More FAQs: Employment Law and the Coronavirus

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By Richard Gvero, Joint Senior Partner, Head of Commercial and Employment

More frequently asked questions and their answers about the employment of staff during the coronavirus pandemic.  Richard Gvero offers some clarity around questions concerning furlough, sick leave, maternity leave, annual leave, redundancy, notice periods and hours.

Employment and furlough FAQs

Do I have to place all of my employees on furlough, or can I be selective?

No. It is clear that the Treasury does not envisage an all or nothing approach. Some employers will need to maintain a skeleton staff even if the majority of their operations are shutting down. Some will only need to send a relatively small proportion of their employees home while other parts of the business carry on almost as normal. It is clear that employers and employees will be able to benefit from the scheme in either scenario.

Can we change which employees are furloughed at any one time – can an employee be furloughed, brought back to work and then furloughed again?

The guidance makes it clear that the minimum period for which an employee may be furloughed and take advantage of the scheme is three weeks. However there is nothing to suggest that an employer cannot rotate staff in and out of the furlough scheme provided that each rotation is at least three weeks long. This not only allows the employer to focus on those areas of the business that need attention at any one time, but also allows a fair distribution of work and leave among employees.

Can we place sick employees on furlough or do we have to keep paying them SSP?

There is some inconsistency between the different documents the government has issued. The HMRC guidance suggests that an employee can be converted from sick leave to furlough. But the Treasury Direction states that an employee cannot be eligible for furlough if they are in their first period of entitlement to SSP. We do not yet know which position the government will end up adopting.

Could someone return early from maternity or adoption leave to benefit from the furlough scheme?

It seems that they could. The operation of maternity and other forms of family-based leave is unaffected by the furlough scheme. An employee on maternity or adoption leave can return to work early provided she gives the employer eight weeks’ notice of the early return (or shorter, if both sides agree). The employer would then be free to place the employee on furlough from the date of her return. Employees should bear in mind, however, that the employer is not necessarily obliged to place them on furlough and may instead find work for them to do.

The furlough scheme does not pay all of an employee’s salary – do I have to top up their pay to the full amount?

The guidance says that this is voluntary – but it is in reality a matter for the contract of employment. For most employees on a salary, or with a guaranteed minimum number of hours the employer remains obliged to pay the employee in full if it is not in a position to offer work. To that extent the furlough scheme subsidises the employer’s wage cost but does not replace the obligation to pay wages.

If there is a clause in the contract allowing the employee to be laid off without pay then the payments made under the furlough scheme will be in addition to the employee’s contractual entitlement and there will be no obligation to top up the employee’s pay to the full amount.

This means that even with the benefit of the furlough scheme the employer may be facing a substantial contractual obligation to employees for whom it can provide no work. One option is to agree a temporary reduction in salary so that the amount paid by the furlough scheme represents the full amount to which the employee is entitled. The employer could make the employee’s consent to such a change dependent on the employer designating them as furloughed rather than making them redundant.

Can I reduce the hours that employees work?

This depends on the terms of the contract. The more important question (see below) is likely to be whether an employer is able to reduce the pay of an employee who has been given fewer hours to work. Very few employees will actually have a contractual entitlement to work a full working week provided that the employer is prepared to pay them as normal. Where the employee’s reward package is dependent on commission or a bonus paid on output then there may be an argument that the employer is in breach of contract if they do not give the employee the chance to work a full week. In the circumstances of the current crisis however, there must be a strong argument that it would not have been possible to earn much commission anyway.

What does a reduction in hours mean for pay?

A salaried employee whose hours are reduced will still be entitled to be paid in full unless he or she agrees otherwise – perhaps as an alternative to redundancy.

Can I instruct employees to take annual leave if I cannot offer them work?

Under the Working Time Regulations an employer can instruct a worker to take annual leave by giving notice that is at least twice the duration of the leave that must be taken. So if the employer wants the employee to take two weeks’ of annual leave entitlement then it must give the employee four weeks’ notice of this. There is of course nothing to stop employers and employees from agreeing that any given period without work should be treated as annual leave – although the terms of the furlough scheme will reduce the incentive to reach agreements of this sort.

Can I instruct employees to take annual leave while they are on furlough?

Nothing in the guidance so-far published by the Government would seem to prevent this. However an employee forced to take annual leave would normally be entitled to be paid in full for that period rather than at the capped figure provided for in the job retention scheme.

What about if they are off sick or self-isolating?

It is well established that a worker cannot be forced to take annual leave while off sick.

How do I stop too many employees taking what is left of their annual leave later in the year?

The Government has amended the Working Time Regulations to allow employees who have been prevented from taking their basic four-week annual leave entitlement to carry over that leave for up to two years. Where it is not reasonably practicable for employees to take their full entitlement this year, therefore, they will be able to defer their remaining leave to next year. The additional leave of 1.6 weeks must still however be taken in the current holiday year.

The Regulations also make it clear however that the employer can only defer the employee’s request to take annual leave where it has ‘good reason’ to do so. While a rush in demand for leave towards the end of the year may well satisfy this requirement, the employer should make every effort to accommodate requests for leave where possible.

Does the prospect of the furlough scheme make it unfair to make employees redundant?

It will certainly be a relevant consideration. There may well be circumstances in which any reasonable employer would conclude that the job retention scheme means that there is no need to make employees redundant. The extent to which the employer could recover its wage costs by placing employees on furlough will certainly affect the reasonableness of any decision to proceed with redundancies.

The job protection scheme does not in itself protect employees against redundancy. Nor does it cover all of the costs associated with employing somebody. In the absence of an agreement from an employee to accept the sum provided by the scheme for the duration of the furlough, and depending on the terms of the contract, the employer of furloughed employees could still be facing considerable costs.

It would seem likely however that an employment tribunal would take the view that a reasonable employer would at least explore the options presented by the scheme and whether an employee would accept the associated drop in pay for the duration of the furlough before concluding that employees should be made redundant. While the scheme itself does not require employers to take part, it is difficult to see why an employer would refuse to at least consider doing so and discuss the matter with employees who would otherwise be made redundant.

Can employees be furloughed during their notice period?

There is nothing in the scheme to prevent this.

Can a furloughed employee still claim a redundancy payment if laid off for four weeks or more?

No. There is an incredibly complicated procedure under which an employee who is laid off without pay can claim a redundancy payment after four weeks when there is not likelihood of a return to normal working within the next four weeks. To qualify, however, the lay-off in question must be unpaid. Since furloughed employees will be paid up to 80 per cent of their wages, their period of furlough will not count as a lay-off under the statutory procedure for claiming a redundancy payment.

Contact Richard Gvero if you need employment advice for yourself or your business due to the coronavirus crisis.

Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.