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Employment

Furlough Agreements

Furlough Contract

Friday, April 3, 2020

Picture the scenario, the staff called together, and the MD says I’m terribly sorry, we’re going to have to close the business due to the CO-VID 19 pandemic but the good news is we can pay you 80% of your salary as we can reclaim the cost under the Coronavirus Job Retention Scheme (CJRS). The HR manager sends out a letter to staff confirming what the MD said. The letter may or may not offer a right of appeal. Are the staff truly on furlough leave? Can the company recoup 80% of their wages (up to £2,500 each)?

The answer is no. Why? Because the MD only made an announcement; the company doesn’t have the agreement of its employees. The guidance on the CJRS is that the employer and the employee must agree for the employee to go on furlough and for their salary to be reduced to 80%.

We can’t stress enough how important it is to have a written furlough agreement for each member of staff. If you don’t have a valid agreement, an employee can insist on receiving their normal salary and can bring a claim in the Employment Tribunal for unlawful deductions from wages. If there is no valid agreement the Government may recoup the furlough money paid to the employer. If the employee then wants to recoup that from the employee, it will be unable to do so without evidence of a valid agreement.

Written furlough agreements can also cover other things; such as prohibiting the employee from working elsewhere during furlough. Otherwise if the employee goes to work elsewhere, either with or without the employer’s knowledge or permission, there is again a risk that the government may seek to recoup any furlough money paid to the employer and the employer will struggle to recoup this from the employee in the absence of evidence of a valid agreement.

Written furlough agreements can also cover the tricky area of holidays during furlough leave. Is pre-booked holiday to go ahead? What do you pay them during holiday whilst on furlough? What if you want to require staff to take holiday during furlough?

We can’t stress enough how important it is to get a written furlough agreement in place. The good news is, we can help. We have a robust precedent furlough agreement that we will send to you for £75 + VAT (payment can be made through our website https://samuelphillips.co.uk/ hit the yellow banner at the top right of the page and use your company name as the reference). You can customise this to your particular circumstances. If you would like us to check it and amend it for you after you have customised it, we will do so for a further £75 + VAT.

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