Laying off employees means that the employer provides employees with no work (and no pay) for a period while retaining them as employees; short-time working means providing employees with less work (and less pay) for a period while retaining them as employees. These are temporary solution to the problem of no or less work.  However, if employees are laid-off or put on short-time working in circumstances where the employer does not have the contractual right to do so then the employer will be in fundamental breach of contract entitling the employee to resign and claim constructive dismissal.

A better option is likely to be the Coronavirus Job Retention Scheme which will pay employees' salaries of up to £2,500 a calendar month as long as they are kept on the payroll.

On 20 March 2020, the government announced new measures to help employees.

Chancellor, Rishi Sunak, has said:

  • Any employer in the country – small or large, charitable or non-profit - will be eligible for the scheme;
  • Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off;
  • Government grants will cover 80% of the salary of retained workers up to a total of £2,500 a month – that’s above the median income;
  • Employers can top up salaries further if they choose to;
  • Workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary;
  • The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months - and the scheme will be extended if necessary;
  • The first grants should be paid within weeks and they are aiming to get it done before the end of April.

The Government website advice for employees states:

If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies.

If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.

To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.

You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.

If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.

We intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.

The Government website advice for employers states:

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Other points:

  • This scheme covers businesses in any sector; and
  • The scheme will apply in respect of all employees on PAYE, including those on zero-hours contracts.

If you need any further advice from an Employment Lawyer please contact; Claire Fountain, Partner at TWM Solicitors LLP Telephone: 07773 233147