As full details of the scheme are awaited, it would be unwise for employers to seek an employee's agreement to "furlough" them before the Government has published guidance and draft legislation on the scheme.
However, it is important for employers to communicate with worried employees and the reassurance of an initial letter is a good starting point.
On 20 March 2020, the Government announced the Coronavirus Job Retention Scheme to provide funds to support all employers with a PAYE scheme to continue paying employees who would otherwise be made redundant or put on an unpaid period of lay-off.
Under the scheme, if a worker is designated as a "furloughed worker", a grant will be available from HM Customs and Revenue (HMRC) to reimburse the employer for 80% of a worker's wage costs, up to a maximum of £2,500 per month. Payments can be backdated to 1 March 2020.
The Scheme is initially set to run until the end of May 2020, but the Government has said that the scheme will be extended if necessary.
The Government's guidance on support for businesses states that employers that wish to designate employees as "furlough workers" must "notify them of this change" and the change in status "may be subject to negotiation".
Unless the employer has a contractual right to lay off workers, it will need the employee's agreement to be placed on furlough leave. Similarly, the employee's agreement is needed to make a reduction in pay. However, it is highly likely that employees will agree, if the only alternatives are redundancy or unpaid leave.
During the furlough period, employees will:
A contract of employment is an agreement that exists between an employer and employee, and sets out terms such as employment rights, responsibilities and duties.
A verbal contract will automatically come into existence when a person accepts a job, but written contracts of employment will help businesses to protect themselves and reduce the risk of disputes or claims being pursued against them. While some believe that they can achieve greater flexibility without such contractual documents, this can in fact cause them serious difficulties further down the line when perhaps the relationship breaks down.
Pitfalls of ignoring your legal responsibility
In the UK, an employer is legally required to provide employees with a written statement of their terms and conditions, within the first two months of their start date.
While this is not a contract of employment, it can act as a summary of the information contained in the contractual document. It should outline essential terms and conditions, such as rate of pay, working hours, holiday entitlement and a brief job description as well as information on collective agreements, pensions and notice periods.
However, with effect from 6 April 2020 employers will be required to provide employees with their written statement of terms and conditions on the first day of work (rather than within two months) and this right will also be extended to workers.
Employers will need to review their recruitment processes and ensure employment contracts are being issued to employees and workers on or before their first day.
By failing to provide these statements, employers could face complications such as:
Drawbacks of having basic written statements
While providing employees with a basic written statement is the bare minimum a business is legally required to do, it is recommended that employers also have comprehensive contracts of employment in place.
Employers can choose to include information on their policies for computer and mobile phone use, smoking, outside interests, additional employment and expenses.
A clear and detailed contract of employment that outlines exactly what you expect from employees can help to safeguard your financial and business interests. With increased control over the terms and conditions, you can also reduce the possibility of disputes or claims being brought against your organisation. It is recommended that you regularly review and update these contracts, particularly when, for example, an employee has been promoted or your business has developed, in order for your business to remain up-to-date and properly protected from harm.