Furlough and contract of employment requirements

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Following up on the Chancellors announcements on Friday we have been in touch with our HR experts seeking advise in relation to the rules surrounding potentially furloughing staff and the impact this will have from an HR / employment contract perspective. We are delighted to be able to provide the following information but please do note, in this fast changing environment we strongly advise seeking your own expert independent legal / HR advise specific to your circumstances to cover all bases.
Check out our blog on the chancellor announcements on Friday and the specific rules surrounding furloughing staff and eligibility criteria, the link is provided below:
What if I want to furlough staff?
The employer will need to be looking  at mutually agreeing this change with employees.
Is this enforceable?
If the employer has a clause in the contract/handbook which allows for the employer to either introduce lay off, or short time working, then the answer is Yes. No consent is required.
What if there is no lay off clause?
If you do not have a temporary layoff/reduced working hours clause within your employment contract you do not have the contractual right to impose the temporary layoff/reduced working hours/furlough, therefore you would have to either send staff home on full pay, look to terminate employment for those with less than two years’ service due to the downturn in work or make redundancies.
There are, however, three ways you can look to introduce the temporary layoff/reduced working hours/furlough:
1)            The quickest and most ideal way is with the express agreement of the employees. The employer should sit down with all possibly affected staff and explain to them that you are proposing to introduce a temporary layoff clause into the contracts, what this means and the reason why you are trying to do this i.e. safeguard the long term future of the company / business and their employment. This should ideally then be followed up in writing seeking the employees express agreement. Expert advice and assistance should be sought to ensure compliance and adherence to all relevant laws. If employees return the signed copy of the contract containing the temporary layoff clause, the company can then rely on this moving forward.
The above would be the preferred method as it’s the fastest way but it can only be done by agreement.
2)            The second option is introducing the temporary layoff clause to contracts and starting a four week consultation period with staff about this. You should then write to all employees, sending out a copy of the updated proposed contract. Employees will then have a four week period to look over the contracts and if there is anything in there that they have questions on they should be encouraged to raise these with the appropriate personnel. At the end of the 4 week period if there are no outstanding objections the contracts will then come into force, employees should be asked to sign them and the company can then rely upon the clauses moving forward.
3)            If employees refuse either option 1 or 2 you may decide to enforce the change. To enforce the change you would have to terminate the current terms and conditions with the contractual notice and offer new terms and conditions including the temporary layoff clause, the danger here is that you are terminating individuals employment and those with either the prerequisite length of service (two year’s) or discrimination claims/ automatic unfair dismissal claims could lodge tribunal proceedings. Expert legal and HR advice should be sought before proceeding with option 3.
An employer could make an employee redundant if they refuse any of the above options, provided they have been selected for this fairly.
In situations where employers need to select employees for furlough purposes we would advise that you use a shortened version of a redundancy selection. For example some form of objective criteria, this is because if an employee refuses furlough, the employer could then select them for redundancy and the basis would already be on a fair footing.
What should I do as an employer?
As an employer you will be required to check your contracts and confirm if there is a temporary layoff/reduced hours clause so you can look to impose the furlough. It’s a case of having a meeting with the staff and explaining the situation and that they will receive 80% of their wage during the next 3 months, when the furlough is to start and how long you anticipate it lasting. You will then need to confirm this all in writing and we would advise seeking expert help to ensure proper compliance will all applicable laws.
What does it mean if I put an employee on furlough?
The furlough is a no work rule so employers are not able to have people on furlough but available for work as and when needed.
What if I am social distancing / in lockdown can I consult my staff on any of the above via video chat / conference call?
We see no issue why you could not look to do the consultation via a conference call/video chat? Examples of software that could be used are Microsoft team/skype.
We are grateful to our HR experts for providing this information and would be happy to assist clients with any required letters and notification if furloughing staff is the only option available to the business/ employer given the current Covid19 situation. Please do not hesitate to contact us on 01273 326 556 or email your account manager, alternatively you can email us on info@src-time.co.uk

Here at SRC-Time, we will endeavour to keep you updated with all the latest information regarding financial aid at this testing time. Please note that the Government makes fresh announcements every day so please ensure that you have the latest information.

SRC-Time Ltd
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T: +44 (0) 1273 326 556
F: +44 (0) 1273 733 827
E: info@src-time.co.uk

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