How does Coronavirus Job Retention Scheme operate?
- Certain workers will become “furloughed workers”.
- Furloughed workers cannot carry out any work for their employer while designated as furloughed, or a linked or associated organisation but they can do voluntary work as long as they are not providing services for or generating revenue for the employer or a linked or associated organisation.
- A furloughed worker can be furloughed part time and work the rest of the time.
- The furlough period begins when the employee stops work, not when agreement is reached.
- If furloughed employees are expected to do online training while furloughed they must receive the National Living Wage/National Minimum Wage for the time spent training.
- Workers must be told of and agree to this change in writing. This written agreement must be kept for five years as part of the scheme. The guidance has confirmed that collective agreement reached between an employer and a trade union on furloughing staff is acceptable for the purposes of making a claim under the scheme.
- However it should also be noted that this is a change in status and pay (if pay is not being topped up) and therefore subject to the usual employment law rules on changing terms and conditions.
- Changes to the contract must be made by agreement with the worker and the government guidance is clear that to be eligible for the subsidy employers must document their communication with the employee on being furloughed.
- You must confirm in writing that an employee has been furloughed, but that the employee does not need to provide a written response. Please note that this is for the purposes of making a claim under the scheme. Any reduction in pay must be agreed in writing under normal employment law principles and failure to do so may result in Employment Tribunal claims. You should not rely on a term in the employment contract to effect this change. We can advise you on how to document this properly.
- Employers must also keep a record of the agreement for at least 5 years.
- If employers have collective bargaining arrangements in place, they must agree this change with the union in the usual way.
- Collective consultation obligations may be triggered if there are 20 or more employees that are proposed to be dismissed and re-engaged in order to effect the change to terms to be furloughed. You should take advice if you think this may apply.
Related FAQs
Where a lender requires a EWS1 as part of the mortgage requirements for a flat this will apply regardless of its tenure and will therefore apply to applicable RTB properties. It may also be required in order to obtain a valuation for the disposal notices and issues in obtaining it could cause problems in serving this within relevant deadlines required by legislation.
It is almost impossible to completely guard against the risks associated with contractor insolvency, but there are some steps which can assist in mitigating and managing the risks involved. To be in the best possible position, it is worth considering the following at the outset of any project:
- Check the contractor’s financial position – particularly the specific company which will enter into the building contract, as the employer’s rights will be against this company rather than the business as a whole
- Take legal advice to ensure that the building contract is properly drafted with appropriate provisions to deal with an insolvency event
- Consider requiring a performance bond and/or parent company guarantee (each serve slightly different purposes)
- Obtain collateral warranties from the consultants and sub-contractors involved, so that there are contractual rights against other parties if the contractor is no longer able to meet claims
- Consider requiring retention bonds, advance payment bonds or vesting certificates if necessary
- Project bank accounts and escrow accounts can also provide some further assurances for the parties involved
If changed circumstances mean that a business wants to exit from a contractual arrangement, then before trying to terminate it, a careful review should be carried out to see whether a right to terminate actually exists. For example:
- Not every contract for the sale of goods contains the right for the buyer to terminate in circumstances where the supplier hasn’t done anything wrong. If a business has entered into a contract on the supplier’s standard terms, it is unlikely to contain any such provision
- A contract for the provision of services is unlikely, if drafted by the customer, to contain a provision that allows the supplier to walk away from the arrangement at short notice, or perhaps at all
If a party tries to terminate a contract when it doesn’t have the right to do so, the other party will likely claim breach of contract and could sue for damages. In the case of a long term or high-value contract, this could amount to a very significant liability.
Even if the right to terminate the contract does exist, there might be particular rules about the following:
- How much notice has to be given
- How such notice has to be served (for example, it might have to be in writing to a particular address)
- When the notice can be served (perhaps on an anniversary of the start of the contract)
- How much a party has to pay if it cancels (for example, for raw materials, for work done to date, or even the whole contract price)
All of these factors must be taken into account, and any contractual processes for termination are followed.
The FCA’s test case in the Supreme Court ruled overwhelmingly in favour of policyholders. However, business interruption cover generally has the prerequisite of physical damage or loss to the property (or in some circumstances, the presence of a notifiable disease at the property or within a certain radius of it), to recover losses caused by the interruption to your business. The onus is on insurers to re-assess those claims which are impacted by the Supreme Court’s judgment and to make contact with the policyholders regarding next steps. If you have not already made a claim, in the first instance the terms of any policy should be checked carefully to see whether business interruption cover is provided.
Yes. You can continue to fully furlough employees until 30 September 2021 (but from between 1 August 2020 and 31 December 2020 and from 1 July 2021 you need to contribute to the cost). If on full-time furlough, employees continue not to be able to undertake any work for you. As before, they can undertake training, or volunteer or work for another employer or organisation (if contractually allowed).