'Furloughed workers' explained - East Devon HR

  Posted: 25.03.20 at 12:11 by Sue Cockayne - East Devon HR

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In an ever-changing situation, how can employers choose the best option for the future of their business and their employees?

The Covid-19 outbreak has had an extreme impact on all our lives and whether you’re a business owner, employee or self employed you will be worried about your future and how to support yourself financially.

Over the last couple of weeks, the situation has moved quickly; initially clients were enquiring about how they might look to make staff redundant or arrange lay-offs; there was the option of short time working and this week, as an option to avoid mass lay-offs, we have the new option of “furloughed workers”.

To understand how to choose the best option for your business and your employees, you will need to understand what your options are and how this will impact financially on the business.

You will want to check what your employment contracts say - is there a clause in the employment contract to give you the right to reduce hours if the work of the business reduces?

There may be specific reference to short time working or a “lay-off” clause and this means that the employers can implement a reduction in working hours or a period of time when employees are “laid-off”.

Both these options have a financial aspect and the right to “guaranteed pay”. For more information about these payment visit the Government’s website.

This week the option of “furloughing” was put forward by the Government; this is not a phrase familiar in the UK but is more commonly used in the US. The option to designate employees as “furloughed workers” comes under the Coronavirus Job Retention Scheme.

At this stage all the details are not in place, but it appears likely to be a reimbursement scheme which can be claimed through HMRC.

Under the Coronavirus Job Retention Scheme you will be able to designate affected employees as “furloughed workers”.

Those workers will remain as your employees and will not be able to do any work during the time they are furloughed, either for you or anyone else; they will continue to accrue holiday, pension etc.
Where you don’t have the option for this in your employment contracts; it will be vitally important to present the options to your employees and consult with them to gain their agreement.

On the face of it, the option to receive 80% of pay instead of Universal Credit or Guarantee Pay would look to be an attractive one for employers and employees alike – as an employer explaining the options so that employees can understand what it means for them, will be key.

In a short article it is challenging to explain all the detail and the best way to implement these options; there are excellent resources available using this link.

It is advisable for employers to take expert advice. If you need further advice and support, please contact East Devon HR here or call Sue on 07989 237057.

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