top of page

GUIDANCE: What is Furlough?

Updated: Jun 14, 2022

How does it work? If you have any employees or workers on your payroll (PAYE) that you were going to lay off / make redundant due to the current Coronavirus pandemic, then you can keep them employed and class them as furloughed instead.

What does it mean? It means that your employees and workers are not dismissed from their employment with you. So, when things have settled down and its business as usual, you still have the employees you need to carry out your normal work. You are also able to claim back 80% of their wages (up to a maximum of £2,500 per month) from HMRC.

What about the other 20%? If you are in a position to, you can top up your employee’s wages and pay the 20% yourself. However, if this is not something that is possible, then you do not legally have to do this.

What is the £2,500 maximum grant based on? The £2,500 maximum monthly grant covers all employment costs, i.e. salary, employer pension contributions required by auto enrolment (if applicable) and employer NIC.

What date can you claim furlough from? It can be backdated from 1st March 2020.  It will last initially for 3 months but might be extended if necessary.  Please note that although the scheme started from 1st March 2020, you will only be eligible to claim the grant once you have agreed furlough with your staff and staff have stopped working for you.

How to select employees for furlough? Choose the designated workers you would have laid off, there is no set procedure for this, just need to ensure you are not discriminatory.

What do my employees need to do? If you’re looking to furlough your employees instead of laying them off, then you will need to have a conversation with them to tell them what you are proposing to do. During times like these, people will panic, so the more information you can give them, the better. Explain that this is a solution to the problem. They will still receive 80% of their normal pay and their job is still there to come back to. During the time your employee is classed as furloughed, they cannot do any work for you.

How do I reclaim the money? HMRC are currently working on a system for employers to use to claim back any reimbursed wages. This will be rolled out as soon as it’s ready to use. In the meantime, if you do not have the finances to keep any employees on the payroll and classed as furlough, then you can look at accessing a Coronavirus Business interruption Loan by clicking here.

Who pays them and how much? You will be responsible for paying the employees and workers while they are classed as furloughed. Once the HMRC system has been set up, you will then reclaim the 80% of their wages via this system. In terms of payment, you would pay them 80% of their normal wages. If your employee or worker does not have regular hours, then we would advise you work out their average pay based on the last 52 weeks they have been with you. If they have not been with you for 52 weeks, then use the full length of their employment / placement with you to work out their average pay.

I have an employee on maternity/paternity leave If your employee is on maternity/paternity leave, there is currently no guidance to say that you make any changes to this arrangement. Carry on paying them their maternity/paternity pay as normal.

I have an employee off sick They will need to be ordinarily available for work, therefore would not be eligible for furlough until they would be back from sick. If your employee receives statutory sick pay, then continue to pay this as normal. If they are contractually entitled to company sick pay, then, we would advise you continue as normal.

Can I furlough employees who are on maternity leave? If your employee would have been laid off / made redundant due to the Coronavirus pandemic, then yes you can class them as being furloughed.

Would these employees get the 80% contribution to their wages? Under normal circumstances, if you were to make someone redundant while they are on maternity leave, you would still have to pay them statutory maternity pay if they qualified for it while they worked for you. There is currently no guidance to say that this will change.

What if the 80% takes the employee under National Minimum Wage? NMW doesn’t apply as the employee will not be working.

Can I enforce furlough? If you have a ‘lay off clause’ in your contract you can do furlough without consent, if you do not have this clause you will need to vary the contract and ask for consent.

Contractual terms During the time your employees or workers are classed as furloughed, their other contractual terms continue as normal. This means that they will still accrue annual leave, they will still be classed as employed by you (so there’s no break in their continuous service), and if you have any other contractual benefits, then these will still be applicable.

What about cutting hours? If you are in a position to be able to keep employees, but need to reduce their hours, then you CANNOT reclaim the 80% of their wages back from the government. This money is only available for people who would have lost their jobs due to the current situation. If you are able to get agreement from employees to reduce their hours, then this will mean that you are responsible for paying their wages as normal.

Working from home? Again, if you employees are able to work from home, then you are NOT able to reclaim the 80% back from the government.

Can they do a little bit of work for me? If you have classed any employee or worker as furloughed, then they CANNOT do any work for you. If there is still work available for people to do, then they cannot be classed as furloughed.

Can my employee get a temporary job elsewhere while on furlough? At the moment, there’s no guidance on this. Our opinion would be that you check your contract of employment to check to see if there is anything in there about your employees being allowed to have a second job. If there is something in there banning them from doing this without your permission, then you need to consider whether you would allow them to. These are very difficult times for everyone, and there are currently shortages of key workers. If your employees are willing and able to assist with these temporary shortages and you are happy for them to do so, then you can agree this.

What about employees that I’ve already laid off? The furlough scheme is available for employees who were on your payroll (PAYE) and have been dismissed since 1stMarch 2020. This means that if you have already dismissed someone due to the Coronavirus pandemic, but you really would have liked to have kept them employed, you can look at classing them as furloughed instead. This means that they go back onto your payroll and they are reinstated as an employee / worker. It means that you are, in effect, revoking the dismissal. Your employee / worker will have no break in their continuous service with you, will continue to accrue annual leave as if they had never left, and will continue with all other contractual benefits.

Do I have to take someone back? At the moment, there is nothing to say that if you have already laid someone off, you have to take them back and class them as furloughed. Ultimately, this means that the decision is down to you.

Can workers take holiday while furloughed? And do they accrue holiday? This is no clear answer yet, but we do know that the government have said that they will leave all employment law in place which would appear to indicate that they do accrue holiday. Our current view (just an opinion) is that they would accrue holiday and if an employee has booked holiday in the next 12 weeks and is going on furlough, pay them holiday pay for that period. If we are wrong, you haven’t lost anything and can claim back what would be the overpayment from them if it becomes a problem. If, when more information is available, it is confirmed that employees accrue holiday during furlough, the employer is, and has always been entitled to serve a notice on the employee compelling him or her to take leave, so it can be used up in that way. Updates There will be daily updates on the NHS 111 online service and the Government website More information about furlough and support for businesses can be found using the link below. If you need a FREE furlough letter template, please contact:

2 views0 comments


bottom of page