Take the right advice before furloughing your staff

April 02, 2020 - 11:20am

Take the right advice before furloughing your staff

The coronavirus has presented businesses across the district with many challenges, some that we’ve never faced before.

We’ve seen some wonderful innovation and adaptability from businesses, but what’s even more indicative of the spirit of our Lancastrian business owners is the strong desire to retain their workforce and ensure jobs are not lost.

Two weeks ago, my colleagues and I were the recipients of many a heart-breaking call. Business owners who have been very successful and have brought much employment into the district, were now faced with having to lay off or make redundant their valued employees.

But on 20 March, we were presented with the Coronavirus Job Retention CJRS (the CJRS), bringing with it the term ‘furlough’, a previously unrecognised word in UK employment law.

The CJRS presents a lifeline to both employers and employees alike, with those employees who were facing losing their jobs now able to remain in employment, while also receiving at least 80% of their pay. Employers can recover the 80% of furloughed employees’ pay, by way of reimbursement from HMRC.

However, in the government’s rush to roll out the CJRS, a lot of detail is still missing, and there is confusion as to what pay will be reimbursed, which employees will be eligible, whether directors can truly be furloughed without neglecting their fiduciary obligations, and many, many other queries.

We employment lawyers are trying to make sense of many unknowns and, with the CJRS portal not yet open (and not expected to be up and running until the end of this month) businesses, including ours, are trying to make commercial decisions without the necessary clarification of important issues.

It’s vital businesses carry out proper due diligence before taking the decision to furlough staff under the CJRS. This will ensure they fall within CJRS remit and that the money they pay to their furloughed employees will be reimbursed.

Consideration needs to also be given to the long-term effects of the current situation. It’s hoped that business will return to normal once restrictions are lifted, but the reality is that once the CJRS ends, whether that be on 31 May or a later date if the scheme is extended, many businesses will take time to recover and return to something like their usual trading levels .

As a result, business owners should be starting to put plans in place now, to try to counter the long-term effects and, should redundancies become inevitable, care should be taken to ensure that proper processes are followed to mitigate the risk of claims being brought, which could be the final nail in the coffin for a struggling business.

Harrison Drury is offering a fixed-fee service to support businesses who are considering furloughing their employees. We can also assist with future planning which can give business owners the peace of mind to move forward with confidence.