What exactly does it mean to be placed on ‘Furlough’? | Howells Solicitors

What exactly does it mean to be placed on ‘Furlough’?

The Government has introduced a Coronavirus Job Retention Scheme, which is a temporary scheme open to all UK employers that have been placed on furlough as an alternative to making them redundant and will cover at, and will cover least three months starting from 1st of March 2020.

Employers can use a portal, which is to be set up by HMRC but which is not yet live, to claim for 80% of the usual monthly wage costs including the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage, up to a maximum of £2,500 per month.  The employee is placed on leave and may not work for the employer.

Employers can use this scheme anytime during this period.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

What does ‘Furlough’ mean?

The definition of the word furlough is to ‘take a leave of absence’ from service. Essentially, implementing furlough allows employees to be temporarily absent from work, and not carry out any work that makes the firm revenue, but still still be paid by the employer.

Who can claim on the ‘Coronavirus Job Retention Scheme’?

Any UK organisation with employees can apply, including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

If you work for a public sector organisation, the Government expects that the scheme will not be used by many areas, as many public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak. However, where employers receive public funding for staff costs, and that funding is continuing, employers will be expected  to use that money to continue to pay staff and not place them on furlough.

Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.

Which employees can an employer claim for on the ‘Coronavirus Job Retention Scheme’?

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:

  • full-time employees
  • part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

To be eligible, when on furlough, an employee can not undertake work for or on behalf of their employer.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and will have to continue being paid by the employer through its payroll subject to the terms of the employment contract agreed.

Can an employer force an employee to go on Furlough?

It is unlikely that the firm will have a contractual right to place staff on furlough so consent from the employee must obtained. Failure to do so may constitute a breach of contract.

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

If an employee is on unpaid leave they cannot be furloughed, unless they were placed on unpaid leave after 28 February.

If they are on sick leave or self-isolating, they should get Statutory Sick Pay, but can be furloughed after this.

If an employee has more than one job you can be furloughed for each job.

Does an employee on Furlough maintain their employment rights?

Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, and other parental rights, rights against unfair dismissal and to redundancy payments.

Can you be made redundant rather than placed on ”Furlough”?

Based on current guidance it appears you can. An employer cannot force an employee onto furlough. But in testing whether or not a redundancy dismissal was fair, an Employment Tribunal would look at whether there was a “suitable alternative”.  An employer would therefore have to be able to explain why government-funded furlough was not a suitable alternative to dismissal.

Our employment department offer free consultations for some matters. If you would like to discuss these or any other issues with an expert Solicitor them you can email Howells to make an appointment, which can be via telephone, at [email protected], visit our website or call us:

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