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Download FREE template Furlough Agreement

Click here to download furlough agreement template

We have just entered another week of lockdown and yet it has not been resolved when we can expect it to be eased. We observe many of our business clients and local entrepreneurs suffering financial losses and organisational disruptions as a result. Unfortunately, many of them have no other option but to start redundancy process or assign some of their employees to so called ‘furlough leave’.

We have been frequently asked about the need of any special agreement with an employee if he is to be nominated as a ‘furlough worker’. Since the issue is common for so many employers we share the answer by way of this note, so everyone can take advantage of it. Moreover, we also share with you a standard draft agreement you can use if you wish to agree with your employee terms of his ‘furlough leave’. This is free of charge.

So, do I need this agreement and if yes, why?

This is one of the characteristics of employment that you, as an employer, are obliged to provide your employees with work. If the employment contracts you adopted at your workplace do not permit you to reduce your employees’ pay or provide them with no work, you will have to agree with your employees (those designed for furlough) new terms of their employment. In simple words, the way how they will work for you (or temporarily not work at all) changes, so the contract has to reflect those changes to be compliant with the law.

The changes to the contract can be made by way of an annex or a new agreement amending some of the provisions of existing one. This is exactly when you will need the agreement that you can download here. This is also crucial because in order to be eligible to apply for a grant of 80% of the employee’s salary (up to the cap of £2,500) through the Coronavirus Job Retention Scheme you not only have to nominate the employee who will be furloughed, but also agree it with him. It may be a case that the employee says ‘no’ and he may do it validly.

We therefore invite you to have a look and use the template. You may need to amend it slightly to adjust to your circumstances (for instance, put your employee’s details, whether your employee will receive 100% of his salary or 80% only etc.). We hope you will find it useful.

If you have any questions or need any further assistance, please contact one of the lawyers in our business team on 0330 107 0106 or email business@imd.co.uk.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.