This page was last updated on 12 May at 13.30
LATEST UPDATE ON FURLOUGH – 12 MAY
The Chancellor has today announced that the Coronavirus Job Retention Scheme (JRS) will be extended until October. Workers who are furloughed will continue to receive at least 80% of their normal wage (up to a maximum of £2,500 a month). However, from August there will be changes to the scheme which will mean employers having to contribute towards the cost and changes to allow furloughed workers to be brought bac to work on reduced hours.
Many members will have heard the phrase ‘furlough’, probably for the first time, in recent weeks. This is a term that has arrived in the UK and refers to a siltation where an employer keeps a worker ‘on the books’ on a reduced salary during a period where they would otherwise be made redundant. It has come to attention due to the government’s job retention scheme announced as part of the response to the Coronavirus emergency.
The concept of ‘furlough’ does not exist in UK employment law, so for everyone involved (trade unions, workers, employers, lawyers) it is an untested area.
In normal times the principle behind UK employment law has been that there is a contract between you and your employer. In return for fulfilling your contract, your employer will pay you and provide certain other benefits. If your employer can no longer give you work as specified in your contract they must continue to either pay you in accordance with your contact, or terminate your contract by making you redundant.
The Job Retention Scheme (JRS) seems, on the whole, to be a positive idea. Where an employer is proposing to make its workers redundant due to the workplace closing or demand reducing because of the Coronavirus emergency, the government will cover 80% of the worker’s wage (up to £2,500) on the condition that the worker remains ‘on the books’ and returns to work once the emergency is over.
The detail of the scheme has been slowly evolving and at the moment it seems that:
- It only applies where you would otherwise be made redundant
- It is unlikely to apply to public sector employers (such as councils, schools and other local authorities), nor does it seem to apply to private companies where they continue to receive public funds for the service
- It is a change to your employment contract so can only be done with either your consent or through a collective agreement with the trade union(s). It is not clear what would happen if you refuse to accept furlough; it could mean that you would be made redundant but there is a risk you could forfeit any redundancy pay.
As this is a new area of employment law, and as there are many unanswered questions, it is really important that you contact us for advice if your employer is proposing to move you on to furlough.
Can my employer claim under this scheme?
Any UK organisation can apply under the scheme, including:
- recruitment agencies (where the agency workers ae paid through PAYE)
- public authorities, but we expect most pubic sector employers to be excluded from the scheme (see below)
Employers must be set up for PAYE (Pay As You Earn) and have a UK registered bank account.
They can only claim for workers who were employed on, or before, 19 March 2020.
How do I get furloughed?
It requires both you and your employer to agree. It cannot be done without the agreement of both parties. If trade unions are recognised where you work, it could be done through agreement with the trade union(s) on your behalf.
Once the terms have been agreed:
- Your employer must confirm this is writing
- Your employer must continue to pay you the agreed amount (at least 80% of your salary)
- Your employer has to claim for your salary through the HMRC.
I work for a council, or other public sector employer, can I be put on furlough?
Probably not. The government expects that the scheme will not be used by many public sector organisations, as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.
Where employers receive public funding for staff costs, and that funding is continuing, employers are expected to use that money to continue to pay staff in the usual fashion and not furlough them. This also applies to private sector employers who receive public funding for staff costs.
Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.
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.
What will I be paid?
Your employer can claim back up to 80% of your usual monthly wage, up to a maximum of £2,500 per month. As an absolute minimum you should continue to receive 80% of your normal wage for the period you are furloughed. Your employer can choose to contribute some, or all, of the remaining 20% so you don’t lose out.
Your income during the period of furlough will be subject to the usual deductions such as national insurance, income tax, student loan payments etc.
What about my pension?
If your employer is entitled to claim under this scheme, the government will cover up to 80% of the usual monthly wage costs including the employer’s national insurance contributions. However, they will only cover the minimum pension automatic enrolment contribution which could be as little as 3%. If you have an occupational pension scheme you could lose a significant amount of your monthly pension contribution. We advise members to contact us for advice if you are asked to agree to be furloughed.
How long can I be furloughed for?
The minimum period is 3 weeks.
Your employer can furlough you more than once, so they can bring you back to work after the minimum period of 3 weeks and then furlough you again at a later date (with your agreement).
I am self-isolating, or on sick leave, can I be furloughed?
No, but you can be furloughed once your period of self-isolation or sickness has ended.
If you are one of the 1.5 million people who have received a letter from the NHS telling you to shield yourself for 12 weeks you can be furloughed if your employer would otherwise make you redundant.
What if I am employed by an individual (such as through the Direct Payment Scheme)?
You can be furloughed in the same way as any other employee, so long as your employer meets the relevant requirements of the scheme.
Do I keep my continuous service?
Yes. Being furloughed means you remain ‘on the books’ so you remain employed and your continuous service remains. Any benefits associated with your continuous service (such as annual leave entitlement, or occupational sick pay) remain.
I left my job voluntarily as I was worried about childcare, can I be included?
The government has confirmed that if you decided to leave your job voluntarily due to the Coronavirus emergency (for example because you were worried about looking after your children), then you could be covered by the scheme if;
- You had been employed on 19 March 2020, and
- Your old employer agrees to rehire you
Can I do other work while I am furloughed?
No. You cannot provide work or services for the employer who has furloughed you. If you work for more than one employer, you can continue working for any employer that has not furloughed you.
Can I do voluntary work while I am furloughed?
Yes. A furloughed employee can take part in volunteer work as long as it does not providing services to, or generating revenue for, or on behalf of your employer.
I am an apprentice, can I be furloughed?
Yes, if you would otherwise have been made redundant. You must continue to be paid at least the Apprenticeship Minimum Wage, National Living Wage, or National Minimum Wage for all the time that you are training even if this is more than 80% of your normal wage.
What happens when we return to normal?
You should be allowed to return to your original job, working your usual hours and receiving your normal pay. If your employer does not allow you to return at the end of your furlough period then you could have the right to redundancy pay and may have a claim for unfair dismissal.