Can we bring staff back on reduced pay? Furlough and Employment Contracts

The furlough scheme was spearheaded by the government as part of the Coronavirus Job Retention scheme. For this, employers were originally able to claim 80% of an employee’s wages plus any employer National Insurance and contributions (up to £2,500 per month), if they were furloughed because of the effects of Coronavirus.

The Coronavirus Job Retention Scheme will officially close on 31st October 2020. As this date approaches, the scheme will change in regards to the grants which can be claimed by an employer. For employers, the question will be how they go about bringing employees back following furlough in a way that works for them.

Can you bring back furloughed staff on reduced pay?

It is possible to bring staff back from furlough on reduced pay. However, change of pay is a significant point and must be agreed with staff.

What procedures must be followed to reduce pay?

Reduction of pay constitutes a change to the original contract of employment, therefore must be agreed by both parties in writing. In the first instance employers should consult with staff  individually to explain the need and to get agreement.

What steps can an employee take if their pay is reduced without their consent?

If an employer reduces salary and/or hours without the consent of an employee or the right reserved in their employment contract, the employee can resign and make a claim for constructive dismissal or continue working under protest and make a claim for losses suffered.

In some cases, the employee may choose to accept the reduction in pay or hours with no dispute. However, if the employee does nothing and continues to work with the reduced pay/hours, they could be accepting the change by implication.

Specialist Legal Advice For Employment Issues

It is imperative that changes to employment contracts are carried out in the correct way to avoid dispute. Should you require support in this area, our employment law team is on hand to help. We support individuals and businesses to understand their legal position and the options available to them. For help and support, please get in touch today to speak to a member of our team.

Our Employment Law Specialists

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