1. What is furlough?
Furlough is a temporary period of leave to help employers deal with the fact that there is no/less work available for employees at this time due to COVID-19. Employers may decide to furlough staff if they are experiencing a temporary downturn in business or if the business is forced to close altogether based on government guidance. Once furloughed, employers can apply to the government’s Coronavirus Job Retention Scheme for reimbursement of 80% of eligible employees’ wages. In this way, furlough may be an alternative to redundancy.
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Government guidance states employers may only furlough employees if they are suffering from severely affected operations or unable to maintain their workforce as a result of COVID-19. However, the recent Treasury Direction allows for any employee to be placed on furlough leave so long as “the instruction is given by reason of circumstances arising as a result of coronavirus”. As such, it may be possible to furlough staff who are otherwise affected by the virus, including those who are shielding, those who are otherwise vulnerable and those who have taken time off to care for dependents.
3. How long can a furlough last?
The guidance confirms that you can submit one claim every three weeks, which is the minimum time an employee can be furloughed for. The updated guidance has clarified that it is possible for employees to come “in and out” of furlough by, for example, spending three weeks furloughed, coming back to work for three weeks (perhaps part time) before being furloughed again. The actual scheme itself has been extended until the end of June.
Looking for practical advice on furlough due to the coronavirus pandemic and other common scenarios? Visit our free Coronavirus Advice Hub for answers.
4. How to request a furlough?
While in theory employees can request to be furloughed, the decision ultimately rests with the employer. If there is work for the employee to do, and that cannot be done from home, we suggest that furlough is only granted to those employees whose circumstances have been impacted by the coronavirus to stay within the spirit of the Treasury Direction (e.g. employees who are vulnerable or required to stay at home to look after children following school closures).
5. Can you put salaried employees on furlough?
Yes. The grant from HMRC will cover the lower of 80% of an employee’s regular wage or £2,500 per month plus the associated employer NICs and minimum automatic employer pension contributions. For fixed-rate employees, i.e. those with an annual salary, this is based on basic pay. The employee’s actual salary as of the last pay period prior to 19 March 2020 should be used to calculate the 80%. For those with variable pay/hours, use the higher of the corresponding month’s pay from the previous year or an average of the last 12 months (or less if employment started less than 12 months ago).
Make light work of furlough leave
For many employers, furlough will be uncharted territory, leading to a lot of homework and potentially a lot of stress. For straight answers and practical guidance based on the latest government information, visit our Coronavirus Advice Hub, which contains a range of free resources designed to support employers through this difficult period.