Covid-19 Emergency: My Article in the Times Red Box: 'Time to Furlough? How Employers can get it right' (31/03/20)

This article was published in the Times newspaper's Red box on 31/03/20. As such, some information contained may be out of date.

 

From The Grapes of Wrath to Death of a Salesman, the story of the individual struggling for survival amid economic catastrophe has provided some of literature’s most searing tragedies. That explains the emotional resonance of the unprecedented steps taken by the government to guarantee the wages of the British workforce during the current crisis: preventing mass unemployment, securing livelihoods and giving the country its best chance of bouncing back when this is over.

The Coronavirus Job Retention Scheme will be backdated to March 1, in place for an initial three months and open to all UK employers that had a PAYE scheme in place on February 28. The eligible employee must also have been on the payroll by this date. Furlough must be taken in minimum blocks of three weeks which enables employers to rotate staff should they so wish.

For employers embarking on the process there are some critical points to bear in mind. “Furlough” is not a word used before in employment law but essentially means “a temporary leave of absence”. This is important. The furloughed employee cannot be working part of the time.

If they work for even one hour during their entire three-week furlough period, they become ineligible. But employees are able to undertake training or voluntary work so long as they do not provide services to, or make money for, their employer.

Unless there is an express clause in the employment contract, the employer does not have a unilateral right to require its employees to take the leave — which after all amounts to a potential reduction in wages which the employer has an option (but not an obligation) to make up.

So employers should seek agreement from their employees (which may be by collective agreement if the union organises in the workplace). Clearly, employees are likely to be prepared to agree at the present time if the only alternative is redundancy.

Although employers have a discretion over who they wish to furlough, they must take care not to discriminate. A blanket policy of requiring all managers to remain could disadvantage disabled managers who fear their extra vulnerability to the virus.

Equally, proposals to give short-term pay rises to remaining staff (to reflect additional duties they may be covering) could lead to claims from groups who felt that they had no choice but to take furlough, such as mothers with extra caring responsibilities like home-schooling. This makes consultation, flexibility and a fair selection process important.

The scheme has sensible protections in place for those whose earnings vary — for example, because they are on a zero-hours contract. Employers can claim for the higher of the employee’s earnings from the same month in the previous year, or from the employee’s average monthly earnings in the 2019/20 tax year. The word “wages” is treated more narrowly than in other aspects of employment law and does not include commissions or bonuses.

Finally, employees retain all their statutory employment rights during the period of furlough. Annual leave continues to accrue during the period as if the employee was working normally and can be rolled over into the next two leave years if it is not reasonably practicable to take it this year.

Overall, this is an extraordinary package of measures which gives Britain its best chance of recovery.

Laura Farris is the Conservative MP for Newbury. John Bowers QC is the principal of Brasenose College, Oxford. Both are employment law barristers at Littleton Chambers.