Most businesses are currently facing the challenging question of how to keep business moving forward and how to continue paying overheads, including employees’ wages, whilst their workload has reduced significantly or indeed stopped. So what options are available to employers, and what should employers consider in making these decisions? If you are going through a divorce, separation or having children issues, then we are here to assist you in an intelligent, constructive and non-confrontational way.
All non-essential businesses have already had to close their doors, seeing cafes, pubs, restaurants, cinemas, clothing shops and other non-essential stores no longer being able to trade face-to-face in their usual way. As businesses face unprecedented financial challenges, the government has stepped in to provide financial support for employees, known as Furloughed workers, who would otherwise have been made redundant. This support is available through the Coronavirus Job Retention Scheme and is available to employers who use PAYE payroll from the 19th March 2020 (having been extended from 28th February 2020).
To be eligible for the scheme, employers must notify their employees that they are to be furloughed. The decision to furlough should be fair and not discriminatory. Furloughed employees will then remain on the payroll but will receive a government subsidy of 80% of their wages. If an employer has already made an employee redundant, they may be rehired and put on furlough.
In order to furlough an employee, employers have to get permission from the employee unless there is a term in their contract of employment which allows the employer to make this change. Generally, employers cannot change the terms of a contract of employment without employee consent. Otherwise, this can lead to claims against the employer, such as constructive dismissal claims if an employee chooses to resign as a result of the change or contract breach. Therefore, it is important that employers speak with employees about how the business is being affected and why they are being asked to be furloughed.
It is recommended that any agreement that an employer reaches with an employee to be furloughed is recorded in writing. It is sensible to set out the time in which the employee will be furloughed, when this will be reviewed and how contact can be made with the employer throughout the furlough period.
Finally, employers should be aware that, whilst claims can be made to the government scheme for an 80% reimbursement of wage costs for furloughed workers, at the time of writing, this scheme is still in the process of being set up. Therefore, at the outset, the employer will be required to pay wages and claim these back once the scheme is active. Employers may be able to benefit in the meantime from the ‘Coronavirus Business Interruption Loan’ for short-term cash flow support.
For more information about the Coronavirus Job Retention Scheme, visit https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
O’Donnell Solicitors offer employment advice to both employers and employees. For further advice at this time, contact Suzzanne Gardener at email@example.com or on 01457 761 320.