Furlough Agreements

What does a furlough agreement need to say?

With the news that the Furlough scheme is extending from 1 November 2020 to 21 March 2021 (read more on the furlough scheme being back here), numerous questions are arising concerning the scheme, with a common one being; what do you need to do to put your staff on furlough?

Employers need to be organised with their paperwork this time around, especially as HMRC is cracking down on businesses that they think aren’t handing furlough properly.

It’s important to note; HMRC will be publishing a list of all the businesses who claim furlough from 1 December 2020. Partly, to ‘name and shame’ those employers and businesses who are relying on the furlough scheme when they don’t need to, but this also makes It easier for HMRC to identify furlough fraud, for example, if an employee is still working but the employer claims furlough it will be much clearer.

Unlike the original furlough scheme where employees wouldn’t know if their employer is claiming furlough (and we heard some horror stories of entire workplaces working, with no idea their salary was being paid by the furlough scheme until they left) they will now be able to see the employer’s name listed and contact HMRC to report their employer. This is likely to lead to an increase in whistleblowing cases; click here for our guide to whistleblowing.

What paperwork do you need to do furlough properly and to comply with employment law?

As an employer, you must have a contractually binding agreement between you and the employee who is to be furloughed to obtain their agreement to vary their hours and to reduce their salary to 80%. Even if you intend to top the salary up to 100%, you still need an employee’s consent to be furloughed as it is a variation of their terms as they have the right to work.

We recommend this is always done in writing. You should also keep all agreements for five years.

Working remotely and whilst in lockdown causes issues for many in getting these agreements signed. It is not a legal requirement that the employee has to sign the document, however, asking them to do so puts you in a stronger position, should it ever be argued that you didn’t seek their agreement or they weren’t aware of the arrangement if you have a signed document to refer to or communication in the form or an email confirming they agree, will be sufficient.

You can use electronic signature platforms such as Adobe Sign or DocuSign to help with this and track who has and hasn’t signed.  It also stores them for you once sign providing a clear audit trail

What process should you follow?

There is no prescribed legal process to follow per se, but to ensure you are dealing with furlough properly we would suggest for you ensure to complete the following steps.

  1. Decide on who you will be placed on furlough; make a paper trail of the decision process to ensure that you are not making any discriminatory decisions and can evidence the need for furlough in case you have any complaints arise and ready for HMRC inspection.
  2. Arrange a meeting, probably virtually given we are in lockdown, with the employee to discuss with them the changes that will be made to their hours and pay.
  3. Confirm to the employee in writing what you have agreed and that have been furloughed and when this is likely to end.

What does the agreement need to include?

It must be clear that you will keep a copy of these agreements for 5 years.

The furlough agreement should make it clear that the employee is not allowed to do any work or perform any services for the business during the time they are on furlough. They should also clarify, based on the existing employment contract, whether that employee can work elsewhere.

Where an employee is flexibly furloughed, employers must also keep a record of the hours the employees work and the hours of which they are on furlough during the period they are subject to the furlough agreement. If the actual hours don’t reflect the HMRC submission, you have the opportunity to change your claims.

A signature from both the employer and the employee if possible.

How can Thrive help you?

We can draft tailored furlough agreements for your business for a fixed fee of £150 plus VAT. If you are already one of our HR clients you should already have one in your inbox ready to use

Email today for your agreement enquires@thrivelaw.co.uk

Did you know we provide outsourced HR services to businesses?

Using Thrives Outsourced HR services makes your life easier; we provide you with quick and most importantly, correct HR decisions so your staff management is stress-free and sufficient. We take care of everything. From drafting contracts, furlough documents, and handbooks tailored to your business to advising and supporting you through redundancies and furlough. There is no limit to our knowledge, if you have an HR question, our qualified solicitors have the answer for you. We are always one phone call away.

Why should you outsource your HR services to solicitors? Getting your HR services from a solicitor means, should a case ever proceed to tribunal everything we have ever discussed is protected by Legal privilege meaning all conversations are protected. Whereas if you were to use an HR consultant, all conversations and documentation regarding that employee would be disclosable in the tribunal.

Get in touch today to invest in your business and make your HR stress free. Email Jodie.hill@thrivelaw.co.uk


Please note this blog is for reference purposes only. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions on enquires@thrivelaw.co.uk


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