Like most of you we had to reach for the dictionary. It appears to be a term used more in the US than the UK.
Whilst we await details from HMRC of the 80% subsidy for furloughed employees, over and above those already announced, PJH Law’s understanding is as follows:
- Employers identify which employees are furloughed or laid off. Furlough status only applies to employees.
- Laid off means doing no work for the employer in any week because the employer does not provide any work.
- The statutory meaning of laid off is here. We assume furlough has the same meaning. But you know what assumption does to those who make them.
- Those employees who are laid off or furloughed must be assigned as such by the employer and presumably to prevent abuse there needs to be documentation to support the furloughed status.
- Employers can claim 80% of wages for furloughed employees via HMRC for 3 months.
- We await details from HMRC of how to claim this presumably via the payroll.
- Most employment contracts don’t have the right to lay off. So any furlough or lay off is technically a breach of contract.
- In practice employers are unlikely to find much resistance to lay off where there is a maximum income of £2500 pcm plus whatever top up the employer makes. To get £2500 pcm as 80% the employee must earn £37500.00 as a 100% salary.
- Whilst there may be a theoretical right for an employee to bring a claim for unlawful deduction for any shortfall between what is received during a period of furlough and what should have been due under the contract, we don’t anticipate many employees taking the legal route.