The UK government has extended the Coronavirus Job Retention Scheme until 30 September 2021. Kate Palmer of Peninsula explains what is meant by ‘furloughing’ and how employers can access the furlough scheme.

What does furlough mean?

‘Furloughing’ means putting employees on a temporary leave of absence where they do no work but are still retained on company books to be brought back to work when needed.

What is the Coronavirus Job Retention Scheme?

The government announced its plans for financial assistance to help employers retain employees during the coronavirus outbreak. It’s called the Coronavirus Job Retention Scheme and under the scheme, employers place their employees on 'furlough'.

The guidance sets out that organisations will need to designate which of their workforce will be furloughed employees and then submit that information to HMRC, along with each employee's earnings. Information will be able to be submitted through an online portal.

Employers who furlough staff will be able to obtain a grant from the government:

• employers can claim 80% of an employee’s usual salary for the hours not worked, up to a maximum £2,500
• employers will be asked for a contribution of 10% from July
• employers will be asked for a contribution of 20% in August and September towards the hours their staff do not work

Following the announcement of the Budget 2021, the scheme was extended and will continue until 30 September 2021.

Who is covered by the Coronavirus Job Retention Scheme?

For periods ending on or before 30 April 2021, you can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.

For periods starting on or after 1 May 2021, you can claim for employees who were employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. You do not need to have previously claimed for an employee before the 2 March 2021 to claim for periods from starting on or after 1 May 2021.

New guidance from the government has also confirmed that employees can get new work for a different employer while they are on furlough. However, their employer’s policy on this will still apply, and this may place restrictions on someone finding a second job. Existing rules will likely mean that second jobs which create a conflict of interest will be excluded, and employers would be advised to put in place additional rules that require employees to be available when the employer needs them back in.

The position on employees who have been advised to ‘shield’ has also been cleared up by the government. Shielding is where an employee has been advised by the NHS to stay at home for 12 weeks and avoid face to face contact due to a health condition. Guidance now states that people who are shielding can be furloughed where they cannot work from home and would otherwise have to be made redundant.

What is the process for furloughing?

The guidance states that the ability to furlough an employee depends on their contract. It is not likely that employee contracts will include a specific right to use furlough, however contracts may contain a right to lay off employees on no pay already. In either case, even when there is a right to lay off, it is still advisable to gain the employee's agreement to furlough to avoid any confusion in the future.

When faced with potential redundancies, a period of leave with 80 per cent pay may seem an attractive option to employees. If an employer has already taken the step to utilise lay off, they can get in touch with those employees and agree to change their status from lay off to furlough. They still wouldn't be provided with any work, but their pay arrangements would be changed from nothing, or the payment of statutory guarantee pay, to 80 per cent wages.

Workers should not undertake any work for the organisation while on furlough that amounts to making money for it or providing services to it. If workers are asked to undertake training while on furlough, they should be paid in line with the national minimum wage even if this is above the 80 per cent.

Can I force an employee to be furloughed?

Employers need to designate employees as furloughed, which means it is their choice. However, if businesses are not placing everyone on furlough, they should consider carefully who it should be and whose skills will continue to be in demand through this challenging period.

While it may be assumed that the best thing to do is furlough those employees labelled as high risk by the government, forcing them on to furlough without their input, and therefore forcing them on to 80 per cent wages, may result in discrimination claims from those who allege they were made to do it because of their age, disability or pregnancy.

Where employees need to be selected for furlough, it may be best to ask for volunteers across the workforce. If any high-risk employees, who had previously been risk assessed as fine to still be in work, put themselves forward, it may well be appropriate to choose them first. There does not appear to be a maximum or minimum number of employees who can be furloughed.

*Please note that to comply with the latest government guidance on home working, it will be necessary for The Gazette to temporarily introduce some changes to its post and fax service. Find out more here: https://www.thegazette.co.uk/all-notices/content/103530.*

About the author

Kate Palmer is Associate Director of Advisory at global employment law consultancy at Peninsula.

See also

How UK businesses can support the fight against Coronavirus (COVID-19)

Government announces new carry-over and holiday leave regulations for workers

Find out more

Claim for wages through the Coronavirus Job Retention Scheme (GOV.UK)

COVID-19: guidance for employees (GOV.UK)

Image: Getty Images

Publication updated: 4 March 2021

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.