Furlough FAQ UPDATE 30th March 2020
Furlough FAQ UPDATE 30th March 2020

“Furlough” is an American employment term which means to allow, or force someone to be absent temporarily from work. The term has until now, had no prior meaning in UK employment law.

Furlough has been adopted recently in the UK, to ask an employee to stop working during the coronavirus pandemic so as not to make an employee redundant.

What is the Coronavirus Jobs Retention Scheme (CJRS)?

Using the Coronavirus Jobs Retention Scheme (CJRS), employers can benefit from a grant from the HMRC to cover 80% of the “wage costs” of “furloughed” employees capped at a total of £2,500 per month plus the associated Employer NI contributions and minimum automatic enrolment employer pension contributions on that wage. Employers may choose to top up the remaining 20%, however, there is no obligation to do so.

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should NOT be included.

Furloughed employees must have been on PAYE payroll on 28 February, and can be on any type of contract, including: full-time employees, part-time employees, employees on agency contracts, flexible or zero-hour contracts.

While on furlough, an employee cannot undertake work for or on behalf of the employer AND the employee’s wage will be subject to usual income tax and other deductions.

The scheme covers employees who were made redundant since 28 February, if they are rehired.

Employees on sick leave or self-isolating should get SSP, but can be furloughed after this.

Furlough leave must be taken in minimum blocks of three weeks.

The scheme will cover the cost of wages backdated to 1 March 2020 and is available initially for a 3- month period. The Chancellor advised in his announcement on 20 March 2020 that there will be no limit on funding available for the scheme.

The Government statement said that “changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.”

The steps to place employees on furlough leave:

1. Decide which employees will be designated as furloughed workers.

2. Employees which you have designated as furloughed should be given notice, preferably in writing and WWR has a template for this. The template is factual and can be used as part of a letter which we recommend that you top and tail with your organisation’s own language. 

3. Does the organisation need to consult with employee representatives or trade unions?

• To vary the contracts of 20 or more employees, or to reduce pay to 80% with the intention to dismiss if consent is not achieved, would mean under section 188 of TULRCA these employees would be classed as dismissed by reason of redundancy. There would be a duty to inform and consult appropriate employee representatives.

• It is widely accepted that because of the circumstances it may not be necessary to go down this route. 

4. Exercise a contractual right to lay off. If there is not a ‘Lay Off’ clause in an employee contract the organisation should vary contracts to introduce one.

• Due to the current situation, employees are likely to agree furlough leave on 80% pay but agreement is not necessary to vary the contract.

5. The organisation should provide information to HMRC about the furloughed employees through the online portal (due to be in place 1 April 2020). Further guidance is expected from HMRC as to what information is required.

What is the process for the organisation to claim funds?

The government has advised that funds will be claimed via the HMRC portal which should be live by 1 st April 2020.

How do organisations select which employees should be furloughed?

The CJRS involves “furloughing” designated workers who would otherwise have been “laid off” during this crisis. There should be no discriminatory or otherwise proscribed reason used for designating an employee as furloughed.

Otherwise, there is no set procedure that needs to be followed.

Will the organisation need to pay back any of the funds which will be paid by the government?

No, as this is a grant, it will not be repayable.

Is it possible to make a claim under the CJRS if a furloughed worker is still working?


Would it be a breach of trust and confidence to lay employees off?

If the employee contract has a ‘Lay off’ clause, and the right is not exercised in any discriminatory or malicious way, this would not be a breach of trust and confidence.

There is no implied term as to how long an employer can keep an employee on lay off. 

Can an employee undertake any other employment while furloughed?

The guidelines state that an individual cannot undertake any work for an employer that has furloughed them, it does not expressly state that they cannot work for another employer. More information should follow on the online portal on this in due course.

However, the furloughed employee must be available for work when their employer advises them to return.

If an employee is sick or self-isolating can they be furloughed?

Employees on sick leave or self-isolating should get SSP but can be furloughed after this.

To be furloughed, an employee must be “available for work.” If the employee is sick before the period of furlough leave, they will not be available for work.

They should be eligible for statutory sick pay (SSP), however this would usually be at a lower rate than furlough pay.

If an employee becomes sick whilst on furlough leave, this is only likely to become an issue if the employer asks them to return.

If an employee is on parental leave would they receive furlough pay?

There would be no change to the status of employees on maternity or paternity leave.

Will organisations have to pay redundancy payments?

The scheme covers employees who were made redundant since 28 February, if they are rehired.

Furloughed workers are not redundant and therefore would not be paid redundancy.

However, if an employer exercises an express or implied right to lay off an employee, in some circumstances, the employee becomes entitled to claim statutory redundancy payment. This also applies to short-time working, the definition of which would apply here (if the employee will receive less than 50% of their pay, which is possible because of the £2,500 cap).

The employee must have been laid off or kept on short-time working (or a combination of both) for at least four or more consecutive weeks; or a total of six weeks in any period of 13 weeks.

If an employer provides a contractually guaranteed rate of pay, an employee cannot be laid off for the purposes of claiming a redundancy payment under the statutory scheme. Whether this applies will depend on the contract.

How do organisations best consult staff when they are all at home?

Contact staff via telephone or, by video conferencing. Alternatively, you could contact by email. 

Will there be a breach of trust and confidence if an organisation does not ‘top up’ the extra 20% under the CJRS is made by an employer?

Not if you laid people off under an express contractual right to do so.

Can an employee be forced by their employer to take furlough leave?

If a contractual clause exists which permits the employer to either lay off, or bring in short time working, an employer can insist on furlough leave without consent.

Is it possible for an employee to ask their employer that they be placed on furlough leave?

Yes, but there is no obligation for an employer to agree to do this.

If employees are placed on furlough leave, can there be a rotation of furlough leave between employees?

It is not yet clear as to whether this will be permitted.

As business needs may change, it would appear there can be a rotation to be allowed but that has not yet been confirmed.

Can organisations furlough workers, and then take them back on if needed?

Furlough leave must be taken in minimum blocks of three weeks.

If instead of furlough leave an employer wants to make somebody redundant, will this be deemed unfair?

If an employer wants to undertake a redundancy exercise, then they can do so.

At this time, we have to question whether to choose to make redundancies has been fair. The CJRS is designed to keep people in employment and to discourage redundancies. There is also a financial disincentive in making an employee redundant as it would also mean paying notice and any applicable redundancy payment. To gauge whether the redundancy is fair would depend on the outcome of consultation. If the employee would rather be furloughed, a dismissal may have been an unfair decision.

What if an organisation has already made staff redundant?

The scheme covers employees who were made redundant since 28 February, if they are rehired. 

Would all organisations regardless of size be able to furlough their employees?

There is no indication that there will be any restriction by size of business.

What if an organisation has employees who are still working but object to other colleagues receiving 80% of pay on furlough leave?

Organisations may have to deal with grievances being raised, however, there is nothing to prevent you from looking to resolve any issues informally should they arise. However, there is no right for employees to insist on being placed on furlough leave. 

What is the position regarding individuals such as agency staff and zero-hour workers under the CJRS?

Furloughed employees must have been on PAYE payroll on 28 February, and can be on any type of contract, including: full-time employees, part-time employees, employees on agency contracts, flexible or zero-hour contracts.

Will annual leave continue to accrue for furloughed employees?

Annual leave will continue to accrue if an employee is furloughed because they will remain employed as opposed to being made redundant.

It would require specific laws to enable furlough leave to be classed as annual leave. Organisations may wish to agree with employees that they take annual leave instead of furlough leave, but there may be little incentive to do so for many employees.

To ensure that workers do not lose their leave entitlement the Government announced on Friday 27 th

March that employees can carry over up to 20 days annual leave from the 2020 leave year for 2 years.

What effect does this have on National Minimum Wage (NMW)?

The NMW is a prescribed minimum hourly rate of pay which employers must legally pay to most of their workers. As furloughed employees won’t be working, the NMW will not apply.

Will employees who have moved back home (to other countries) still be eligible for this scheme, if they are still technically employees?

If someone has lives overseas and is furloughed, they must still be available for work.

If they are furloughed, at this point there is no restriction on their location during such a period.

What happens to employees that started after the 28 February 2020 or started in February but added on payroll in March, will they still be entitled to the 80%?

The scheme is backdated until 1 March 2020 and at this point is available for employees, with no restriction on start date. However, there may be other guidance to the contrary when the online portal goes live.

Key tips for employers:

• Ensure that you document your thought processes and discussions when deciding which employees are to be designated at ‘furloughed’ – treat it as if it is a redundancy situation and think about how you would need to evidence your decision.• Consider if putting employees on furlough leave is absolutely necessary and reasonable to do in the circumstances. Again, make sure you record your reasons (in writing).

• Ensure that you notify employees being designated as ‘furloughed’ in writing, giving your reasons, making clear any terms that will apply during this period, and offering reassurance that financial support via the CJRS will be available.

• The CJRS is intended to be a reimbursement scheme so it is envisaged that the employer will have to make the payments to employees first and then seek reimbursement from HMRC.

• Be understanding that there may be groups of employees that feel hard done to e.g. those who are genuinely sick with the Coronavirus, those having to self-isolate as a family member is sick, the over 70s and those in vulnerable groups who are only entitled to SSP or contractual sick pay (which may be less than 80% pay) and they feel it is unfair that those ‘furloughed’ are getting much more. Equally, you may have some self-employed contractors in your business who are not entitled to anything (certainly at the present time unless things change).

Useful links:

1. Link to employer guidance released so far: COVID-19 employer guidance
2. Link to employee guidance released so far: COVID-19 employee guidance
3. BBC news on the Job Retention Scheme: Job Retention Scheme first announced
4. Statutory Sick pay amends: https://www.gov.uk/statutory-sick-pay
5. Tax helpline to support businesses: Tax-helpline for businesses
6. Government summary of what the Coronavirus Bill aims to do? Summary of Coronavirus Bill
7. More detailed proposals in the Coronavirus Bill: Detail on Coronavirus Bill
8. Coronavirus Bill- Self-employed pay: Statutory self-employed pay
9. Rules on carrying over annual leave: https://www.gov.uk/government/news/rules-on-carrying-over-annual-leave-to-be-relaxed-to-support key-industries-during-covid-19

We hope that this note is helpful. The situation is changing by the day, and even the hour, and so as soon as there is any further information we will share that with you.

In the meantime, if you have any questions or you encounter issues with getting employees to agree to being ‘furloughed’, please do not hesitate to seek assistance from one of the Employment team.

This note is not intended to constitute legal advice and you must take specific advice in respect of your particular circumstances.