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Furloughed employees and Employment law (based on ACCA information released 31 March 2020)

Is an employer required to fund the difference between the grant received and full salary?

No, but the scheme is being designed with underlying reference to employment law.

The general principle for employees (not for casuals or agency workers) is that an employer cannot reduce unilaterally an employee’s pay without their consent unless the employer has provided for reduced payment in the contract of employment (which is relatively rare).

Thus, if an employer unilaterally imposes a pay cut on an employee that constitutes a breach of contract, that would entitle an employee to leave and claim constructive dismissal (less likely in the current circumstances) or remain with the employer under protest and make a claim for back wages on the basis of unlawful deduction.

The key message is to talk to the employees and probably the most sensible course of action to make any changes to the employment contract in writing.

Is it mandatory for an employee to accept furlough?

An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead, using the usual employment law procedure.

Can the employer decide which employees are furlough?

Identifying which workers to furlough will largely be a business decision, but employers should ensure they follow a fair, well-documented process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment. Employers are advised to treat such processes in the same way as redundancies to minimise the risk of tribunal claims.

Are furloughed employees treated as being made redundant?

No, furloughed employees are not treated as being made redundant during their furlough period. This period would be considered as continuous employment, they would retain their seniority and all other continuous employment rights.

Can a furloughed employee take on another job with a different employer?

Because a furloughed employee remains on the payroll, they are treated as an employee, so they are subject to the terms of the contract of employment.

Most contracts would prevent an employee working for another firm while employed by their current employer. If an employee wants to take another job while furloughed, they will need to seek consent from their current employer. However, those employees who have more than one employment allowed under the terms of their employment contract can continue to work for another employer whilst being on furlough with one employer. If all employers put such an employee on furlough, they would be entitled to claim 80% of each employment under the Job Retention Scheme.

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