23 March 2020

What is furlough and how do we access it?

The Chancellor of the Exchequer announced on Friday March 20 that he is setting up a new Coronavirus Job Retention Scheme (CJRS) open to a wide range of businesses needing support for the months ahead.

Who does the CJRS cover?

Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.

What is available to employers?

A grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.

What does “furloughed” mean?

There is no legal definition yet, but the scheme is about the wages payable to an employee who has been sent home and who is not working.

What will it cover?

The grant will cover 80% of the salary of retained workers up to a total of £2,500 a month. Employers can top up salaries further if they choose to

Does it apply now?

Yes. The scheme will be backdated to 1 March 2020 and will be open initially for at least three months.

How does it work?

The Government is still setting up the scheme and has said that it expects to pay the first grants within weeks and before the end of April.

What don’t we know yet?

A lot. The details of the scheme are yet to be published. Issues that arise would include how to deal with employees on short-time work; exactly what goes to make up that £2500; how to plug into the scheme if you’ve already made employees redundant or laid them off.

What about our contractual arrangements?

They are still relevant. You can’t impose furlough on an employee, as far as we know, but very few employees are going to resist if it’s offered. If you have a proper lay-off clause, you will need to check that you can still use the scheme.

Will the situation change?

This sets out the position as of the morning of March 23, but the situation is highly dynamic, so do watch out for further updates.

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About the Author
Michael Stokes, Partner, Head of Employment and Immigration Team

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