Guidance for employers on the furlough scheme

27th March 2020

Coronavirus Job Retention Scheme Update

We know that coronavirus is a worrying period for you as employers and your staff. The Government last night published further details of the furlough scheme. The full details and guidance is here. Employers will need to read the guidance, but it is summarised below. 

Who can claim?

Any UK organisation with employees can apply, including businesses, charities, recruitment agencies and public authorities.

The employer must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

The Government does not expect employers who receive public funding for staff costs, and that funding is continuing, to claim as the Government expects employers to use that money to continue to pay staff in the usual way.


Which employees can employers claim for?

Furloughed employees must have been on the PAYE payroll on 28 February 2020. It can be any type of contract, including;

  • Full time employees
  • Part time employees
  • Employees on agency contracts
  • Employees on flexible or zero hours contracts

This scheme also covers employees who have been made redundant since 28 February 2020, if they are now re-employed by their employer.

However, this means that it will not apply to employees who have commenced employment since 1 March or who are due to start soon.

When on furlough, an employee cannot undertake any work on or behalf of the employer.  This includes providing services or generating revenue.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for the furlough scheme.


What if the employee is on statutory sick pay?

Employees on sick leave or self-isolating should get SSP but can be furloughed after this. The sick leave period would have to be brought to an end to be eligible.

Employees who are shielding in line with public health guidance can be placed on furlough.


What about employees who are on maternity leave?

If the employee is eligible for SMP or maternity allowance, then the normal rules apply.  If an employer offers enhanced earnings-related contractual pay to women on maternity leave, this is included as wage costs that an employer can claim through the scheme.

The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, provided always that they cannot ‘return’ within the compulsory maternity leave period.


What about rotating staff?

This is one of the questions we have been asked about the most.

Employers can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for.  It will therefore not be possible to furlough staff on a one week on, one week off basis.  The rotation would have to be on a minimum of three weeks.


What about the national minimum wage?

Workers are only entitled to the minimum wage for the hours they work. If they are on furlough leave, they will not be working and so, if paying 80% of normal pay would take them below minimum wage if working as normal, that is allowed.


What can an employer claim?

Employers can claim up to 80% of wage costs up to £2,500 per month, plus (not including) the associated employer NICs and minimum auto-enrolment pension contributions on that wage.  Fees, commissions and bonuses are not included.  Tax and employees’ NICs, along with pension contributions, will need to be deducted as normal from the gross amount paid to the employee.

An employer can choose to top-up to 100% but does not have to.  This is subject to employment law and renegotiating any contractual entitlements (see below).

For employees whose pay varies, the employer can claim the higher of (i) the same month’s earnings from the previous year, (ii) the average monthly earnings in the 2019/2020 tax year.

Employers need to have records of letters issued to staff as evidence that have been placed on furlough leave.


How should an employer implement the change?

If an employer is topping up, then this will be relatively easy.  If an employer is implementing furlough and paying employees 80%, then, if simply imposed, this would be a breach of terms and conditions of employment. Employers therefore need to obtain agreement from the staff in order to place them on furlough leave.

We would anticipate that many employees will agree to furlough leave given the current position and would be willing to help the business survive through a difficult period.

Depending on the numbers involved and the consequences if agreement is not reached, it may be necessary for employers to engage in collective consultation processes.  One of the difficulties at the moment is consulting with staff when staff are working remotely or are self-isolating.

We understand that this is a troubling and uncertain time for you and your employees. Our team are here to resolve any questions and give further advice on furlough leave and the process to follow. Please do not hesitate to get in touch. Call us on 0113 849 4000 or email

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