The government’s furlough scheme to save jobs and businesses in response to the Covid-19 crisis has created a raft of unexpected legal questions for startup founders and their teams. SeedLegals answers your questions on how and where to use it
Should you use furlough leave to cut costs and extend your runway?
If your business is not fortunate enough to have enough cash in the bank to give you a runway of at least 12 months the question is what to do next, because raising investment in the coming months is going to be tougher than before. Even companies with adequate bank balances and revenue may find they simply don’t need certain job functions or roles while everyone is working from home, and may pause those roles until their team, and their customers, are back in the office.
More advice and information here
How do I create a furlough notice?
If you have decided to put an employee on furlough leave, firstly you have to formally notify them. The employee also needs to have a contract with your company that allows you to make them furloughed. This is what HMRC means when they say the scheme “remains subject to employment laws”.
Next steps here
What can my newly furloughed employee do or not do?
It’s important that they do no work for the company that is furloughing them. If they do any work and you claim from the HMRC scheme then you will be committing fraud. The scheme is only to support those employees who have been asked to not work. But, they are able to do voluntary work and undertake training, as long as they do not provide services to or generate revenue for, or on behalf of the company.
More information here
Do founders and directors qualify as employees under the scheme?
Yes. But remember, who will run the business if everyone is stood down? It’s important to the survival of the business that you identify who to furlough – only place on furlough leave those who are not key staff, those who you can survive without for the next few months.
More advice on this and much more here
Furlough and redundancy
Does my employer need to consider the furlough scheme before making redundancies? Is it unfair dismissal if my employer makes me redundant rather than placing me on furlough leave? I have already been made redundant, can I be put on furlough leave instead?
These questions and many more answered here