• Furlough has had a huge effect on the functionality of the employment contract.
  • Employers have been able to rely on their Force Majeure clauses as a result of the global pandemic. These clauses allow the employer to pause the employee’s normal hours of work and duties, in place of an alternative working pattern and pay.
  • Many employees have found themselves being made redundant or being offered a settlement agreement. Both have pros and cons.

Who is entitled to Furlough

  • The latest Coronavirus Job Retention Scheme will remain open until March 2021. This means that from 1st November 2020 you can claim 80% of your usual salary for any hours not worked, up to the maximum of £2,500 per month.
  • The government is due to review the scheme in January 2021.
  • All employers with a UK bank account and UK Pay As You Earn (PAYE) scheme can claim the grant.
  • An employer can furlough their staff on any type of contract, including full-time, part-time, flexible or zero-hour contracts. Foreign nationals are also eligible to be furloughed.
  • There are many types of employees who may be eligible for Furlough (Terms and conditions apply for each category of employee). For example, An employee with more than one job, an employee who has had multiple employers over the past year, an employee who does voluntary work, an employee who does training, an employee who’s health has been affected by Coronavirus, and an employee who has recently returned from maternity leave.

Redundancy or Settlement Agreement?

  • An employee may be asked to choose whether they want to be made redundant or have a settlement agreement.
  • If an employee is made redundant, they will be offered redundancy pay.
  • In order to be entitled to redundancy, you must be an employee who has worked for their employer for two or more years.
  • Redundancy pay is as follows: Half a week’s pay for each full year if you are under 22.
  • One week’s pay for each full year if you are 22 or older, but under 41.
  • One and a half week’s pay for each full year if you are 41 and older.
  • Length of service is capped at 20 years.
  • Your normal employment rights, including bringing a claim against your employer are still permitted.

On the other hand, if an employer opts for a settlement agreement the following rules apply:

  • A settlement agreement is a document that allows the employee to waive their rights to bring any kind of legal action against their employer.
  • The employee is normally paid a settlement payment.
  • The employee may be offered a settlement agreement instead of a redundancy payment.
  • The settlement agreement allows the employee to waive the right to go through a fair redundancy procedure. This means that they would not be entitled to an enhanced redundancy package.
  • The employee can refuse the settlement agreement if it is being used instead of a redundancy procedure.
  • Settlement agreements tend to be higher in terms of money than redundancy packages.
  • It is important when deciding whether to accept a settlement agreement over a redundancy package, whether it is financially adequate.

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