As we reach the light at the end of the tunnel in relation to the pandemic we reflect that “furlough” was a word rarely heard or utilised pre March 2020, now firmly a staple of society’s vocabulary and a major feature of the UK’s pandemic landscape. As employers, employees, and indeed the government have grappled with the furlough scheme and it’s ever extending abilities many new challenges have presented themselves; ‘Can my employee be ill and on furlough, if so how do I pay them, can I clawback furlough payments if they are only entitled to statutory sick pay etc. How do I bring employees back from furlough…
The topic of this article is namely, if an employee consents to furlough, and the subsequent changes to their contract, if they withdraw consent to being on furlough what do I as an employer do? The main implication in most cases is in relation to salary with many employers choosing to pay 80% salary from the government fund. If an employee states explicitly that they no longer wish to be furloughed if you continue to pay them at the 80 % rate you may find that the employee makes a claim for unlawful deduction of wages.
Unlawful deductions from wages is a claim covered by section 13-27 of the Employment Rights Act 1996. Deductions from any amounts owed to an employee can be authorised by explicit (written) consent by the employee and by contract. Contractual examples are often the standard clause contained in employment contracts that stipulates that any amounts owed by the employee (ie overpayment of wages, costs of training, holiday pay etc.) can be clawed back and by signing the employment contract the employee explicitly agrees.
In relation to furlough it is expected that most employers will have issued a letter or agreement for their employees to sign stipulating the changes to their employment contract that would be caused by furlough. It would be the norm that these changes would be limited to a set period of time. The case of Re Carluccio’s Ltd 2020 IRLR 510 the court recognised that implied acceptance of furlough terms may be possible if there is inaction on the basis of the employee to explicitly accept, however this is highly dependent on circumstances and implied acceptance cannot be relied upon, especially in this case where they sought to rely on implied consent when the letter had only been send a matter of days before.
Jackson Boyd represented the Claimant in the case of Docherty v CCRS Brokers Ltd (4106558/2020). In this case initial explicit acceptance for a period from April to June 2020 was obtained. No consent or update was provided thereafter by the Respondent and as such the Claimant had expected to be returned to work and his normal contractual rate as of 1 July 2020. When no correspondence was received from the Respondent the Claimant wrote to indicate on 17 July 2020 that he was ready and available to work and expected his salary to return to normal. In this case the Tribunal held that the Claimant was entitled to his contractual salary from 17 July 2020, as opposed to 1 July 2020. This was on the basis that he had explicitly agreed to furlough until 30 June 2020 and having been on furlough for some two months had not indicated any alternative to this consent, nor had he indicated any desire to return to work. As such, on the basis of Carluccios his implied consent was taken from this continuation of non communication despite the fact the Claimant had raised a grievance about being on furlough in April 2020. It was only when his express communication as to returning to work and non consent was received that his consent was taken to be revoked, thus triggering his normal contractual rate of pay and terms.
If an employee contacts you stipulating they no longer wish to be furloughed and as such wish to return to work, and their wages to revert to their contractual 100% to continue to pay them at 80% rate you no longer have the consent required, nor the contractual entitlement to pay 80%. To avoid a successful claim being made it would be beneficial to pay the wages at 100% rate when consent is withdrawn, and if this is not feasible going forward it may be that redundancy would have to be considered if the company is not in a position to pay the employee’s 100% salary and/or bring them back to work.
If you are considering making employees redundant we would strongly recommend professional advice is sought.
Should you have any further questions about redundancy, or unlawful deduction from wages the employment team at Jackson Boyd would be delighted to assist.