Should I rehire an ex-employee so I can furlough them?

Apr 6, 2020 | Good Management

It has now become clear that even if an ex-employee was not made redundant because of coronavirus but left employment for other reasons, you can rehire them and then place them on furlough, claiming back 80% of their salary from HMRC through the furlough scheme.

But should you do this? Here are some things to consider when making your decision:

Reasons you might want to do this

  • You might want to do this because it’s the kind thing to do. Although an employee can work elsewhere while furloughed from you, in most cases the employees asking to be rehired and furloughed will be those who had another job offer withdrawn because of the coronavirus crisis, leaving them in a difficult financial situation. If you valued them and are in a position to help, you may want to do so.
  • Although it’s probably small, there is a risk that if an ex-employee asks to be taken back on and you refuse, they may make a claim that they have suffered a detriment because of (for example) a protected characteristic. This will obviously depend on the specific circumstances and the individual concerned.

Reasons you might not want to do this

  • If you rehire someone who had not previously reached two years’ service, they might reach this milestone after you take them back on and furlough them. This gives them more employment protection, including against unfair dismissal, and entitles them to redundancy pay. Both of those things become potentially enormously problematic once the furlough scheme ends, and could cost you significant sums or cause you significant inconvenience.
  • The reason they left employment (whatever that reason is) will in most cases still be there. If you take someone back because you didn’t want them to leave in the first place, the reason they resigned will still be there and they’ll probably go again. If you dismissed them, for conduct or capability, those issues won’t be resolved and you’ll have to deal with them again.
  • Assuming you don’t want to keep them employed indefinitely (you may have replaced them or may not need them), you will probably then need to dismiss them at some point down the line. This might mean using a redundancy selection process or some other dismissal, and in many cases this will not be at all straightforward. Even if they resigned before, there’s no guarantee they will do so again. Rehiring several ex-employees to furlough them will leave you in a position where you have excess staff when the scheme finishes, and might result in having to drag everyone through a redundancy selection process that might not have been necessary.
  • The furlough scheme isn’t set up yet and although HMRC are indicating they hope to have it up by the end of April, that does seem ambitious. Therefore it is entirely likely that you’ll end up funding the 80% salary for ex-employees as well as current ones, for a fair while, which presents cashflow issues.
  • Even though you can get 80% of salary back, rehired employees will also accrue holiday and may be entitled to other contractual benefits (unless you specifically withdraw these, which could present other legal difficulties), and those cannot be claimed for.

If you are being asked by people who left your employment after 28 February 2020 whether you are prepared to rehire and furlough them, we strongly advise that you take specific advice about the circumstances involved, in order that the various risks can be assessed properly and addressed where possible, and the right decision made.

If you would like some advice on furloughing ex-employees, do get in touch.