Employers may find themselves at risk of being ordered to pay 100% of an employee’s salary as the Employment Tribunal has held that the absence of written confirmation of furlough arrangements could give rise to an unlawful deduction of wages claim.
The Claimant had worked part-time in a café since 2003 and following the national lockdown, as a result of the covid-19 pandemic, the café was required to close. The Claimant was of the understanding that she would be furloughed and that she would receive 80% of her salary under the furlough scheme. However, the Claimant’s furlough income was not forthcoming and neither were her employer to provide any sort of update in this regard. Having, in her own words, “given up”, the Claimant consequently terminated her employment with immediate effect and took up alternative employment elsewhere on 26th August 2020.
Subsequently, the Claimant issued a claim for unlawful deduction of wages. Disputing the claim, the Respondent said that they had applied under the Coronavirus Job Retention Scheme (CJRS) but their application was unsuccessful for technical reasons. It appears that the technical reasons referred to were that the Claimant was not officially registered with HMRC as she was paid weekly in cash and it was only when the Claimant’s made a retrospective application that this became evident.
The Employment Tribunal found in favour of the Claimant that there had been an unlawful deduction of wages, pursuant to s13 Employment Rights Act 1996. The rationale was that it had not been confirmed in writing that the Claimant would be placed on furlough, and that consequently she would receive a 20% reduction in her wages. Despite the fact that the Claimant anticipated receiving 80% of her salary through the CJRS, the lack of any written agreement entitled the Tribunal to award 100% of her salary, thus echoing the importance for employers to ensure they have written confirmation of any furlough arrangements. The Claimant was also awarded 4 weeks’ pay for a failure on the part of the Respondent to provide a particulars of employment or any employment contract.
In addition, the judgment cites that the unlawful deduction of wages are between the Claimant and the Respondent, her employer. However, the possible recovery of any funds would be between the Respondent and HMRC.
What can be learned from this?
As with any agreements or arrangements, it is always strongly advised to put it in writing and the CJRS is no different. Whether you make amendments to existing contracts of employment, or producing a separate furlough agreement, if you want to avoid paying 100% of an employee’s salary and incurring fees for an unlawful deduction of wages claim, put it in writing and arrange for it to be signed by both parties.
For further advice please contact our Employment Team