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This article was first published on 3 April 2020. It was updated on 24 September 2020. 

These FAQs deals with the mechanics of furloughing workers under the scheme in place from 1 March 2020, which closed to new entrants from 30 June 2020.  This means that no employees can be furloughed if they had not previously been furloughed at some point between 1 March 2020 and 10 June 2020. The situation may differ for employees who return from statutory family leave after 10 June 2020.

These FAQs also deal with making claims under the scheme.

On 29 May 2020, the Chancellor announced changes to the scheme, which included a requirement for employers to contribute to furloughed workers’ wage costs, and the introduction of flexible furlough.

From Wednesday 1 July, furloughed workers are able to return to work part time as part of the flexible furlough scheme. Please click here for information on this. Please also click here for our 'how to' guide on placing staff on furlough after 1 July. 

8 July 2020 update

On Wednesday 8 July, Chancellor Rishi announced a Job Retention bonus available to employers who retain furloughed staff until the end of January 2021. This is to prevent redundancies as the furlough scheme is wound down towards the end of October. Staff must be brought back to do 'proper work' and earn at least £520 per month. More information is available in our article

24 September 2020 update

On Thursday 24 September 2020, Chancellor Rishi Sunak confirmed that the Job Retention Scheme is to end on 31 October, to be replaced by the Job Support Scheme from 1 November. Please click here for details. 

What’s the Job Retention Scheme?

By designating employees as “furloughed”, you will be able to recover 80 per cent of your wage costs via the Job Retention Scheme. This means that your furloughed employees will still receive at least 80 per cent of their wage from you even though they are not doing any work. It is a way of avoiding unpaid lay off or redundancy and allows you to keep employees on until you can provide work again.

On 12 May 2020, an extension to the end of October was confirmed. 

Three Treasury directions have been released which set out how claims will be dealt with under the Scheme. The first was issued by the Chancellor on 15 April 2020 and applies to claims submitted before 22 May 2020 which are not compliant with the second Treasury Direction. 

The second Treasury direction was issued by the Chancellor on 22 May 2020.  It amends and effectively replaces the first Treasury direction in respect of claims made on or after that date, or in relation to earlier claims that would have been compliant with the second Treasury direction in any event. 

The third Treasury direction was issued on 26 June 2020. It outlined how the new flexible furlough scheme would work from 1 July. 

Applications for the scheme opened on Monday 20 April and the online portal can be found at this link. From 1 July, subject to exceptions, only staff that have previously been furloughed can be placed on furlough again. 

How is the scheme going to work from from July onwards? 

On 29 May 2020, the Chancellor announced changes to the Scheme.  

Existing scheme closure and ‘flexible furlough’

  • The old Scheme closed to new entrants on 30 June.  
  • From this point onwards, employers are only able to furlough employees that they have furloughed for a full three week period prior to 30 June.
  • Employers who want to place new employees on furlough needed to go do so by 10 June so the minimum 3 week period required can be achieved.
  • From 1 July, flexible furlough can be used.
  • For example, an employee who works 5 days a week can be brought back to work for 2 days a week. The employer will pay wages for those 2 days as normal. The Scheme will “continue to cover” the employee for the other 3 working days.   

Financial assistance and final closure

  • There were no change to the level of financial assistance provided by the scheme during June and July.
  • From the start of August, employers now need to start contributing to furloughed employees’ wage costs on a phased basis - more details are outlined below.
  • The scheme will close at the end of October.  

What is a ‘furloughed’ employee?

The word furlough generally means temporary leave of absence from work.

A furloughed employee is someone who, rather than being dismissed for redundancy by their employer or being put on lay off, is kept on the payroll during a period where the employer does not have any work for them. From 1 July 2020, furloughed staff can return to work on a part-time basis. 

On 9 June 2020, the Chancellor confirmed that employees who are returning from certain types of family leave in the coming months are not subject to the 10 June cut-off date where they are returning to work for an employer who has previously furloughed employees. This will apply to those who return from maternity, paternity, adoption, shared parental and parental bereavement leave.

Do I need to get employees to agree to the furlough?

Unless there is a term allowing furlough in employees’ contracts, you will need to obtain agreement from employees to designate them as furloughed and reduce their pay (if that is what you want to do — you may decide to furlough and keep on 100% pay by topping up the Government grant). An addition to Government guidance on 23 April 2020 stated that collective agreement between employer and employee will be sufficient as evidence.

You will need to agree the pay reduction with employees as part of the agreement to furlough, because normal employment law principles apply.

On 15 April 2020, the Government released a Treasury Direction on the Scheme. It stated that employers must have agreement in writing that the employee will cease to do all work for the duration of furlough.

Employers should confirm the employees' new status and obtain their consent in writing, including confirmation that the employee will cease all work in relation to their employment. Records should be kept for five years.

The second Treasury direction clarified that agreement to cease all work can be done by either obtaining the employee’s consent in writing or by the employer confirming the agreement in writing. This measure is intended to cover those employers who did not obtain written agreement from employees before placing them on furlough provided that the employer complies with all other requirements of the second direction. The second direction requires that written agreement or confirmation:

  • specifies the main terms and conditions on which the employee will cease work
  • is incorporated (expressly or impliedly) into the employee's contract
  • is made in writing or confirmed in writing by the employer (including by electronic means such as email)
  • is retained by the employer until at least 30 June 2025.

A separate agreement will be necessary for staff who are to be placed on flexible furlough. If the hours they are to work change, a further agreement to this development will also be necessary.

When the new rules are implemented, for any flexible furlough which takes place during the period commencing on or after 1 July, will employers need to get fresh agreement with furloughed employees if their furlough is to continue?

As employees must cease all work for their employer while on furlough under the current rules, it is likely that furlough agreements include a requirement that the employee does not carry out any work for the employer during their furlough period. The change to terms and conditions is that furlough means no work and 80 per cent pay (unless topped up). A fresh furlough agreement will be needed, which permits the employee to work during furlough and sets out the circumstances in which the employer can require the employee to work.

A new Treasury Direction has been released on 26 June 2020 to cover the post-July period because the one currently in place only sets out the terms of the current version of the Scheme.

Do I have to collectively consult if 20 or more employees are involved?

Possibly. If there is a pre-existing consultation process in place, you may have to follow it. If there is no consultation process in place and to begin consultation on this would present difficulties with the election of representatives and actually fulfilling consultation, there may be a defence because of the special circumstances. In all but the most extreme cases, there is likely to be an expectation that some form of consultation is undertaken.

Who does the Scheme apply to?

The scheme is open to all UK employers that had a PAYE scheme in place on or before 19 March 2020, have enrolled for PAYE online and have a UK bank account. Any organisation with employees can apply, including charities, not for profit organisations and recruitment agencies.

Whilst the Government has said they do not expect many public sector employers to furlough employees, there is no complete bar on this. The guidance says “In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the Scheme may be appropriate for some staff.”

From 1 July 2020, the scheme is only available to those who have been furloughed by 10 June 2020, save for eligible employees returning from certain types of family leave including maternity leave. In order to qualify, employees must have been on furlough for the minimum period at any time in the period from 1 March to 30 June 2020.

For employees that meet the criteria above, the number of employees you claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June.

For example, an employer had previously submitted three claims between 1 March 2020 and 30 June, in which the total number employees furloughed in each respective claim was 30, 20 and 50 employees. Then the maximum number of employees that employer could furlough in any single claim starting on or after 1 July would be 50. The only exception to this rule is where employees return from certain types of family leave after 10 June; they can be furloughed for the first time after this date provided they meet the usual criteria and the employer has previously furloughed employees.

When would I use the Scheme?

The Government guidance for employers says that the Scheme was for employers who have been severely affected by the coronavirus.

However, all employers were eligible to claim under the scheme and the Government recognises different organisations will face different impacts from coronavirus.

The Treasury directions stated that the Scheme was to help “employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease”. The employer guidance still states that it is for employers whose “operations have been severely affected by coronavirus”.

It goes on to say “It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.”

On 12 June, the employer guidance was amended to follow suit with the Treasury Direction, now saying “If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees…”. Provided there is a connection between putting employees on furlough and the consequences of COVID-19, the purpose of the scheme will be met. 

From 1 July 2020, organisations are not able to place staff on furlough if they have not previously done so. 

When did the scheme start? 

HMRC’s online portal through which you can make the claim launched on 20 April 2020. The scheme was able to be backdated for furloughed employees from 1 March 2020. The scheme closes to new entrants on 30 June 2020 except for employees who are returning from maternity, paternity, adoption, shared parental and parental bereavement leave in the coming months, and reservist employees returning from active service, where they are returning to work for an employer who has previously furloughed employees. Except where that exemption applies, from 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.

What happens to employees who have been transferred under TUPE?

Government guidance published on 30 April 2020 confirms that employees who were subject to a TUPE transfer after 28 February 2020 can be furloughed and the new employer can claim for their wages, to the prescribed amount, via the Scheme. This reverts the position back to that which had been in place before 15 April 2020, which is when the Government amended their guidance to state that employees who had been transferred after 19 March could be claimed for under the Scheme. For now the position is this: employees transferred after 28 February 2020 can be claimed for provided they are on the ‘new’ employer’s payroll, and a RTI submission made, on or before 19 March 2020.

From 1 July, TUPE'd staff can be placed on furlough by the new employer, provided they have previously been furloughed by their old employer. 

What do we use as the starting point for employee pay?

Salaried employees’ pay is that which they earned in the last pay period prior to 19 March 2020. Up until the end of July, you could reclaim up to 80 per cent of wage costs up to a cap of £2500 per month, plus the associated employer National Insurance contributions and minimum auto-enrolment pension contributions on that reduced wage. This has now changed from 1 August 2020 - see below for details. 

Guidance published on 15 April 2020 clarifies that, if, based on previous guidance, you had calculated your claim based on the employee’s salary as at 28 February 2020 (and that differed from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.

The situation for those with variable/irregular pay is different. If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, you can claim for the higher of either:

  • The same month’s earning from the previous year.
  • Average monthly earnings from the 2019-20 tax year.

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If you have previously calculated employee pay as at 28 February 2020, you can still use this calculation.

What exactly is covered in terms of elements of pay?

The Government guidance is that commission, bonuses and discretionary payments are not included when calculating pay. All elements that you are obliged to pay your employees including wages, past overtime, fees and compulsory commission payments can be included.

From the start of the scheme until the end of July, the government paid 80 per cent of wages up to a cap of £2,500 as well as employer NICs and pension contributions for the hours the employee doesn’t work.

In August, the government paid 80 per cent of wages up to a cap of £2,500 and employers will pay employer NICs and pension contributions for the hours the employee does not work.

From September, the government pays 70 per cent of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers also pay employer NICs and pension contributions and 10 per cent of wages to make up 80 per cent total up to a cap of £2,500.

In October, the government will pay 60 per cent of wages up to a cap of £1,875 for the hours the employee does not work. Employers will also pay employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. 

Will the payment be taxable?

Yes, payments you make to furloughed employees will be subject to PAYE and National Insurance contributions.

Will I be able to recover Employer’s NI contributions and pension contributions under the Job Retention Scheme?

You remain liable for Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.  However, you can claim a grant from HMRC to cover:

  • wages for a furloughed employee (equal to the lower of 80% of an employee’s regular salary or £2,500 per month), plus
  • the Employer National Insurance contributions associated with that (capped) payment, plus
  • minimum automatic enrolment employer pension contributions in respect of that (capped) payment.   

From August, employers pay employer NICs and pension contributions for the hours the employee does not work. 

Do I have to pay 100% of the wages in order to claim?

No. You can choose to top up to 100% but do not have to. Those who choose to top up can now only claim 70 per cent from the government from 1 September (60 per cent from 1 October ). 

Do I have to meet minimum wage with the 80 per cent?

Minimum wage applies to hours worked. So if employees are furloughed and do not work and 80 per cent of their normal earnings would take them below the NMW, this is fine.

How will I apply for the reimbursement?

You can make one claim at least every three weeks using the HMRC online portal, open from 20 April 2020. To claim, employers will need:

  • employer PAYE scheme reference number
  • the number of employees being furloughed
  • National Insurance Numbers for the furloughed employees
  • Names of the furloughed employees
  • Payroll/employee number for the furloughed employees (optional)
  • their Self Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference, Company Registration Number or Employer Name (as appropriate)
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • their bank account number and sort code
  • their contact name
  • their phone number

Employers will need to calculate the amount they are claiming. Remember that from August 2020, employers cannot claim for employer national insurance and pension contributions.

The old system - 1 March to 30 June

Employers were unable to make more than one claim during a claim period, so when preparing to make a claim they needed to decide the length of the claim period. This meant they needed to include all of the employees that they want to furlough for that claim period, because they were not able to make another claim for the same period or one that overlaps, and they were not able make changes to their claim once it was submitted. To make the process easier, a ‘save and return’ option was added, meaning if employers do not have all information they require, they were able to save and come back to the claim later.

Employers should retain all records and calculations in respect of their claims, including records of the amount claimed for each furloughed employee and the period for which each employee is furloughed and a claim made under the scheme. 

If employers have fewer than 100 furloughed staff they were asked to enter details of each employee they are claiming for directly into the system - this included their name, National Insurance number, claim period and claim amount, and payroll/employee number (optional).

If there are 100 or more furloughed staff the employer was be asked to upload a file with the information rather than input it directly into the system. HMRC accepted the following file types: .xls .xlsx .csv .ods

The new system - 1 July to 31 October

HMRC provides a file upload template to complete for claim periods starting on or after 1 July.

The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional).

If employers use an agent who is authorised to act for them for PAYE purposes, they will be able to make a claim on the employer’s behalf. If the employer uses a file only agent (who files their RTI return but doesn’t act for them on any other matters) they won’t be authorised to make a claim and employers will need to make the claim themselves. The file only agent can assist employers in obtaining the information they need to claim (listed above).

If an agent makes a claim on the employer’s behalf, the employer will need to tell them which bank account they would like the grant to be paid into.

From 1 July, claim periods are no longer be able to overlap months. Employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme. The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the existing scheme.

The deadline for you to claim under the scheme for the period to 30 June 2020 was 31 July 2020. From July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June.

What if I have already just made redundancies or employees have recently left?

You can re-hire and furlough any ex-employees who have left provided they fit into the following criteria, but it’s entirely your choice. You can re-hire and furlough someone who left after 28 February 2020 provided they were on your payroll on 28 February 2020 and had been notified to HMRC on a RTI submission on or before 28 February 2020. This means a RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 28 February 2020. You can also re-hire anyone who left on or after 19 March 2020 but they must have been on your payroll on 19 March 2020 and have been notified to HMRC on a RTI submission on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. Other employees may be in the position where they are serving out their notice of redundancy but have not yet left the company. Employers may choose to withdraw the redundancy notice and place the employee on furlough instead. Employers can use the letter to withdraw a redundancy and offer furlough.

Can I make an employee redundant when they are on furlough?

Although the scheme is in place to prevent redundancies, it is inevitable that some businesses will assess that redundancies are required. The Government guidance confirms that employees can be made redundant while they are on furlough. Redundancy processes are still subject to the normal rules when carried out on furlough and, to prevent an unfair dismissal claim, reasonableness of the decision will be a key factor. This includes the financial position of the employer. As part of the process, employers should consider why furlough, with its ability to claim capped wages from the Scheme, was not suitable in the circumstances.

Is statutory redundancy pay calculated on furlough pay or normal pay, when a redundancy takes place following furlough?

Furloughed employees who are then made redundant will receive redundancy pay based on their normal wage, rather than a reduced furlough rate, under new laws coming into force on 31 July 2020. 

These changes also apply to Statutory Notice Pay, which is where employees must be given a notice period before their employment ends, varying from at least one week’s notice up to 12 weeks’ notice, depending on how long they have worked for their employer.

During this notice period, employees must be paid and this must be based on normal wages rather than their wages under the Coronavirus Job Retention Scheme (CJRS).

It should be noted that the new legislation does not affect any enhanced redundancy pay that may be stipulated in the terms and conditions of an employee’s individual employment contract, but applies to basic statutory redundancy pay entitlements

Can I agree to re-hire and furlough in any other circumstances?

Yes. Anyone who left your organisation after 28 February 2020 but before 19 March 2020 can be re-hired and placed on furlough. This means that the ex-employee must have been notified to HMRC through a RTI submission on or before 28 February 2020. However, this is not an obligation and you can decide whether to do this or not. Anti-discrimination laws are likely to apply here.

How long does furlough last?

Prior to 1 July, furlough had to be taken in minimum blocks of three weeks in order to be eligible for the funding. It was able to last for the entirety of the scheme’s life time but the final date by which an employer could furlough an employee for the first time was 10 June, save for employees who are returning from maternity, paternity, adoption, shared parental and parental bereavement leave, or reservists returning from active service in the coming months where they are returning to work for an employer who has previously furloughed employees. Reservists must have been on active service before 10 June 2020 and also need to have returned after this date. 

From 1 July, employees can be placed on furlough for any amount of time. 

Can I rotate employees on furlough?

Yes, it appears so. Employees can be put on furlough more than once so you can, for example, place Employee Set A on furlough while Employee Set B continue to work. Then Set B can be put on furlough while Set A come back to work. Set A can then be furloughed again etc.

Rotating employees between work and furlough can continue into July and onwards, however, any employee put on furlough from 1 July must have already been furloughed for a minimum of three weeks prior to 1 July 2020.  Employers must also remember the limit on the number of employees that can be furloughed on any on claim period from July.

Can the employee undertake any work during furlough?

Prior to 1 July, employees were not able to conduct any work for the company, or any linked or associated organisation. If they worked for even an hour (during their minimum three week furlough period) the employer was unable to claim the grant for this period.

From 1 July, furloughed employees can return to work on a part-time basis. However, for the time in which they are considered furloughed, they should still undertake no work for the company. 

Can my employee get another job whilst on furlough with me?

Your normal rules on employees getting second jobs will still apply, however you may wish to be flexible in the circumstances. It will be in your best interests to continue any restrictions on other employment which may create a conflict of interest e.g. work with a competitor or client. If you do allow your employees to take on other work during their normal working hours, you should ensure that they understand that they must be available for duty when work is available again.

Can employee representatives who are furloughed continue with their duties, for example, if the employer is undertaking a redundancy exercise?

Whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However in doing this, they must not provide services to or generate revenue for, or on behalf of their organisation or a linked or associated organisation.

How do I select employees for furlough leave?

You must be careful not to discriminate when deciding who to furlough. In some cases it will be all employees, in others it will be certain departments. Where selection does need to take place, it may be appropriate to implement a similar selection period as would be used in a redundancy situation so that the most effective employees remain in work.

What about employees on sickness or self-isolating?

Government guidance released on 9 April 2020 clarified that while an employee receiving SSP cannot be on furlough at the same time, an employer can decide whether to place a sick employee on furlough or on sick leave. The second direction clarifies that employers can place an employee who is on sick leave or self-isolating onto furlough at any stage; it had previously been understood that furlough could only commence once an original SSP period had ended. Where the employer places a sick employee on furlough, SSP is longer payable and the employee should receive furlough pay. Both the SSP Rebate Scheme, introduced as part of coronavirus emergency legislation, and the Job Retention Scheme can be used for the same employee but not at the same time. The guidance made clear that an employer should not use the Scheme as a way to “top up” sick pay for short term sickness. In any case, the minimum furlough period eligible to claim the grant is three weeks. Employers who decide to place sick employees on SSP cannot claim for wages under the Scheme.

What about employees who are ‘shielding’?

Guidance published on 9 April 2020 appears to show a change in stance where those who are shielding are concerned. Guidance now states that employees who are shielding can be furloughed if they are unable to work. Previous guidance had stated that employers could only furlough those shielding where the employee would otherwise have been made redundant. This no longer appears to be the case.

On 16 April 2020, new legislation permitted employees who are 'shielding' to be entitled to statutory sick pay (SSP). As outlined above SSP cannot be claimed under the scheme. You will therefore need to decide if you want to furlough staff in this position or keep providing SSP to them. The government may refund up to two weeks of SSP for coronavirus related absences as part of the Coronavirus SSP Rebate Scheme, subject to eligibility. 

Shielding ended in England and Scotland at the end of July, and is due to end in Wales no earlier than 16 August. When it ceases, SSP will no longer be payable.

What’s the position with apprentices?

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed. However, apprentices must get at least the appropriate minimum wage rate for all the time they spend training which is not covered by the reimbursement.

Where apprentices are furloughed or placed on unpaid leave, or where the nature of their employment changes and no longer supports their apprenticeship, the apprentice, employer and training provider should consider whether a break in learning would be appropriate.

Apprentices can be made redundant, however, specific advice should be taken on this as different rules may apply in different parts of the UK.

Employers who are subject to the apprenticeship levy payment must continue to pay this as normal; it is not recoverable under the scheme.

What’s the position with agency workers?

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Can I furlough employees working on a visa?

Foreign nationals are eligible to be furloughed, including employees on all categories of visa.

Can I furlough employees on unpaid leave?

The Scheme was not able be used in respect of employees on unpaid leave i.e. unpaid leave is not furlough. For claims made under the first Treasury direction, employees that started unpaid leave after 28 February 2020 were able to be put on furlough instead. If an employee went on unpaid leave on or before 28 February 2020, they could not be furloughed until the date on which it was agreed that they would return from unpaid leave.

In respect of claims submitted between 1 March and 21 May 2020, the first Treasury direction stated that where the duration of the leave was uncertain because its duration is determinable by reference to a particular circumstance, completion of a particular purpose or occurrence of a specified event, the end date of the unpaid leave was the ending of the circumstance, completion of the purpose or occurrence of the event.

For claims submitted on or after 22 May 2020 or those submitted before that are compliant with it the second direction:

  • No claim was able to be made in respect of an employee's period of unpaid leave between 1 March to 30 June 2020.
  • An employee cannot be furloughed while they are on unpaid leave during that period.
  • Where the unpaid leave period began on or after 1 March 2020, an employer could end the unpaid leave earlier than originally anticipated in order to allow them to be put on furlough provided that the usual eligibility conditions were met and it could be shown that doing so was consistent with the exceptional purpose the scheme.
  • Where the unpaid leave began before 1 March 2020, the employee could not be furloughed until the date it was agreed the leave would end when it commenced. If that date was uncertain because the end date depended on a particular circumstances, completion of a particular purpose, or occurrence of a specified event, the unpaid leave still needed to end when that circumstance occurs, the purpose is completed, or the event occurs.
  • However, the employer and employee could agree to vary the end date of a period of unpaid leave if that agreement was reached after the unpaid leave began and before 20 March 2020.

If such an agreement to vary was reached, the date that agreement was made was taken as the date the unpaid leave began (rather than the actual real date). Therefore, an employee whose period of unpaid leave began before 1 March 2020, but who subsequently agreed between 1 and 20 March 2020 to vary the end date of that leave, was taken as beginning their unpaid leave on the date the agreement to vary was made. This placed them in the category of people who started unpaid leave from 1 March onwards and built in flexibility to end the leave early and furlough them.

Remember that, from 1 July 2020, only staff who have previously been furloughed can be placed on furlough, subject to exceptions. 

How does furlough interact with fixed term contracts?

Fixed term contracts which ended, without extension or renewal, on or before 19 March 2020 did not qualify for the grant once they have ended. Fixed term contracts could, however be renewed or extended before their natural conclusion during the furlough period without breaking the terms of the scheme. There was no minimum period which must be left to run on a fixed-term contract to enable it to be renewed or extended, but it was not able to have ended. The furlough period had to be for a minimum period of three consecutive weeks.

Where a fixed term employee’s contract ended because it was not extended or renewed before its natural conclusion you will no longer be able claim a grant for them once the contract ends. However, an employee on a fixed term contract can be re-employed, furloughed and claimed for if either:

  • their contract expired after 28 February 2020 and an RTI payment submission for the employee was notified to HMRC on or before 28 February 2020 or
  • their contract expired after 19 March 2020 and an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020.

Employees that started and ended the same contract between 28 February 2020 and 19 March 2020 will not qualify for this scheme. This is not specific to employees on fixed-term contracts, the same would apply to employees on all other contracts.

Remember that, from 1 July 2020, only staff who have previously been furloughed can be placed on furlough, subject to exceptions. 

Does annual leave accrue during furlough?

Statutory minimum annual leave entitlement will continue to accrue because the contract of employment is still in existence. You may want to agree that contractual leave in excess of the statutory minimum does not accrue, however, this may present a blocker to obtaining employees’ agreement.

Can annual leave be taken at the same time as furlough?

Yes. On 17 April 2020, the Government confirmed this point. It was also clarified that employers must pay the employee’s normal pay for any annual leave but will still only be able to claim 80% of pay through the scheme. The rest must be topped up by the employer. Normal rules will apply to annual leave requests from employees during furlough which means that employers can refuse the request. Some employers may choose to do this in light of the requirement to ‘top up’ pay to 100% during annual leave.

Guidance published on 13 May 2020 clarified the position with Bank Holidays which fall during a period of furlough. Workers who would normally have worked on the Bank Holiday will simply still be on furlough.

Where the worker would usually have taken annual leave on the Bank Holiday, the employer has two options.

The first option is to confirm that the worker will be on annual leave, and ensure they are paid accordingly i.e. normal pay which may include the employer topping up pay from 80% if that is the agreed rate of pay during furlough.

The second would be to agree with the worker that annual leave will not be taken on that day and it will be a ‘normal’ day of furlough. Where this happens, the day’s leave will be deferred and the worker must be permitted to take it later on in the year, or carry it over (see next question for new rules on annual leave carry over)

If employees are flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. This means that the employer will be able to include them in the hours claimed for.

Can I require my employees to take annual leave during furlough?

Yes. This was confirmed in Government guidance published on 13 May 2020. However, the guidance goes on to state that employers should consider whether the purpose of annual leave (rest, relaxation and enjoyment) would be met if the employee was under any restrictions e.g. lockdown. However, as lockdown begins to ease, the worker’s argument that enforced annual leave would not serve its purpose is weaker.

It should be mentioned that the Working Time Regulations 1998 have recently been amended to allow for four weeks of leave to be carried over into the next two leave years where it was not reasonably practicable for the worker to take leave as a result of coronavirus.. This now means that all statutory minimum annual leave can be carried over, albeit carrying over the 1.6 weeks of additional leave is still subject to agreement by the employer and can only be carried over into the next leave year. Carry over of any contractual leave in excess of the statutory minimum is subject to agreement between employer and employee.

This extension to the carry over rules means that it is less of a concern for employers that employees have a potentially large amount of backed up leave to take once the pandemic passes.

How does furlough interact with maternity leave?

Those about to go on maternity leave will go on leave as normal.

Employees can be furloughed if they are on maternity leave, or other family related leave.

It appears that an employee can be furloughed if they are on maternity leave, or other family related leave, although this has not been expressly confirmed by the Government.

Guidance states that, where employers pay enhanced maternity pay, they can claim for this under the scheme and it does not appear that this would be the case if employees could not be on maternity leave and furlough at the same time. The same applies to pay during paternity, adoption and shared parental leave.

The position on assessing the level of payment to be made during leave was confirmed by the Government on 24 April 2020. Eligibility for Statutory Maternity Pay (SMP) is calculated with reference to earnings during a prescribed 8 week period. New legislation provides that, where statutory maternity leave begins on or after 25 April 2020, entitlement to SMP will be calculated on the employee’s normal, full earnings rather than their furlough pay.

The same applies to paternity leave, adoption leave, shared parental leave and parental bereavement leave.

The cut off date of 10 June does not apply to employees returning from statutory maternity, paternity, adoption, shared parental and parental bereavement leave. You can furlough an employee returning from these types of statutory parental leave after 10 June even if you are furloughing them for the first time. You may do this provided that:

  • you have previously submitted a claim for any other employee in your organisation in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June
  • the employee you wish to furlough for the first time started maternity, shared parental, adoption, paternity and parental bereavement leave before 10 June and has returned from that leave after 10 June
  • the employee was on your PAYE payroll on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020

When calculating the maximum number of employees you can claim for, the number of employees you are furloughing for the first time due to them returning from parental leave should be added to any previous maximum. This means the maximum number of employees you can claim for in these circumstances, is the maximum you claimed for in any one claim before 30 June, plus any employees that you are furloughing for the first time due to them returning from parental leave.

What’s the specific position in guidance on early years provision, children’s social care and education?

On 17 April 2020, guidance was released which deals specifically with early years, children’s social care and education.  This appears to set out tighter restrictions on the use of the scheme by these sectors. Whilst the general guidance says that the Govt does not expect public sector employers to use the scheme, the following creates a structure by which these particular sectors may use it. Using the scheme in a way that doesn’t align with the rules may jeopardise funding in the future.

There are various types of support open to these industries. However, the Govt expects that all relevant organisations should first consider any potential options to reduce their operating cost and secure commercial loans e.g. Business Interruption Loans, before seeking to use the Coronavirus Job Retention Scheme or seeking specific support from the Department for Education (DfE).

Educational settings that are in receipt of some public funding should only furlough employees if they meet the following conditions:

  • the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • the employee would otherwise be made redundant or laid off
  • the employee is not involved in delivering provision that has already been funded
  • (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
  • the grant from the Coronavirus Job Retention Scheme would not lead to financial reserves being created

The Govt is developing an online tool that will support the education, early years, and children’s social care sectors, in working through this guidance, and understanding the different funding and financial measures available to support them, and their workforce, through this period of disruption caused by coronavirus.

For more information, please refer too our 'how to' guide on placing staff on furlough.

Can furloughed staff take part in disciplinary and grievance procedures?

New guidance from Acas, released on 6 May 2020, details that furloughed staff can take part in such procedures, provided rules on social distancing and public health are followed. It will be up to the organisation if these procedures can still proceed fairly. For more information on this guidance, please refer to our article

Does furlough affect pay during the statutory notice period?

Yes. The same rules that apply during the statutory notice period in a lay off situation will apply during furlough. That means that if an employee is serving their notice period when on furlough, the starting point is that their statutory notice pay is protected meaning that they will be due full pay. 

17 July 2020

Guidance released on 17 July confirms that you can continue to claim for a furloughed employee who is serving a statutory or contractual notice period, however grants cannot be used to substitute redundancy payments.

How should I ask staff to come back to work?

It is advisable to provide as much written notice as is reasonably possible. Whilst government guidance does not outline what should be considered reasonable, employers should consider providing at least one week's notice. This gives staff time to get their personal situation in order; for example, they may need this time to make arrangements for child care. 

Employers can ask staff to volunteer to come back in off furlough, something that may prove popular if staff have been receiving 80 per cent of their wages. This can be a useful way of managing a situation where employers do not want their staff to all return at once. If too many volunteer, employers should then consider different processes, such as a rota system or asking staff to return part-time. Alternatively, they may also need to implement a selection criteria. Any procedure put in place should be non-discriminatory. 

What should I do if furlough has paused procedures such as a disciplinary process?

Generally, procedures such as a disciplinary can take place during a period of furlough but it may have been decided to postpone them during lockdown. As workplaces reopen, employers may now wish to recommence them. In doing so, they should consider if all parties required, such as managers and witnesses, are available. Although it is understood that furloughed staff can provide witness statements, it may make the process easier to wait for them to be taken back off furlough. If there are any further delays, these should be clearly communicated, in writing, to all parties. 

What steps have been taken to prevent abuse of the Scheme?

Chancellor Rishi Sunak stated, in his Government briefing on 8 April 2020, that the Scheme had been put together in a way to prevent spurious claims. HMRC’s Chief Executive, Jim Harra, confirmed measures had been put in place to minimise fraud, which were:

  • the requirement for an employer to have already been authenticated by HMRC

  • a four- to six-day payment processing period to allow background checks

  • checks on employers after a payout has been made to verify a claim was real

Payments may be withheld or need to be repaid it claims were based on dishonest or inaccurate information or found to be fraudulent. A hotline has also been set up on which employees can report employers’ abuse of the system.

The HMRC is expected to be given more powers to investigate instances of furlough fraud. Please refer to our article for more information.