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The new ‘F-word’ in the energy sector

Robert Phillips, legal director, Addleshaw Goddard at Kingshill view, Prime Four Business Park, Kingswells.
Robert Phillips, legal director, Addleshaw Goddard at Kingshill view, Prime Four Business Park, Kingswells.

The Energy industry has taken another battering. But unlike previous economic hurricanes, this time within weeks centrally funded support was made available in the form of furlough leave and pay.

The Sunday name of this new F-word is the Coronavirus Job Retention Scheme. This nomenclature has led some misconceptions. Many believe that jobs must be retained or that jobs should only be cut if the reason for redundancy was unrelated to COVID-19 (such as commodity price drop). But furlough pay is not a universal income and eligibility criteria have been widely framed.

Employers across the land have been tasked with administering the furlough scheme, within parameters set by constantly updated Treasury Directions and HMRC Guidance. The Guidance has consistently mandated that underlying employment law remains fully in force and must be complied with.

So the furlough scheme does not inoculate employment contracts from redundancy situations or immunise them from holiday legislation or vaccinate them from lawful notices of dismissal. Rather it gives businesses vital breathing space to take stock and assess the tough decisions, adjusting business plans to face the new future. Employers have been given discretion to strike the right balance between competing interests.

Many employers have, of necessity, taken the difficult decision to start consultation on redundancies or changes to contractual benefits (whether temporarily or permanently) during furlough. While employees, their representatives and trade unions may challenge these decisions with collective grievances and contentious disputes in Employment Tribunals, it does seem clear that the CJRS does not prohibit these actions.

Businesses that stay furloughed and remain inactive risks missing an opportunity to get ready for the new normal in the short to medium term.


A scheme originally expected to end after 3 months at the end of May will now continue until 31 October 2020.  Here’s a summary of the key changes:

  • To be eligible to be furloughed from 1 July, the employee must have been furloughed for at least 3 consecutive weeks between 1 March and 30 June 2020.
  • The number of employees you can claim for in any single claim period from 1 July cannot exceed the maximum number of employees that you claimed for under any period before 30 June
  • After 1 July, employers cannot make claims that cross calendar months
  • From 1 July, employers can make use of flexible furloughing and bring back employees to work for any amount of time and any work pattern
  • A flexible furlough agreement should be put in place (and retained for 5 years)
  • Additional clarity has been provided on furloughing those returning from periods of statutory family leave, on transferring furloughed employees under TUPE and holiday rights of furloughed employees.

Returning from furlough and rebooting businesses

As businesses are actively encouraged to un-furlough workers and return to COVID-secure workplaces, there is a duty on employers to ensure that a system of safe work is developed, risk assessed and implemented.

As essential work, offshore work has continued despite COVID-19 the energy sector leads the way on what can be done safely. Collaboration between industry and the helicopter companies again reveals that safety precautions can be introduced and safe essential travel offshore is possible.

For onshore workplaces, the UK Government guidance refers to high levels of deep cleaning and sanitary practices, staggered shift patterns, continued social distancing and the use of PPE as measures which will be instrumental in providing a safe environment for working employees. With safety at the heart of all activity in the energy sector, the mind-set of the industry is pre-programmed to meet these new challenges.

Employers should “listen for the whistle” and be alert to the risks arising from complaints made on health and safety grounds. Again collective grievances (via safety reps or trade unions) are possible. Employees who make disclosures and refuse to work on the grounds of a reasonable belief in serious or imminent danger in the workplace could have valid claims if treated detrimentally or dismissed.  Employees who argue that they have caught Coronavirus because of an employer’s failures could intimate claims in the future.

Can the tsunami of job losses predicted by some be held back by the furlough scheme?  In the energy sector, this seems unlikely.  Perhaps the furlough scheme is better viewed as a survival suit, rather than a rescue helicopter?

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