COVID-19 - Furlough Leave

Furlough leave - retaining jobs and basic income

The government has announced an unprecedented range of financial measures to assist businesses and their employees during these troubled times.  The latest round of initiatives announced on Friday, 20 March 2020 includes "Furlough Leave" for employees.

What is it?

“Furlough Leave” is aimed at retaining jobs and paying part of the salary of those employees who otherwise would have been laid off during this crisis.  In other words, this leave will allow these employees to remain ‘employed’. 

How does it work?

Information about Furlough Leave is a bit scarce at the moment as the government hasn’t yet published its detailed guidance. But, what we do know is that employers will need to designate affected employees as ‘furloughed workers’ and then notify them of that fact. Employers will then need to notify HMRC through an on online portal, which is currently under construction.

The employee will not be able to carry out any work for their employer during this period. In exchange they will be paid 80% of their gross wage, up to a maximum of £2,500 per month cap. As yet we do not have enough detail but this sum may include pension and national insurance contributions. 

The government guidance suggests that the scheme will run for at least 3 months but may be extended if necessary.  Eligible employers will be able to access grants by the end of April from HMRC and the payments will be backdated to 1 March 2020. 

Whose choice is it?

An employee cannot insist on being placed on this leave as it is for the employer to choose who they want to put on Furlough Leave.  Once they have made their choice it is likely that they will then need to seek the consent of each employee to place them on Furlough Leave. This is because employers are changing the status of employees and this remains subject to existing employment law. Therefore, unless the employment contract provides that the employer can withhold work and pay, the employee will need to agree to the change of status. That said, it is likely that most employees will agree in the circumstances.

The government are updating their web page as more information becomes available, and you can find the latest announcements and details here:  Coronavirus Job Retention Scheme.  If you would like further legal advice on your own personal circumstances, we offer a Talbots Expert Advice meeting to discuss your specific issues at only £99 including VAT.   Please call our team on 0800 118 1500 for more information, or email Reyhana Koser.