Will employers be required to enter into new furlough agreements with employees?

Earlier this month, Rishi Sunak announced the anticipated extension to the Coronavirus Job Retention Scheme (the Scheme). The Scheme will now continue until 31 October 2020, but from 1 August 2020 the Scheme will be modified to permit part time working of furloughed staff. Whilst employees will continue to receive 80% of their salaries (up to the monthly cap of £2,500), employers will also be required to pay a proportion of this. But will employers need to enter into new furlough agreements to address these changes?

As things currently stand, employees on furlough leave are prohibited from carrying out any work for their employer. Current furlough agreements will most likely include a term which sets this out.

It may therefore be necessary for employers to amend furlough agreements through the use of a side letter, or for a new furlough agreement to be entered into which permits a furloughed employee to work part time. It may also be helpful for the new agreement to set out the circumstances in which an employer can require a furloughed employee to return to work.

Pending further details of the changes to the Scheme, employers should think about the next steps in their business continuity plans. Once the full details have been published, employers will be able to fully assess what steps they should take. However, employers should ensure that when amending furlough agreements, consent is obtained from the employee before the changes take effect. This will ensure that the changes made to the contract are effective and there has been a valid contract change.

Further details on the changes to the Scheme are expected to be released at the end of the month.

The Furlough Advice Team at Edwin Coe will continue to monitor and report on the situation as it develops.

To review our previous updates, please click here.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

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