The claimant commenced employment with the respondent in October 2017.  She agreed to take a reduced salary of £32,000, rather than £36,000, on the basis that she would receive a van and fuel for business use only.  On 5th June 2020 the respondent sought the claimant’s agreement to place her on furlough under the Coronavirus Job Retention Scheme introduced by the Government in light of the Covid-19 pandemic.

The claimant queried how the van salary sacrifice would be dealt with, but she signed the form anyway.  There was no proposal to go beyond the remit of the scheme so she would receive 80% of her pay. The respondent later responded stating that the van was outside of the furlough scheme and would not be considered and also stated that the van would be collected as it was not required during the furlough period.  The claimant queried this again by directing the respondent to the Government guidance which stated that benefits including salary sacrifice schemes should continue to be paid.  She stated that Covid-19 led to a lifestyle change out of her control so she would like to opt-out of the salary sacrifice scheme and return the van.  The respondent stated the van was ‘surplus’ and if she did leave it back the monthly payments would be remaining. It was apparent that there was no formal contract in place which led to a position of uncertainty when it came to the salary sacrifice and position of the van. The van was collected on 17th June 2020 and never returned.

The claimant remained on furlough until being made redundant in October 2020.   There were four payments from June-September.  The claimant brought a claim for unlawful deduction from wages relating to the salary sacrifice.  The Tribunal held that the claimant had clearly agreed to being placed on the furlough scheme.  The award of furlough was as a result of the payroll data before March 2020 so it related to a salary figure of £32,000. However, when the van was taken by the respondent on 17th June 2020 the Tribunal treated that as an implied variation of the contract to the original proposed salary of £36,000. Over the four months of pay relating to furlough that led to an unlawful deduction of £1,066.68.  A further award of £1,384.62 was given for the failure to provide written statement of particulars.

Practical Lessons

This case demonstrates some of the more technical matters leading to disputes as a result of the Covid-19 pandemic and furlough.   With furlough ending, it is likely that we will continue to get cases that deal with the edges of the furlough scheme.   In this case, the Tribunal seemed to perform legal gymnastics in holding that the retrieval of the van was tantamount to an implied contract variation.   Interestingly, the implied contract variation came after the March period yet it was still 80% that was only payable as the award.  It could be suggested that if it was a contractual right that was being infringed post-March 2020 and therefore not subject to any furlough protection then it should be a greater protection of 100%.

NI Tribunal decisions are available on the OITFET website:
http://www.employmenttribunalsni.co.uk/