless of size or industry, can claim a grant from HMRC to cover 80% of furloughed employees wages, up to a limit of £2,500 a month for each employee. Employers have been given the option to top up the remaining 20% at their own discretion.

The scheme will be backdated to 01 March 2020 and will last for at least three months, subject to a review whereby the scheme will be extended if necessary.

The government has not yet published much written guidance on the scheme; and the ins and outs remain opaque. However, it has updated the COVID-19: support for businesses guidance and COVID-19: guidance for employees web pages to provide basic details in the meantime. What the government has made clear is that the scheme will apply to all employees on PAYE, including those on zero-hours contracts, and whilst HMRC are still working to set up the new system of reimbursement, the government hopes that the first grants will be paid within weeks.

What Should Employers Do

The first thing employers should do is review their relevant policies such as the working from home policy. Those who do not have such policies in place should learn significant lessons from this pandemic, namely, that is essential to consult a solicitor or have numerous policies in place should the worst happen. Businesses that have policies drafted have managed the crisis far more comfortably than those who did not or don’t.

Nonetheless, in relation to the scheme, employers will need to:

1. Decide which employees to designate as furloughed employees – this will vary from industry to industry, as well as business to business.
2. Notify those employees of the intended change to their status and agree this change with the employees; the majority of employment contracts cannot be varied by an employer without an employee’s agreement.
3. Consider whether you need to consult with employee representatives or trade unions, as there are numerous scenarios where an employer is under a duty to inform and consult such representatives or even notify the Secretary of State which could apply. Although it must be noted that it is not clear, whether the government expects employers to adhere to this process before placing employees on furlough leave under the current circumstances.
4. Confirm the employees’ new status in writing. Given the unprecedent unknowns of the current climate we advise employers to put employees on furlough leave for an initial period, subject to review.
5. Notify HMRC about the furloughed workers and their earnings through the new online portal.
6. Ensure that the employees do not carry out any further work while they are furloughed.

Should you require any more advice in relation to furloughing, the Coronavirus Job Retention Scheme or your businesses policies in general, please feel free to get in touch with us.

Finally, any advice arising from the issues relating to COVID-19 are constantly evolving, therefore you should always consult the latest directions from government websites, NHS, Public Health England and WHO before taking any action.