HCR Law Events

CJRS / Furlough Q&A

Many of our clients are asking about the Coronavirus Job Retention Scheme and furlough. We’ve answered these questions below. If you have a question please call us on 08000 862 819.

Back to our Covid-19 Hub.

What is the Coronavirus Job Retention Scheme?
What is “furlough”?
Does it apply now?
Is furlough different to laying off staff?
How do we access the scheme?
How do you select which staff to furlough?
Can you furlough a foreign national employee?
Can you furlough someone on a fixed term contract?
Can you furlough an apprentice?
Can you furlough someone against their will?
Will an employer need to collectively consult if they intend to put 20 or more employees on furlough leave?
Can you rotate people through Furlough, for example on a ‘month-on-month-off’ basis? Can you furlough an employee more than once?
Can you dismiss an employee for redundancy if furlough is available?
Can you furlough employees who have already been dismissed due to coronavirus?
Can a company in administration utilise the scheme?
What if an employee has a second job?
What if a furloughed employee has two roles, for example in the context of a school, a teacher and a houseparent? Can we furlough one role?
Can I furlough an employee already taking unpaid leave?
Can an employee who elects to take unpaid leave to be able to look after their children whilst they are home from work be put on furlough leave instead?
Can employers furlough employees who are on sick leave or self-isolating?
Can employers select employees who are on long term sick leave to be furloughed
If furloughed employees take sick leave, would they drop to SSP whilst furloughed
Will annual leave continue to accrue during a period of furlough?
Can employers require employees to take annual leave? What notice must be given if this is possible?
Can we ask furloughed employees to take annual leave during the furlough period and pay them normal pay instead of furlough pay?
How should an employer deal with bank holidays?
Are employers required to let employees cancel pre-booked annual leave if they are unable to work?
What if it is not possible for employees to take all of their holiday in the current holiday year?
Can we select employees who are on maternity leave to be furloughed? What happens to their rate of pay? Will it break their maternity protection?
What about other family leave?
Can an employee volunteer for the business whilst on furlough?
Can an employee volunteer elsewhere whilst on furlough?
Can employers require employees to complete training during furlough?
What costs can an employer claim for under the scheme?
What about employees transferring under TUPE after 28 February 2020?

What is the Coronavirus Job Retention Scheme?

Answered 27 March 2020

The Coronavirus Job Retention Scheme (the “Scheme”) was announced by the Government on 20 March 2020. The Scheme affords all UK employers, regardless of size or sector, the ability to claim funding from HMRC to cover 80% of the wage costs of its furloughed employees (employees who are not working at this time but are kept on the payroll), of up to a maximum of £2,500 per calendar month, for each employee. Public sector employers and employers funded via the public sector are not, however, expected by the Government to put employees on furlough.

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What is “furlough”?

Answered 27 March 2020

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.

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Does it apply now?

Answered 23 March 2020. Updated 13 May 2020

Yes. The scheme will be backdated to 1 March 2020 and will be open  until the end of October 2020.

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Is furlough different to laying off staff?

Answered 24 March 2020

“Furlough” is just a word chosen by the Government for this scheme, under which employees are not required to work but will be paid indirectly, to some extent, by the Government.

The ability to ‘lay off’ staff is very limited and is subject to an existing contractual (or collective) provision. We understand that the term ‘laid off’ used in the guidance is meant in the more general sense i.e. their employer dismisses them because they can no longer afford to pay them, or for another economic reason. A furloughed employee however has the expectation that they will return to work after a defined period, or on satisfaction of a certain condition. They might not be paid in full while on furlough, but as they retain their employment, they will retain their benefits whilst they are away from work as well as their continuity of service.

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How do we access the scheme?

Answered 16 April 2020

In order to access the Scheme, the Government guidance (which is available here provides that employers will need to:

  • designate affected employees as “furloughed workers”;
  • obtain the written agreement of the employees to this change (subject to existing employment law and, depending on the employment contract, negotiation); and
  • submit information to HMRC through an online portal.

The guidance has also clarified that, to be eligible for the grant, employers must confirm the period of furlough leave in writing to the employee and retain this communication for a period of five years.

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How do you select which staff to furlough?

Answered 16 April 2020

Updated guidance has provided further clarity on who can be furloughed. It is now clear that the list includes agency workers, office holders, directors and salaried members of limited liability partnerships. The eligibility criteria for these individuals can be accessed here.

Whilst it was assumed to be the case, the guidance has now also confirmed that workers (and not just those categorised as employees) can be furloughed if they are paid through PAYE.

Aside from the government guidance on who is eligible to be furloughed, ultimately it is up to the employer to decide which employees to designate as furloughed. We would of course advise businesses to be mindful of the risk of discrimination when selecting those employees to furlough – for example, where the selection process is linked to protected characteristics such as age or disability.

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Can you furlough a foreign national employee?

Answered 8 April 2020

The latest guidance has clarified that foreign national employees are eligible to be furloughed.

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Can you furlough someone on a fixed term contract?

Answered 8 April 2020

Employees on fixed term contracts can be furloughed and their contracts can be renewed or extended during the furlough period, without affecting eligibility. However, when a fixed term contract ends because it is not extended or renewed, an employer will no longer be able to benefit from the scheme for that employee.

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Can you furlough an apprentice?

Answered 8 April 2020

The updated guidance confirms that apprentices can be furloughed in the same way as other employees and they can continue to train whilst on furlough leave without jeopardising their right to furlough pay.

Apprentices must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (as appropriate) for all the time they spend training whilst on furlough. This means that the employer will be responsible for covering any shortfall between the amount claimed under the scheme and their appropriate minimum wage.

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Can you furlough someone against their will?

Answered 16 April 2020

You can’t impose furlough on less than full pay on an employee where there is no pre-existing lay-off provision in their contract, but we anticipate that very few employees are going to resist if it’s offered when the alternative is redundancy. Employers with an existing contractual right to lay off employees do not need to seek further consent before putting employees on furlough.

However, if there is no existing lay-off agreement and agreement on furlough cannot be reached, an employer will need to follow an individual consultation process if an employee might need to be dismissed and offered a contract with a lay-off/furlough arrangement.

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Will an employer need to collectively consult if they intend to put 20 or more employees on furlough leave?

Answered 27 March 2020

Yes, if sufficient numbers of employees resist an offer of furlough. This assumes that the employer intends to dismiss employees who do not consent to the change, although arguably the duty does not arise at the initial stage where consent is being sought. From a pragmatic viewpoint, it might be that a ‘soft’ informal consultation will achieve employee agreement without the need to formally consult.

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Can you rotate people through furlough, for example on a ‘month-on-month-off’ basis?  Can you furlough an employee more than once?

Answered 16 April 2020

A furloughed worker must be on leave and not working. The minimum period for furlough leave is three consecutive weeks.

The guidance permits employers to rotate furloughed staff (if they are so minded) provided each furlough period lasts a minimum of three consecutive weeks. The guidance also confirms that the same employee can be furloughed multiple times

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Can you dismiss an employee for redundancy if furlough is available?

Answered 27 March 2020

There appears to be no requirement on an employer to make a claim for furlough payments. If an employer wishes to dismiss an employee for redundancy and goes through a proper consultation process (including any collective consultation that is necessary), there is nothing to stop the employer making employees redundant.

It is arguable, at least, that making employees redundant at a time when the employer could retain them on furlough at no expense might affect the fairness of the dismissal, if the employee can make an unfair dismissal claim.

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Can you furlough employees who have already been dismissed due to coronavirus?

Answered 16 April 2020

The updated guidance has clarified that employees who have stopped working for the employer for any reason (i.e. not just redundancy) since 28 February 2020 can be rehired and then furloughed.
This is likely to be particularly relevant to individuals who may have left in order to commence a new job, only to find that the offer of employment has been withdrawn or deferred because of the pandemic. It opens up the possibility of the previous employer agreeing to rehire those individuals and then placing them on furlough leave, provided they were on payroll as at 28 February 2020 and otherwise meet the criteria under the Scheme.

It is important to take advice in these circumstances, as there may be additional factors to consider. For example, the rehiring of the individual may lead to them accruing two years’ service and it is unlikely to be appropriate to rehire any employee who had been dismissed for gross misconduct. It would make sense, if taking on an employee in these circumstances, to have a written agreement setting out exactly why it is happening and making it clear that the employment will end when the employer no longer makes claims under the Scheme.

Save for this exception, the updated guidance is clear that only employees on the payroll on 19 March 2020 and who had featured on an RTI submission to HMRC before that date are eligible to be furloughed.

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Can a company in administration utilise the scheme?

Answered 16 April 2020. Updated 13 May 2020

The original guidance confirmed that administrators are able to access the scheme. However, the government has now confirmed that it would expect that an administrator would only do so if there is a reasonable likelihood of rehiring the workers – for example, in the event of a sale of the business from administration, rather than a liquidation situation. There have already been two reported cases on the interaction of insolvency, employment law and the furlough scheme, so it would make sense to seek early advice if you are affected by this issue.

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What if an employee has a second job?

Answered 16 April 2020

If your employee has more than one employer they can be furloughed from each job. Each job is separate, and it will be up to each respective employer to decide whether or not they want to furlough that employee from their role. The cap on furlough pay (£2,500 per month) applies to each employer individually, and it will not matter whether the other employer has already submitted a claim for furlough grant in relation to the same employee.

The government has also clarified that furloughed employees are able to start a new job whilst on furlough leave, provided they are not contractually prevented from doing so.

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What if a furloughed employee has two roles, for example in the context of a school, a teacher and a houseparent? Can we furlough one role?

Answered 8 April 2020

The position in respect of employees who undertake two separate roles for one employer remains unclear. Based on the current guidance, it is unlikely to be permissible to furlough such an employee from one role and have them continuing to work for the employer in another, given the strict requirement that the furloughed employee does not provide any services to the employer during the period of furlough.

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Can I furlough an employee already taking unpaid leave?

Answered 16 April 2020

It depends. Employees already on unpaid leave before 28 February 2020 cannot be furloughed. However, employees who have been placed on unpaid leave since 28 February 2020 are eligible for furlough.

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Can an employee who elects to take unpaid leave to be able to look after their children whilst they are home from work be put on furlough leave instead?

Answered 16 April 2020

As above, it depends. If they were already on unpaid leave before 28 February 2020 the employer will not be able to furlough them. However, employees who have been placed on unpaid leave after 28 February 2020 are eligible for furlough. It is possible that the precise reason for someone’s absence will change over time. If someone was due to be back at work after 1 March 2020 but cannot return for a Covid-19-related reason, they may still be eligible for furlough. Please seek advice in such a situation,

It has however been confirmed that employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed as an alternative to taking unpaid leave. This now appears to include employees who need to look after children now that schools are closed.

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Furlough and Sickness Absence

Can employers furlough employees who are on sick leave or self-isolating?

Answered 8 April 2020

Employers are unable to claim furlough pay under the Scheme in respect of employees on sick leave or who are self-isolating as they are eligible for Statutory Sick Pay (SSP). However the guidance confirms that once they are no longer receiving SSP they will be eligible to be furloughed.

Vulnerable or high risk employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) can however be placed on furlough provided that they are unable to work from home.

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Can employers select employees who are on long term sick leave to be furloughed?

Answered 16 April 2020

Yes. Employees who are on sick leave should receive SSP but can be furloughed after this. It may therefore be possible for employees on long term sick leave to be furloughed once their entitlement to SSP has been exhausted.

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If furloughed employees take sick leave, would they drop to SSP whilst furloughed?

Answered 27 March 2020

As above, there is not enough information available yet to understand how furlough will interact with other types of leave, but the guidance does confirm that furloughed employees will have the same employment rights as they did previously, which includes entitlement to SSP.

It is possible that the Scheme will require furloughed workers to be “available for work” and if this is the case, illness may halt the worker’s entitlement to furlough pay, and instead they may shift to SSP. However we do not have any information at the moment to determine this.

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Furlough and Annual Leave

Will annual leave continue to accrue during a period of furlough?

Answered 27 March 2020

It seems likely that the statutory leave entitlement under the Working Time Regulations 1998 (5.6 weeks for full time employees) would continue to accrue during furlough leave, as it would if an employee was on sabbatical, for example.

Employers could attempt to negotiate a change in contractual terms so that any annual leave over and above statutory leave does not accrue during furlough leave, but this may make the offer of furlough less attractive to workers and it is not clear whether the employer is entitled to add extra conditions to furlough leave, beyond a reduction in pay.

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Can employers require employees to take annual leave? What notice must be given if this is possible?

Answered 27 March 2020

Generally speaking, an employer can require an employee to take statutory annual leave (5.6 weeks for full time staff) on particular days, provided it gives the employee the appropriate advance notice. The Working Time Regulations require the employer to specify the day or days on which leave is required to be taken and notice must be given twice as many days in advance of the earliest day specified in the notice as the number of days to which the notice relates (i.e. if you want an employee to take a week’s annual leave, you must give at least two weeks’ advance notice).

With respect to any contractual annual leave entitlement over and above the statutory entitlement, the employer should follow its own rules and procedures about how and when leave can and should be taken.

We do not anticipate that this principle will be changed under the Scheme, but further guidance is awaited.

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Can we ask furloughed employees to take annual leave during the furlough period and pay them normal pay instead of furlough pay?

Answered 27 March 2020

Unfortunately there is not enough information available about the Scheme to determine this. We understand that the Scheme is not going to interfere with existing employment law rights and therefore, subject to a specific Scheme rule being published to the contrary, an employer may have the right to require its employees to take annual leave during furlough by providing at least twice as many days’ notice as the period of leave they are required to take.

What is unclear at the moment, however, is whether an employer will be able to require an employee to take annual leave during the furlough period, and we will need to await further guidance to confirm this.

In the meantime, we would suggest reserving the right to ask furloughed employees to take holiday whilst on furlough leave. That way the employer has written agreement to the principle from the employee, if it turns out under the terms of the Scheme that employers can require them to take annual leave during furlough.

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How should an employer deal with bank holidays?

Answered 8 April 2020

These should be treated like any other pre-arranged holiday, if they are normally days off for the relevant employees.

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Are employers required to let employees cancel pre-booked annual leave if they are unable to work?

Answered 27 March 2020

Many employees affected by travel restrictions and cancellations as a result of the coronavirus outbreak will have to cancel holidays, and employees may want to cancel pre-booked annual leave to take it later in the year when things have (hopefully) calmed down.

Whether an employer has to agree to this cancellation will depend on the rights under the employee’s contract of employment or the terms of the relevant internal policy. There is no statutory requirement for an employer to agree to a request to cancel annual leave.

Employers should take into account the needs of the business, and also the employee’s personal circumstances, and we would recommend agreeing to the cancellation where this would not cause significant inconvenience.

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What if it is not possible for employees to take all of their holiday in the current holiday year?

Answered 27 March 2020

New amendments to the Working Time Regulations allow employees to carry over up to 20 days’ untaken leave into the next two holiday years. This does not necessarily mean that the Scheme will ultimately prevent periods of furlough and holiday coinciding. This amendment is primarily aimed at helping key workers not to lose holiday if they cannot currently be spared.

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Furlough and Family Leave

Can we select employees who are on maternity leave to be furloughed? What happens to their rate of pay? Will it break their maternity protection?

Answered 27 March 2020

Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work immediately following the birth of their baby for health and safety reasons.

If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.

Employees who qualify for SMP, will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of the lower of their average weekly earnings or the statutory flat rate (currently £148.68 a week, rising to £151.20 a week from April 2020).

Whilst you should continue to claim SMP/Maternity Allowance as normal for furloughed staff, if you offer enhanced contractual maternity pay, this will be included in the calculation of wage costs for the purposes of the Scheme so you will be able to claim for a subsidy of this.

Employees will still benefit from the same employment protections whilst on furlough, and this will include maternity protection.

If the Scheme does not prohibit it (and we do not know at this stage whether it does or does not), it may be that for some employees there is a short term benefit in taking the six weeks’ statutory maternity pay (at the rate of 90%) and then returning to work on a furloughed basis to receive 80% of their usual salary for the period of furlough. However, at present the Scheme is only due to run for an initial period of 3 months, and consequently there is a risk that if the Scheme is not extended the employee may have to return to normal work sooner than anticipated.

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What about other family leave?

Answered 27 March 2020

We understand that the same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.

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Furlough and volunteering

Can an employee volunteer for the business whilst on furlough?

Answered 27 March 2020

A furloughed employee must not do any work for an employer that has furloughed them, as the intention of the Scheme is to allow employers to pay staff who are without work. The latest guidance has however confirmed that a furloughed employee can take part in volunteer work or training, as long as it does not provide services for or on behalf of the employer, which includes generating income. From this, we have deduced that whilst a furloughed employee can volunteer, they cannot volunteer for the employer that has furloughed them, without jeopardising the right to furlough pay. The employee can however volunteer for another organisation. Charities are asking the Government to relax this rule, to allow employees to continue to help their employers.

If the employer is seeking volunteers to assist during this period, please remember that the usual recruitment checks will apply to new volunteers.

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Can an employee volunteer elsewhere whilst on furlough?

Answered 27 March 2020

Yes, furloughed workers are able to volunteer for another organisation whilst on furlough.

In addition, non-furloughed workers also have the right to take volunteer leave. The Coronavirus Act 2020 has introduced the right for employees and workers to take emergency statutory volunteer leave in blocks of two, three, or four weeks’ unpaid leave. This is independent of furlough leave. The Act has confirmed that:

  •   There is no obligation on the employer to pay wages to a volunteer during a period of volunteering leave;
  •   An employee on emergency volunteering leave will be entitled to the benefit of all of the terms and conditions of employment (except remuneration) that would have applied if the employee had not been absent from work; and
  • The employee will be entitled to return from volunteering leave to the job in which he or she was employed before the absence, on no less favourable terms and conditions.

Because the emergency volunteer work will be unpaid, the Government has committed to setting up a UK-wide compensation fund to compensate volunteers for a loss of earnings and expenses incurred at a flat rate for those who volunteer through an appropriate authority (for example, the NHS).

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Training

Can employers require employees to complete training during furlough?

Answered 27 March 2020

Yes. A furloughed employee can take part in training, as long as it is not providing a service, or generating revenue for the organisation.

However, if workers are required to complete training whilst they are furloughed, they must be paid at least the National Minimum Wage (or National Living Wage) for the time they spend training, even if this amounts to more than the 80% subsidised wage received under the Scheme. The employer will be responsible for paying the difference.

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Calculating pay for the purpose of the scheme

What costs can an employer claim for under the scheme?

Answered 16 April 2020

Government guidance sets out how much an employer can claim for a furloughed employee and how pay should be calculated. We recommend that employers review this guidance when submitting their claims to ensure they are claiming for all that they are entitled to. The guidance can be accessed here.

In short, the latest guidance has clarified that:

      • Employers can choose to top up furloughed employees salaries (i.e. to 100%) but they do not have to. Employers cannot claim for this top-up under the scheme or for the additional NI or pension contributions incurred as a result.
      • Furloughed workers can be paid the lower of 80% of their salary (or £2,500) even if, based on their usual working hours, this would be below their appropriate minimum wage (subject to the comments about training and apprentices above).
      • Employers cannot claim for any pension contributions above the minimum mandatory employer contribution of 3% under the scheme.
      • Employers can claim for payments they are obliged to pay staff (including past overtime and compulsory commission) but cannot claim for discretionary bonuses or any other commission, or non-cash payments.
      • The sums claimed under the scheme should not include the cost of non-monetary benefits provided to employees, including taxable benefits in kind.
      • The Apprenticeship Levy and Student Loans should continue to be paid as usual. These are not covered by the scheme.
      • Salary sacrifice schemes that reduce an employee’s taxable pay should not be included in the salary for the purpose of the scheme. HMRC have confirmed that Covid-19 is a ‘life event’ for the purpose of salary sacrifice arrangements, and as such, employees are able to switch out of a salary sacrifice scheme provided their contract is updated accordingly.

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What about employees transferring under TUPE after 19 March 2020?

Answered 16 April 2020. Updated 13 May 2020.

A new employer is eligible to claim under the scheme in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

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