Most of us are now familiar with the basic concepts and rules of the Coronavirus Job Retention Scheme (Furlough Scheme), but over the last few months I have found myself answering a number of trickier questions on a regular basis. One of these being – can an employer place an employee on furlough leave for just for their holiday and then bring them back to work as soon as their holiday is over? To date, I have been advising that I felt that such a ruse may amount to an abuse of the scheme but that I could not advise for certain. On 1 July 2020, the Guidance was updated – please find the answer and along with the answers to a number of other trickier questions here:
Can you make an employee redundant while your business is still able to benefit from the furlough scheme? – Yes
While there has been much speculation, that the Coronavirus Job Retention Scheme can only be used for the “retention” of jobs, the Guidance expressly states “your employer can still make you redundant while you’re on furlough or afterwards”. In these circumstances, there is no doubt that an employee can be made redundant while on furlough leave and you will still be able to claim the grant for that employee’s wages.
However, this does not mean that all redundancy dismissals will be fair; an an employer is still obliged to consider all reasonable alternatives which might include keeping an employee on the scheme for longer, as opposed to making them redundant. My personal view is that a dismissal is extremely unlikely to be held to be unfair simply because there was the option to keep the employee on furlough. While an employee is on furlough leave, they will continue to accrue holiday and will accrue longer continuous service which could increase their entitlement to a redundancy payment. In these circumstances, I am fairly confident that a dismissal will not be held to be unfair on this basis alone.
Of course, redundancy is not without risk. An employer will need to ensure they do not just select those on furlough leave (such an act could amount to indirect age, disability and/or sex discrimination because of the typical make-up of furloughed employees) and of course, you will need to follow a fair procedure, ensure you have identified the pools correctly, and then fairly applied objective criteria.
If you are considering redundancies, we have a number of fixed price packages available designed to support businesses and keep costs to a minimum during this periods please see here.
What notice will an employee be entitled to while on furlough leave?
An employee will be entitled to the higher of either their statutory (one week for each year of service) or their contractual notice entitlement. However, there is a strange quirk of the law which suggests that any employee with at least one week’s more contractual notice, than their statutory entitlement, will only be entitled to their 80% furlough pay during any period of notice, whereas an employee whose statutory notice is equal to, or higher than their contractual notice, will be entitled to full pay for any period of notice while on furlough leave. Yes it is a little confusing, please do call us if you want to discuss this further.
Can an employee be required to take holiday while on furlough leave, and if so, how much should they be paid?
Yes an employee can be required to take holiday while they are on furlough leave, providing the employer serves at least twice as much notice, as the period of holiday e.g. if an employer wished an employee to take 5 day’s holiday, they would need to give the employee at least 10 day’s notice to take said holiday.
Any period of holiday should be paid at 100%, so employers will need to top up any furlough pay.
Do Disciplinary and Grievance proceedings need to be paused if an employee is on furlough leave? – No
It is clear that attending such a hearing, will not be deemed as “undertaking work” and therefore an employer will still be entitled to claim the grant for an employee who attends such a meeting. ACAS have also published Guidance on handling these hearings, which is another solid indication that it is fair and reasonable to conduct the hearings. Obviously, public health guidance must be adhered to, and it may be sensible to offer a video hearing (albeit this can raise other concerns around privacy) as an alternative. However, rather unhelpfully, the ACAS Guidance provides that participation must be voluntary. The truth is, each situation must be assessed on it’s own facts, and it is probably worth taking advice if you are thinking of inviting a furloughed employee to either a grievance or disciplinary hearing.
How much notice should an employer give employees that they are required to return to work from furlough leave?
If you specified a period of notice in the furlough agreement, then you should give that amount of notice. If however, your agreement was silent on this point, then the appropriate notice will be whatever is reasonable in the circumstances and again, will be fact specific.
Do you need a fresh furlough agreement if you wish to continue to furlough employees beyond 1 July?
If you are going to bring an employee back on a flexible furlough arrangement, or re-furlough an employee who has been back at work following a previous period of furlough leave, then yes you will need a fresh agreement.
However, if you are merely continuing to furlough an employee for all of their contractual hours, then it seems very unlikely that a fresh agreement will be required, unless the original agreement specified an end date which has since passed. I say this because nowhere in the Guidance does it expressly state that you will need a fresh agreement for this situation, and it would cause chaos if the Government were to now come out and suggest that such an agreement should have been in place by 1 July 2020.
Can an employee undertake different hours on different days as part of a flexible furlough arrangement, and if so, is a new agreement required each time the hours are varied?
Yes – an employee can undertake different hours or work on different days under the flexible furlough scheme, but no, you do not need a fresh agreement each time the hours are varied. Well, I say no, that will depend upon the construction of your flexible furlough agreement. If you draft your agreement so that it makes it clear that the employer can set the hours each week, that will suffice.
Can an employer place an employee on furlough leave just because they have taken holiday? – No
The Guidance was updated on 1 July 2020 to clarify this point and now expressly states:
“Employees should not be placed on furlough for a period simply because they are on holiday for that period. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.”
This does not mean that an employee cannot be on holiday during a period of furlough leave, or that an employer cannot furlough an employee for a period which includes a period of pre-booked holiday. The new provision is to prevent employers abusing the scheme and claiming the grant every time an employee books a holiday.
If you have any questions around furlough, flexible furlough, reluctant returners, redundancies or perhaps even something unconnected to COVID-19 (that would be nice) please contact James Twine on 01752 292351 or email firstname.lastname@example.org
Partner, Solicitor, Head of Business Services