Furlough leave


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Employment law- Furlough Leave


What is the Coronavirus Job Retention Scheme “(CJRS”)?

On 20 March the government announced support for employees who would otherwise likely be made redundant because of the Coronavirus outbreak. This is against a background of a significant drop in business and where there is no longer enough work for the current number of employees.

Under the scheme, which main focus is to keep your job alive, your employer can ask you to stop working, but keep you on the payroll. This is called being on ‘furlough’. This is a very important point. No work is allowed to be carried out if you are being “furloughed”.

You must be furloughed for a minimum period of 3 weeks. You can then return to work, and put on furlough again later if needed.

If you are being furloughed in accordance with the scheme, your employer should pay 80% of your usual monthly wages, up to a maximum of £2,500 per month. Your employer will then be able to reclaim this from HMRC. You will pay PAYE and National Insurance contributions on any payment received.

The 80% of reclaimable wages can include contractual commission as well as basic salary, but this will be relation to past sales only as you cannot be completing new sales whilst on furlough. It does not include the value of benefits such as private health or a car.

The Government scheme is presently only open for 3 months (from 1 March 2020); however, it may be extended. Your employer can only apply for a reclaim of your salary every 3 weeks, so they will doubtless be monitoring the position and requirements of staff in each 3 week period.

Your employer can still furlough you if your role is not entirely redundant, but you have less work to do than you usually would. This is as long as you do not do actual work during the furlough period.

How does the furlough scheme work in more detail?

The updated guidance from the government confirms that:

  1. The scheme is open to all UK employers that had created and started a PAYE payroll scheme by 28 February 2020.
  2. When making an application, employers can only include employees who had joined their payroll by 28 February 2020. Anyone whose employment commenced after this date is not eligible.
  3. Those who were on the payroll on 28 February 2020, but who have since been made redundant can be re-hired and then furloughed.
  4. Employees on unpaid leave cannot be furloughed unless they were placed on that leave after 28 February 2020.
  5. Employees on sick leave or those who are self-isolating should receive SSP (or, if applicable, company sick pay), but can subsequently be furloughed. Employees who are ‘shielding’ (that is, those who the Government has identified as being extremely vulnerable) can be furloughed.
  6. To calculate the 80% of your salary for full-time and part-time employees, employers will need to use your gross salary as at 28 February.
    As mentioned above, those employees who have been furloughed must not carry out any work for their employer. You can however undertake training or volunteer work provided that no revenue is generated for your employer. If you are working reduced hours and/or are on a reduced pay, you are not eligible for the scheme.
  7. If your salary varies on a month by month basis, there are separate provisions. As a result, if you have been employed for at least a year before being furloughed, your employer can use the higher of the same month’s earnings from the previous year, or the average monthly earnings from the 2019-2020 tax year to calculate the 80%. If, however, you have been employed for less than a year, then your employer can use an average of your monthly earnings since you started work.
  8. Fees, commission and bonuses are not included in the furlough scheme when applying the 80% calculation as you are not meant to be working. However, contractual commission for past sales can be reclaimed.
  9. The 80% does not include non-monetary benefits (such as health insurance or car).
  10. Your employer will need to decide who to furlough. There would still need to be a fair process and no discrimination in that selection.
  11. You will need written confirmation of the full terms of the furlough leave to include that it is temporary in nature, and providing for your consent (see below).
  12. Your employer must notify you of your furlough status in writing and retain a record of this for 5 years.

When is it available?

The government has said that the scheme will be backdated to 1st March, so your employer will be able to reclaim 80% wages for any time spent not working because of Coronavirus from that date onwards (subject to the £2,500 a month cap). It will initially last for 3 months until 31st May, but the government has said it will be extended if necessary.

My employer wants to put me on furlough, do I have to accept it?

The government has said that the scheme must be implemented in accordance with existing employment law. This means that putting you on furlough is a change to your employment contract. In the vast majority of cases, you need to agree to any changes to your contract that your employer proposes.

That said, if your employer is proposing furlough leave, it is likely that the alternative is redundancy unless your employer would really not want to lose you. You don’t therefore have to accept being put on furlough, but it is still likely to be in your best interests to do so.

Does my employer need to confirm my furlough leave in writing?

Yes, they do, and must keep a written record for 5 years.

What would a typical written furlough agreement look like?

The following points are likely to be covered in the agreement:

  • That you are taking a temporary leave of absence.
  • The start date of the leave of absence.
  • If you have already been made redundant, an agreed withdrawal of your termination of employment and, if relevant, repayment of any redundancy payments, payments in lieu of notice and/or severance payments already made.
  • How your employer will end the furlough leave in terms of notice give to you.
  • What pay you will receive and your agreement to accept a lower level of remuneration than you are entitled under your contract of employment.
  • Whether you are expected to use up your holiday entitlement during your leave.
  • Confirmation that your statutory rights, such as rights to maternity, shared parental or adoption leave and pay, will continue.
  • Confirmation that other than the provisions of the furlough agreement, the terms of your contract of employment remain in force and unaffected

Can I choose to be placed on furlough?

Simply put, no. The Job Retention Scheme will only be available where the employer offers it and the employee accepts. There will be no ‘right’ to be placed on furlough.

Does my employer have to pay the additional 20% of my wages?

The government has said that employers do not have to ‘top up’ employees’ wages to full pay, although your employer may choose to do so.

Of course, being paid 80% of your salary (up to a maximum of £2,500) is a change to your employment contract, so your employer should seek your agreement in advance. You may otherwise have breach of contract/deduction from wages and/or unfair dismissal claims.

Depending on your employer’s financial circumstances, you may in fact be able to negotiate payment of the additional 20%, but this may not be possible if your employer is under financial pressure.

In most cases, if it is necessary to put you on furlough, then it is likely to be in your best interests to accept this, as the alternative is likely to be redundancy.

Can I do the odd bit of work for my employer while on furlough?

You cannot undertake work for your employer while you have been furloughed. The government guidance says that this includes “providing services or generating revenue”. If you do carry out any work, then your employer may have to repay the grant. HMRC may well be carrying our audits to check if work is being carried out and/or this represents a fraud on the system.

If your employer nevertheless insists that you carry out work whilst you are furlough, we would suggest you draw the rules of the furlough scheme to their attention and query why you are being asked to work. This is going to be a tricky situation, however, because you don’t want to put your own job at risk by raising obstacles with your employer. Hopefully, however, employers will not put their employees in this situation and at the end of the day, it is them whose conduct is exposed as regards HRMC.

Directors and owner-managers can be furloughed if on PAYE and will still be allowed to do statutory duties in these roles – this will not count as work which disqualifies them from the grant.

What is the position where I am working for two different employers?

If you have two jobs, you can work for one employer, whilst on furlough from the other.

Can I start a new job whilst at the same time being on furlough from my other employer?

Yes you can, if your contract of employment does not have a clause restricting you from doing so. Even if there is such a clause, your employer is able to waive this if they chose do so so. This means you could end up earning 80% of your old salary and 100% of the new one.

Will I still be entitled to benefits such as health insurance, gym membership if I am placed on furlough leave?

Yes, these will need to be maintained, unless you agree something different with your employer, even though employers are unlikely to be able to claim the cost of these benefits from HMRC.

If your employer offers you permanent health insurance or death-in-service benefits, they should ideally check with their scheme provider about what salary would be used in the event of a claim – would it be normal annual salary or pay during furlough?

Your employer will not be able to claim as part of the 80% the value of your benefits.

Does my employer have to put me on furlough instead of making me redundant?

Your employer is not obliged to put you on furlough instead of making you redundant. Of course, if your employer has told you that you will be made redundant, you can request that you be put on furlough instead, in accordance with the government scheme. However, your employer does not have to accept this.

If you have worked for your employer for more than 2 years, your employer would still be at risk to an unfair dismissal claim should it not follow a fair redundancy procedure, and this includes exploring alternatives to redundancy. It would, therefore, be reasonable to consider furlough as part of the consultation process.

Will I lose out on my redundancy payment if my employer gives me the choice of furlough or a termination of employment?

Your employer may be relying on a clause in your contract allowing for a variation in your terms of employment. It would be this type of variation clause that they would argue entitles them to give you the choice of furlough or a dismissal for unreasonably refusing to accept furlough.

Whether they can do this would largely depend on what the variation clause says, but it should definately be argued that furlough is not something which it is reasonable to enforce under a variation clause. Instead, your employer should be either fully paying your salary or making you redundant (and paying you the appropriate redundancy payment).

My employer does not want to put me on furlough (instead of making me redundant) because it will have to pay my wages now then wait to be reimbursed. Is there anything I can do?

If your employer is having cash flow issues because of the Coronavirus crisis, then it may be eligible for a ‘Coronavirus Business Interruption Loan’ which could be used to pay your wages until HMRC begins reimbursing employers under the Job Retention Scheme.

You could suggest this to your employer as a way to resolve the issue, however there is no obligation on your employer to accept this suggestion.

I have already been made redundant because of Coronavirus, can my employer re-hire me and put me on furlough?

Yes, the furlough scheme specifically allows this. You should speak to your ex-employer and ask whether they would be willing to put you back on the payroll and designate you as ‘furloughed’. Your employer may very well agree (particularly if the business is likely to recover quickly after the crisis) but there is no obligation to do so.

Can my employer rehire me so I can go on furlough leave if I have already left for a reason not connected with redundancy?

Yes, this is possible under the furlough scheme.

If my employer puts me on furlough, then eventually makes me redundant, will I still get my full notice pay?

At this stage, it is not clear what notice payment you are entitled to if your employer puts you on furlough and then subsequently makes you redundant. It is hoped that the government will release further guidance on this issue. It would, however, seem unfair if you were no longer entitled to your full notice pay and any available statutory or contractual redundancy pay simply because you were on furlough.

Can my employer make some people redundant and furlough others?

Yes. The guidance clearly says that an employer does not need to place all employees on furlough.

How should my employer select which employees should be furloughed?

It is likely that those who cannot work from home and who currently have no work to do will be obvious candidates for furloughing. Otherwise, employers would probably need to consider a process of calling for volunteers, pooling and selection – as with a redundancy process. If you think you have been discriminated in the selection process because of a protected characteristic (such as race, sex, disability) you may have a claim for discrimination.

If I have been given the option to become furloughed or resign, would I still be entitled to my full contractual or statutory notice pay?

Yes, your usual contractual notice period will still in in place or in the absence of a contract, then your statutory notice pay of 1 week for every year worked up to a maximum of 12 weeks will apply.

What happens to my maternity pay?

These payments appear to apply as normal, but if the employer offers enhanced earnings-related contractual pay for maternity leave this can be claimed as a furloughed wage cost. The same proposition applies for contractual adoption, paternity or shared paternity.

Will my holiday continue to accrue whilst I am on furlough leave?

The position is not entirely clear. However it is likely that as the scheme does not affect your entitlements under your employment contract and that you remain employed, your holiday should accrue as normal. Until the government produces further clarification, you should try to agree the full terms for any furlough period to include that your holiday leave remains unaffected.

What will happen at the end of the furlough period?

You will retain your employment status during the furlough period. At the conclusion, you will have the same rights as you did previously including Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments. Of course your employer will need to make some difficult decisions about to what extent they need to restructure the business, including of course their staff requirements.


We are a leading firm of employment law solicitors, acting for employees and senior executives in the City and throughout the UK. For more information on the coronavirus and a free consultation, please get in contact on 020 7100 5256 and ask to speak to Philip Landau or any member of the employment team, or email us.







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