What is Furlough?

As part of the Corona Virus Job Retention scheme the UK Government have created a method to keep jobs open for employees by subsiding 80% of wages up to £2,500 per month where they are “furloughed” or stood down from their role.

Who can access support?
Any UK organisation with employees can apply, including businesses, charities, recruitment agencies (with agency workers paid through PAYE).  You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

Can we put our employees on furlough?
The scheme is aimed at those employees who would otherwise be at risk of losing their jobs through lack of work.  The guidance is clear that furlough remains subject to existing employment law.  Agreement with employees will be necessary if a salary reduction is involved unless there is a clause in the employment contract which allows the employer to reduce pay (often referred to as a ‘lay off’ clause). 

How do we decide who to furlough?
When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws and other legal obligations (such as the implied duty of trust and confidence) will apply in the usual way.

As an employer do I have to “top up” the remaining 20% of wages during this time?
Please see the above – if there is a lay off clause or the employee agrees to receive only 80% of pay then the 20% top up is optional.

What can I reclaim?
Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus the associated employer NICs and minimum auto enrolment pension contributions on that wage.  Fees, commissions and bonuses are not included.

Is there a minimum period for which an employee must be furloughed?
Furlough must be for a minimum of three weeks to be eligible for the Government funding. 

Can my employees do any work for me during that time?
No.  The employee must not be working for you at all.  However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for you.

Can an employee be on and off furlough numerous times?
This remains unclear but there is nothing in the latest guidance which specifically prevents it, so long as on each occasion the employee is furloughed for a period of at least three weeks.  However, employers should be cautious until this is further clarified.

For more information contact our Employment team on 01482 320620 or email [email protected].