Payback Time? Covid-19 Pay-related Queries That May Arise In The UK

Published date23 July 2020
Subject MatterEmployment and HR, Contract of Employment, Employee Benefits & Compensation, Redundancy/Layoff
Law Firmlus Laboris
AuthorNiamh Crotty (Lewis Silkin LLP)

As the furlough scheme starts to wind down and redundancies become more commonplace, employers in the UK may face a host of pay-related queries, grievances or claims from employees arising from the workplace upheaval caused by coronavirus. This article discusses some of the main issues concerning pay that employees could raise.

As the furlough scheme starts to wind down and redundancies become more commonplace, employers in the UK may face a host of pay-related queries, grievances or claims from employees arising from the workplace upheaval caused by coronavirus. This article discusses some of the main issues concerning pay that employees could raise.

Pay reductions

Many employers reduced pay and hours in direct response to the decline in economic activity and demand during the period of lockdown. Some employees have no right to any particular number of working hours but could potentially raise grievances if theirs were cut while the hours of their colleagues were maintained.

Other staff will have a contractual right to a set amount of pay, even if there is no work to be done. Pay reductions for those staff would have required consent in the absence of the employer having an express contractual right to lay them off or put them on short-time working (such these clauses are very rare). Some employers may have unilaterally cut wages and relied on acquiescence (continuing to work) as a form of consent. Employees may now challenge this and argue that they did not genuinely consent to a wage reduction and should not be taken to have done so by carrying on working.

Furlough pay

Employees who were furloughed on reduced salary or wages should have given their consent to this. Disputes may arise if the arrangements have not been agreed or confirmed in writing.

Some employers have been topping up employees' pay during furlough but will no longer be in a position to do so once the government subsidy begins to taper off from 1 August 2020. They will need to secure their employees' agreement to the withdrawal of the top-up, unless this has already been given in the original furlough agreement. If employees do not agree, this could also cause disputes.

The amount that can be claimed through the furlough scheme has not always been clear. Employees who have been furloughed on the understanding or explicit agreement that their employer would pay them the maximum amount that could be claimed may now raise grievances or claims if they think their employer could have claimed...

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