The Government’s online portal to reclaim wages for furloughed workers in now live. Find out more in our article on claiming back wages for furloughed staff.
Furlough: the basics for business owners
What is furlough?
Furlough is an agreed leave of absence. Your staff member remains on payroll but does not perform any work or activity that generates income for the business.
How long can I furlough someone?
Staff can be furloughed for a minimum of three weeks, up to the full length of the Coronavirus Job Retention Scheme.
Do I have to furlough my staff?
No. If your business is still operational and staff can continue to work – for example, from home – and you can continue to pay them, employees should continue to work under their normal terms and conditions.
If I decide to furlough, do I have to furlough everyone?
No, you can select who to furlough. If you do need to choose between staff, you should have a transparent process and be able to demonstrate the reason behind your selection.
Be aware that existing equality and discrimination laws continue to apply, so selections should not be based on discriminatory criteria. However, it may be justifiable to furlough vulnerable staff who would be at increased risk of contracting coronavirus through their work.
Can my staff choose to be furloughed?
Employers are responsible for deciding who to furlough, not the employees. If you need to furlough part of your workforce and have to choose which staff to furlough, you could ask for volunteers to make the process easier. However, staff cannot ask to be furloughed (for example, if they would rather be at home than at work during the pandemic).
How to furlough
How do I furlough someone?
You need to identify who you want to furlough and notify them in writing. If you do not notify them in writing and keep a record of this communication, you may find you’re ineligible for reimbursement for their wages. So this is really important.
If furlough results in a change to your employee’s terms and conditions of employment – for example, by reducing their wage to 80% of prior earnings – you will have to consult them on the fact you plan to furlough them. The employee will have to agree to being furloughed.
If you are topping up the employee’s wages to 100%, our understanding is that you do not need to obtain their consent to furlough them. However, you should get legal advice on this if it affects you.
What paperwork do I need to keep?
To be eligible to be reimbursed under the Coronavirus Job Retention Scheme, you should keep:
a copy of your written notification to employees that they have been furloughed
details of when and how long they have been furloughed for
To protect you against the risk of potential disputes about deduction of wage, you should also keep:
a copy of the individual’s consent to furlough
If you have to choose between employees to furlough, you should keep:
a record of the selection process
any related correspondence
What information do I need to furlough?
Our article on Claiming back wages for furloughed workers has the latest information on this.
Do I have to collectively consult on furlough?
Collective consultation is when an employer plans to change the contract of 20 or more staff in a 90 day period. So, depending on the size of your business and your furlough plans, this may or may not apply to you.
The Government guidance says that where furlough involves a change in terms of employment and there are 20 or more people affected, it may be necessary to engage in collective consultation to get staff to agree to the changes.
If you are topping up the employee’s wages to 100%, our understanding is that you do not need to obtain their consent to furlough them and therefore collective consultation would not be needed.
If you are NOT topping up the wages to 100% and you do plan to furlough 20 or more staff in a 90 day period, you should get legal advice to understand your responsibilities.
What can furloughed workers do?
Can a furloughed worker still work?
For an employer to be reimbursed under the Scheme, the furloughed employee cannot undertake work for their employer. This includes anything that could generate revenue for the business.
Can a furloughed worker volunteer?
Your furloughed worker can still volunteer with another organisation whilst on furlough.
Can I ask my furloughed workers to complete training?
Now is a great time to ask staff to upskill. Yes, you can require your furloughed workers to undertake online training whilst they aren’t at work. However, they must be paid at least the national minimum wage during this time.
My furloughed employee also works elsewhere. Do they have to stop?
If someone has two jobs, these are treated separately. If they are only furloughed from one job they can continue to work as usual in the other.
Employee rights during furlough
Are employment rights and benefits suspended during furlough?
No. Your furloughed staff are still employed by you and their rights and benefits continue.
Statutory rights and benefits continue to accrue
Entitlement to sick pay, family leave etc continues
Protection against unfair dismissal continues
The right to a redundancy payment continues
Can I make my employees take annual leave during furlough?
In theory, yes. However, annual leave is usually paid at the same rate as a week’s pay, which means it may be more economical to keep employees on their furloughed rate.
The government announced on 27 March 2020 that workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.
Can I furlough someone on sick leave?
Any staff on sick leave, or self-isolating due to symptoms, is classed as being on sick leave and should receive Statutory Sick Pay. After their sick leave (or self-isolation period) finishes, they can then be furloughed.
Employees who are unable to work due to observing public health guidance on staying at home can be furloughed.
What is someone becomes sick whilst on furlough?
The Government guidance is not clear on what happens if someone becomes sick whilst furloughed.
The future after furlough
Do I have to guarantee furloughed staff a return to work?
Our understanding is that furloughed staff do not have to be guaranteed a return to work.
The Government guidance says that when the Scheme closes, employers will need to make a decision, based on their circumstances at the time, as to whether furloughed employees can return to work. If not, it may be necessary to terminate their employment by reason of redundancy.
If this affects you and your business, we recommend taking legal advice to understand the redundancy process following furlough.