Search

How can we help?

Icon

Furlough leave – what is it all about?

Furlough leave – what is it all about?

Furlough leave has not been defined by UK statute (yet). However, it is essentially a new mechanism that the UK government has implemented to avoid employers making employees redundant during the Covid-19 pandemic. HMRC will reimburse 80% of “furloughed workers” salary, up to a cap of £2,500 per month,

How does it work and who is eligible?

All UK businesses are eligible. The employer takes the first step and will need to decide which employees they would like to designate as furloughed workers. The employer will then need to inform the affected employees of the proposed change.

Do employees need to agree?

The employment relationship is still subject to employment law and the contract of employment. So, unless the employment contracts have a lay off clause then agreement will be needed because the employer is changing the status of an employees’ contract in a way that will reduce their pay. It is anticipated that most employees will agree given the realistic alternative is redundancy.

What happens after the employee agrees to become a furloughed worker?

The employer will need to inform HMRC which employees have been designated as furloughed workers and submit a claim for their earnings to HMRC through a new online portal. HMRC will then reimburse 80% of the furloughed workers salary, up to a cap of £2,500 per month. The portal has not been created yet and this will take some time. It is anticipated it will be created in time for April 2020 payroll.

Furlough leave has not been defined by UK statute (yet).

How long will the scheme apply for?

At the moment it will last from 1 March 2020 for three months. This will be under constant review and may be extended.

Do employers need to top salaries up to 100%?

No, the guidance states that an employer could choose to top up salaries however as the employee will remain employed, unless they agree to a decrease  there will be a contractual obligation to pay the employee their full salary. Therefore, when an employer is negotiating furlough leave, they may wish to negotiate the relevant decrease for the time that they are a furloughed worker. Again, it is anticipated that most employees will agree given the alternative. An employer may also have a contractual right to withhold pay so it is worth looking at the contract of employment.

Can an employee simply to choose to be furloughed?

No, an employer will need to designate the employee as furloughed.

Will this create problems with employees?

Yes, some employees may resent being made to work whilst their co- workers are not working and only earning 20% less. Employers will need to reassure all non-furloughed employees. Employees subject to furlough may also have their own insecurities for being selected as non-essential. Employer will need to think carefully about how they approach this.

This is all still very new and subject to change. It is anticipated that the government will  publish further clarification in due course.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 02 May 2025
  • Employment

Sex, Gender and the Law: What the Supreme Court’s Recent Ruling Means for Employers

The recent UK Supreme Court decision in For Women Scotland Ltd v The Scottish Ministers  UKSC 16 has generated significant attention, but for most employers, we would argue that its practical impact is relatively limited—at least for now.

art
  • 16 April 2025
  • Employment

End of the Line for Fire and Rehire? What Employers Need to Know

The Employment Rights Bill, introduced in October 2024, aims to restrict the practices of ‘fire and rehire’ and ‘fire and replace’.

art
  • 14 April 2025
  • Employment

Consistency is Key: Strategies for Harmonising Disciplinary Processes

It is an unfortunate reality that occasionally employers will find themselves in a position where it is necessary to proceed with a disciplinary process.

Pub
  • 28 March 2025
  • Employment

Talking Employment Law: Redundancy and settlement agreements – What you need to know

In this podcast, Lucy White and Shauna Jones, members of the employment team at Clarkslegal, will guide you through the complex topics of redundancy and settlement agreements.

art
  • 28 March 2025
  • Employment

Injury to feelings awards: Updates to Vento Bands 2025

Injury to feelings awards: Updates to Vento Bands 2025 For discrimination and detriment cases, compensation can also cover non-financial losses, which, in most cases, will include an injury to feelings award.

Pub
  • 24 March 2025
  • Employment

Talking Employment Law: The Employment Rights Bill – Part 1

In part 1 of the Employment Rights Bill podcast in the ‘Talking Employment Law’ series, Louise Keenan and Lucy White, members of the employment team, will discuss some of the main provisions of the Bill, including unfair dismissal and family rights.