Furloughing workers – Do I need written agreement from staff?

As the guidance for the Coronavirus Job Retention Scheme continues to be updated,  Harrison Drury’s employment team clears up some of the confusion over whether written agreement from affected employees is needed.

Last updated April 22, 2020

There has, quite understandably, been some confusion over whether employers who intend to furlough employees need a record of written agreement from them in order to make claims under the Coronavirus Job Retention Scheme (CJRS).

This is because a Treasury Direction which gives HMRC the power to make payments under the CJRS (published on April 15 2020) had stated that an employer can only reclaim 80% of an employee’s salary where the employee has agreed in writing that they will cease all work for their employer while furloughed.

However, in stark contrast, the sixth iteration of the CJRS guidance published on April 20 2020 confirms how HMRC intends to interpret the Direction, as follows:

“To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.”

The guidance is intended to provide straightforward information which employers can follow and rely upon. Therefore, it is highly unlikely that HMRC will ask employers to provide evidence that their staff members have agreed in writing not to undertake any work in order to make a successful claim under the CJRS.

It seems that HMRC is content to process claims without evidence of an employee’s written agreement and this is unlikely to change now that the portal has gone live and the very first grants will be issued to employers in the next few days.

However, bear in mind that usual employment law rules continue to apply and, accordingly, where there is no contractual provision to enable the employer to stop providing work for an employee and to reduce their pay, written agreement should still be sought to avoid any claims by employees.

We have already worked with many clients to identify prudent measures to take, including preparing key documentation and template letters to staff in order to be eligible for the scheme.

We offer a fixed-fee service to advise businesses as to their specific circumstances. Our service includes:

• Consideration of contractual terms
• Advice on options available
• Letter template to send to staff
• Announcement script (if required)

We understand the importance of this scheme for the continued trading of many businesses and we’re advising our clients not to delay or to risk their eligibility.

For more information, contact Harrison Drury’s Employment Team on 01772 258321 or via enquiries@harrison-drury.com