Loudshirts Blog

Talk Before Actioning Covid Furloughs – Or Pay The Price

The decision by the government to reimburse employers 80% of the pay of staff* who have been laid off – or furloughed – because of Covid has attracted widespread support.  And so it should.  It is an unprecedented intervention in the labour market, designed (along with other measures) to keep people in work and business from going bust. But then Covid is an unprecedented challenge.

However, the emergency nature of the Coronavirus Job Retention Scheme (CJRS) doesn’t over-ride basic employment law or common sense.  Employers who are unilaterally sending staff home and relying just on the 80% rebate (in other words, not topping up the other 20% of salary themselves) will find themselves in trouble.  So too could employers who do top up.  Here’s why.

Let’s take as our example an employer whose business has collapsed because of Covid.  No sales, no income coming in, no customers or clients.  The furlough scheme is designed to help this employer to keep staff employed rather than make them redundant.  But there are conditions.

If you are furloughed, you can’t do anything to generate income for or otherwise assist your employer.  You are absolutely out-of-the-loop.  You also can’t be part-furloughed, say by working reduced hours.  This is a straight “in” or “out” situation.  If you are furloughing some of your staff and not others, you mustn’t unlawfully discriminate in how you make your choice.  And the choices you make don’t by-pass specific consultative requirements should furlough turn out to be a precursor to redundancy.

So far, so clear.  But if you furlough someone, and cut their pay by 20%,  that is a very explicit change in their terms of employment.   As an employer, you don’t have licence to unilaterally do that sort of thing, Covid or no Covid.

That’s where talking before acting – aka consultation –  is vital.  You need to seek agreement for the action you are taking  – and that agreement could be with-held by an employee (admittedly with probably stark consequences in terms of job security).  But in any event,  the employer’s duty of care  (established by the 1974 Health and Safety at Work Act is undiminished by the CJRS so you need to check on and with staff. Otherwise, how will you know they are ok, or of any particular needs/concerns.

The value of consultation and that duty of care comes into play even if staff are being sent home on full pay.  If there is no loss of pay, the employer has more latitude, up to a point.  In normal times, requiring a staff member to stay at home on “gardening leave” would be uncontroversial.  Strictly speaking Covid makes no difference.  But of course, lockdown, social distancing and the uncertainty of how long this will last for makes that duty of care so much more poignant.

Effective consultation,  both individually and collectively has always been important.  Never is that more so than now.

*up to a maximum of £2,500 a month

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