What is furlough, and how does it work?

In early March, the UK government announced that in order to limit the rate of redundancies across the UK, they will offer a Coronavirus Job Retention Scheme for employers to help them retain their staff, with what is called “furlough”.

What is furlough, and what does it mean for employees?

Essentially, furlough is the ability to keep staff on the payroll, yet for them to take extended leave as the company’s business shrinks.

Workers who are on furlough aren’t allowed to actually work and must be furloughed for a minimum of three-week blocks.

The government confirmed that for all businesses who place staff on furlough, it would pay up to 80% of staff wages, to a total of £2,500 per individual per month, with the option to top up the extra 20% in the hands of the employer. This applies for both part-time and full-time employees who were on the payroll on the 28th of February 2020. This amount would be payable through normal monthly instalments.


Can an employee who is on sick leave or who is self-isolating, be furloughed?

Employees who are on sick leave or are self-isolating should get Statutory Sick pay (SSP), but can be furloughed after they have recovered or are no longer self-isolating.


For how long is this scheme for?

The scheme will initially run for at least three months, from the 1st of March 2020, with all UK businesses eligible, and will be extended if necessary.


How to access the Coronavirus Job Retention Scheme.

Employers will need to take the following steps:

  • Designate affected employees as ‘furloughed workers,’ and notify your employees of this change.
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal, which is expected to be operational end of April 2020.

However, employers should note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. This scheme does not give a ’right’ to put an employee on furlough. If employers do not have a contractual right to furlough, they will need employee agreement, and depending on the numbers of employees impacted that might require a collective consultation (typically of 30 days or more).