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Furlough leave: common questions answered

We’ve had a large number of questions regarding the government’s job retention scheme. Our Which? Legal team has answered some of the most common.

In March the government announced a Scheme to ‘help employers whose operations have been severely affected by coronavirus to retain their employees and protect the UK economy‘.

Employers can ‘furlough’ certain staff and apply for a grant from the government to cover 80% of each person’s usual monthly wage, up to a max of £2,500 a month. 

The Scheme will close to new entrants from 30 June 2020 and is due to come to an end altogether in October 2020.

On 29 May, the Chancellor announced some important changes to the scheme:

From 1 July 2020:

i) the number of employees an employer can claim for in any one month may not exceed the number in any previous claim, i.e. no new people can be added,

ii) employers will be able to furlough people for less than the current minimum of three weeks.

iii) furloughed employees will be able to return to work on a part-time basis for any amount of time and any shift pattern. Employees will be entitled to be paid in full for any days worked, whilst the employer can submit a claim under the Scheme for days not worked (subject to the relevant salary caps).

From 1 August 2020:

Employers will be required to pay the following contributions towards furloughed employees’ furlough pay:

August: the employer national insurance contributions and employer pension contributions on the furlough pay.

September: 10% of employees’ 80% furlough pay. Recoverable furlough pay will be capped at £2,187.50.

October: 20% of employees’ 80% furlough pay. Recoverable furlough pay will be capped at £1,875.

As furloughed employees can return to work on a part-time basis from 1 July, the new caps will be proportional to the hours not worked.

On 12 June the government published further guidance on how the Scheme will operate between July and the end of October.

The Scheme applies to anyone who is furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease”. An employer cannot apply for a grant if to do so would be “abusive or is otherwise contrary to the exceptional purpose” of the Scheme.

Guidance on the scheme is continually being updated, but the team here at Which? Legal has done its best to answer some of the most common questions we’ve seen so far.

Read all the latest COVID-19 news and advice on our dedicated hub

Who’s eligible for the furlough scheme?

From 1 July 2020 employers can only claim from the Scheme in respect of employees who were furloughed on or before 10 June 2020, with the exception of those who are returning to work following a long period of statutory family leave, e.g. maternity or shared parental leave.

Prior to that, any employer within the UK was eligible to claim, but they could only furlough staff that were on their PAYE payroll on or before 19 March 2020. This included staff on ‘zero-hours’, fixed-term or temporary contracts.  

Anyone who “stopped working” on or after 28 February 2020 but before 19 March can be furloughed if they were re-engaged by their former employer. However, there was no obligation on their employer to do so.

People hired after 19 March 2020 have never been eligible to be furloughed.

The scheme does not apply to the self-employed – they may qualify for support under the Self-employment Income Support Scheme.

Can you still undertake work whilst you are furloughed?

Currently you cannot do any work for any employer that has furloughed you, but you can undertake training.  

You can work for another employer (providing your contract of employment does not prevent you from doing so, or your employer consents). However, you cannot work for any business that is associated with or linked to your employer. 

From 1 July you can return to work for your employer on a part-time basis (see above). If your employer wants you to begin working part-time they will need to send you a new furlough agreement to sign outlining the circumstances in which they may require you to attend work.

You can do volunteer work whilst on furlough, providing it is not for your employer. 

Can you forced to take holiday whilst on furlough?

Any employer considering asking someone to take annual leave should check that they have the right to do so under the contract of employment.

If the contract doesn’t mention anything on this point, your employer may still be able to require you to take leave; by giving you prior notice equivalent to at least twice the length of time they want you to take off. For example: if they want you to take one week’s holiday they would need to give you at least two weeks’ prior notice.

Depending on the circumstances, there may be arguments to resist being placed on compulsory leave. This can be complicated; if you’d like more in-depth, affordable advice from a legal adviser on this point, you can call and join Which? Legal.

What pay should you receive if you take holiday whilst on furlough?

Perhaps surprisingly, this is a complex and, as yet untested, legal grey area. However, the general consensus appears to be that you should receive your normal pay for any holiday taken whilst on furlough leave. This view is supported by the government’s guidance on holiday and pay whilst on furlough, and separate ACAS guidance. Therefore, there is an argument that your employer should make up any shortfall in your pay.

Can you be furloughed more than once?

Yes, multiple times. From the 1 July, the minimum furlough period of three weeks will be removed so employers will be able to allow people to gradually return to work, i.e. on a part-time/flexible basis.

If you have jobs with different employers, you can be furloughed from one or both jobs.

What is the procedure for employers to end furlough leave?

The government has not outlined a particular mechanism for employers to end furlough leave and bring people back into the workplace. Ideally, your furlough agreement would provide for the circumstances in which furlough ends and how much notice your employer should give you before requiring you to attend the workplace.

In the absence of anything in your furlough agreement about this, your employer should aim to give you reasonable notice. What is ‘reasonable’ will depend on your individual circumstances.

ACAS have prepared some guidance about returning to the workplace which encourages employers to speak to its staff about their plans to work, including any planned changes to the workplace to minimise risks, e.g. providing hand sanitiser, changing start times (to avoid rush hours), amending working hours/patterns to avoid too many people being in at the same time.

Concerns about returning to the workplace

If you have concerns about returning to the workplace you should raise them with your employer in the first instance.

If you are able to work from home, this may well resolve the issue. If not, your employer should consider the current public health advice and the specific circumstances and reason why you are concerned about attending work. For example, if you have school age children but schools remain fully closed, you may be entitled to take dependant’s leave, holiday or unpaid leave (with agreement of your employer).

You also have certain rights; including the right not to be dismissed or suffer any form of detriment for raising certain health and safety concerns. If you have such concerns you should take legal advice to understand your potential rights.

Can your employer still make you redundant?

Yes it can – either whilst you are furloughed or afterwards. Being furloughed does not affect your normal redundancy rights. 

What are the alternatives to furlough leave?

Your employer could ask you to take a temporary (or permanent) pay cut and/or reduce your working hours.

Your employer could also ask you to stop working for a while (a ‘temporary lay-off’), or work fewer hours (‘short-time working’). However, they would need either your agreement or a contractual right to do so. 

The above information is provided by Which? Legal. Have you been placed on furlough leave? Do you feel you were given all the information you needed around the scheme?

Comments

If someone is furloughed, is the employer still required to pay the full contractual salary?

Unless an employee consents to a reduction in pay, the employer will be required to pay contractual salary. Cutting salary without agreement will amount to breach of contract and an unlawful deduction of wages, and there are time frames for pursuing such claims in the civil courts and employment tribunals.

That is very interesting. A friend is having to take a reduction in their salary. They feel like they have no choice in the matter. Either they take a cut in pay or risk redundancy.

Hmm – after a little research on the gov.uk site, the answer my question seems to be caught here:

“If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this [furlough] scheme.”

Because of the £2,500 cap, I could see some employers of higher paid workers trying to reduce salaries of furloughed staff, so they would only need to cover a maximum of 20% of salary. It would seem that attempts to do this would automatically make them ineligible for the scheme.

As dsnook says, an employer cannot reduce an employee’s salary without agreement.

But if cashflow is an issue, then legal protections count for little. If a company becomes insolvent and goes into administration, an employee is no better off than other creditors and could wait a very long time to see a small percentage of any back pay and redundancy owed.

Em – Your point is well made . Although employees have preferential status in any liquidation that counts for little after the secured creditors have been paid and also has limitations on what is protected. Faced with the possibility of closure employees will probably reluctantly have to agree to new terms and conditions of service because the alternative is much worse – especially in times like this when new job opportunities will be in short supply. A recession changes the dynamics of continued employment which is why the Job Retention Scheme is vital despite its current imperfections.

loy johannson says:
12 May 2020

best to go to Martin Lewis. money saving expert.they have a very diFforest result

John cooke says:
21 April 2020

what happens if the employer has no money to pay the employee first

John – It could mean that it is trading while insolvent, which is illegal.

In normal times it would have to go through a reorganisation of its business and funding arrangements and possibly go into some form of liquidation, e.g. administration, in order to survive.

In the present circumstances, companies that are already using all of their borrowing facilities to stay afloat might be able to obtain a lifeline in the form of a government-guaranteed additional bank loan, but, really, a firm that is sailing so close to the wind that it is struggling to meet its payroll has effectively collapsed. The employees would have to join the list of creditors and hope there is enough value in the assets, stock, goodwill, and future business potential to enable a takeover.

For some companies an orderly exit can be arranged but in many cases closure is sudden and very painful for the staff. Today unfortunately, for many employees, the end of furlough will not represent a return to normality but the start of a postponed redundancy process.

The commercial landscape where the impact has been heaviest will struggle to get back on its feet as thousands of shops find it almost impossible to rebuild their markets due to the upsurge in on-line selling – which is habit forming. Restaurants and leisure venues might survive if they can hang on long enough because there is no on-line substitute for their kind of trade, although the economic impact on people’s incomes will adversely affect volumes and in an over-supplied market there are bound to be more high-profile failures.

Lady Muck says:
22 April 2020

If a furloughed employee is secured by the agreement to not undertake any work then actually if the company goes down, it isn’t secure at all. A 0 hour worker in the agreement would not receive a wage for 0 hours normally whether the job is secured or not, so what guarantee is there that 0 hours workers under this scheme will receive a wage? Answers very fair if your name is Rishi Sunnak.

Lady Muck – Workers on zero-hours contracts and other flexible engagement schemes are in a very vulnerable position in any economic downturn, and this is likely to be one of the worst. I don’t know whether zero-hours workers are afforded similar consideration to the self-employed and entitled to payments based on their average earnings over a prior period.

Apparently, UK employment levels reached a record high just before the current emergency which could be a bit of a cushion since it would indicate a high number of vacancies and job opportunities but that will depend on the extent and timing of any bounce back which will vary across different types of occupation.

My partner has been furloughed but her employer has been asking her to still make phone calls and keep in contact with the staff. Is this illegal as its not training?

Correct. The employer cannot require a furloughed member of staff to carry out any duties of their employment. However, I would suggest she is pragmatic about this. The employer is in breach of the regulations, not her, and she is still being paid.

Yvonne says:
23 April 2020

I have been asked by my employer to take a cut in salary also holidays have been booked in May. Is this legal

Hi Yvonne. Thanks for your message. Unless you consent to a reduction in pay, you should be paid your contractual salary. As mentioned above, cutting salary without agreement will amount to breach of contract and an unlawful deduction of wages. Are you able to clarify your issue regarding the holidays you have booked for May?

Joe says:
14 May 2020

Hi Yvonne, my wife is facing the same issue. ie her employer is saying it wants all furloughed staff to take two weeks holiday. As I understand it the company can ask you to do this provided they give two times the period they want you to take as notice. So if they want you to take two weeks leave they must give four weeks notice.

Also I believe the leave should be at full pay, not 80% or £2,500. But I haven’t found anywhere that confirms this.

A BBC news article “Coronavirus: Wages, sick pay and time off explained” published today says on the subject of furloughed staff:

“An employer still pays their staff, and can decide whether to pay in full or only the 80% of wages they can claim back from the government.”

Would Which? care to comment in view of the responses given above?

Hi Em.

Thanks for your message. As we know, employers can claim the lower of 80% of an employee’s wage costs or £2,500 per calendar month, plus employer NI and auto-enrolment pension contributions, through the scheme. They can top up to full pay if they choose. Remembering though that withholding salary will amount to breach of contract and unlawful deduction of wages unless the employee consents to the cut. It is likely a majority of employees will consent to being furloughed on reduced pay if the alternative is redundancy.

Thanks for confirming dsnook. I agree some degree of pragmatism may be necessary if the alternative is redundancy.

It is worth noting that furlough pay does not guarantee continuity of employment, so a degree of caution is needed when not taking the redundancy route immediately. If the employer subsequently becomes insolvent, employees may only receive statutory redundancy, based on a maximum weekly salary of £538. This is guaranteed by the NI fund if the employer cannot pay.

Some employers offer more generous redundancy terms as a benefit in the contract of employment, but this is not guaranteed. The employee would become a creditor and could wait years to see any additional redundancy money – possibly only a very small fraction. The same would be true of pay in lieu of notice, should the worst happen.

Carrie Cull says:
24 April 2020

Daughter is a key worker but asthmatic, on two medications (not three), works part time, single mother 2 young children. The company wont Furlough her as she is only classed as at risk and not high risk. This seems unfair as she cannot risk going to work so is not getting paid.

I am 38 weeks pregnant and mean to start my maternity pay soon. Can I apply furlough? After 6 weeks, my maternity pay will be only £151 per week, which is far lower than my 80% salary. Can my employer put me on furlough if I apply to stop my maternity pay early?

I have spoken to my HR team weeks ago , as I am a carer for my daughter and has not been coping with this so I’m here for her and her children . He clerk told me that she thinks I will be eligible for furlough but will be put on a list for my regional manager to call to discuss with me . This was two weeks ago , ive heard nothing

Could you tell me if it possible to return to work say for a week and then go back on furlough ? My wife is currently on furlough but need to catch-up on about a week’s work. Is this possible ?

Furlough is for 3 weeks minimum but you can return to work and then furlough again.

Hi I have been furloughed from my hourly paid job and I have been payed in line with the government guidelines to calculate this from my earnings last year however I was under 18 at the time so was earning a considerable amount less per hour and also doing a lot less hours. I turned 18 at the end of December and so for the last 3 months before furlough was doing double the hours at a higher rate. My furlough pay has worked out at less than 50% my average for the last 3 months (although accurate if taken from the whole tax year) is there anything I can do to get this topped up!

Em says:
12 May 2020

Hi Roberta,

I don’t necessarily have a solution, but it might help to know if:

You are working on a zero hours contract, or is there a basic number of paid hours per month? In which case, furlough pay could be based on your basic wage on 19 March 2020 if that is more advantageous.

Did your earnings increase when you were 18 because you were or are still being paid minimum wage? Unfortunately, average furlough pay can cause your income to drop below minimum wage.

Was your income better for individual months in 2019? That can be used instead of annual average pay for each corresponding month. E.g. maybe you worked extra hours in June 2019 on which your June 2020 pay can be calculated.

Have you been asked to carry out any training during your furlough. The employer must pay you at least minimum wage for this time.

Have you asked your employer if they can make up the difference and have been refused?

Have you asked your employer to allow you to return to work?

Ann Taylor says:
11 May 2020

My son works as a key worker for a charity which assists and supports vulnerable people who live in privately rented flats provided by the charity. He lives with myself and my husband who are both over seventy. My husband also has pre-existing diseases which make him particularly vulnerable were he to contract the coronavirus so we have both been in voluntary self-isolation since March 13th, before the government suggested this course of action to the general public.

My son became very concerned that he would at some point contract the virus through his contact with his service-users and possibly pass this on to us. Many of them suffer from mental health problems and/or addictions and are therefore unlikely to adhere to the current hand-washing, social distancing measures or to voluntary self-isolate were they to contract the virus. He raised this concern with his line-manager whose suggestion was that he take an unpaid sabbatical for a period of up to 3 months. This was shortly after the government had announced the Furlough scheme which was not suggested.

He agreed to take the sabbatical and also contacted the DHSS to claim Universal Credit. Unfortunately despite being told he would be entitled to some benefit payment which he would have to wait 6 weeks to receive he has now heard he’ll receive nothing this month as he was paid for 2 weeks back pay from his employer for the part of the month he had worked in March which was about £600.

He’s now decided to move out in order to get back to work, but can’t do that until Letting Agencies are able to open up again. It seems employers are not obliged to go down the furloughing route if they don’t want to but in complying with government advice to protect us it seems he has lost out.

Shaun says:
12 May 2020

Hi I have been furloughed for nearly six weeks am I right in thinking if I go into my seventh week of furlough and the company want me back they have to wait until the 3rd 3week block is finished. Or after the minimum time of three weeks has past they can call u back to work at any time as long as they give you some notice

Em says:
12 May 2020

Furlough is for a minimum period of three weeks. If you are called back to work after that, a new furlough must also be for a minimum of three weeks. However, provided the furlough is continuous, there is no requirement for furlough to be in multiples of three weeks thereafter.

Since, technically, you are still under contract of employment, I don’t think they need to give you notice to end a period of furlough, always provided you are paid fully from your first day back at work and there are no other circumstances that might prevent you working normally, unrelated to the furlough scheme.

Hi All. My employer (Construction Industry) is keeping me on furlough until the end of June even though the project I was working on is due to re-open in 2 weeks. Is this allowed? I just want to get back to work.

Unless there is a clause in your contract of employment – a furlough (temporary paid leave) would have to be by written agreement. Is there an end date? But do consider that if your employer cannot afford to pay you to go back to work until end of June, the alternative could be redundancy.

If other colleagues are returning to work in 2 weeks to enable the project to restart, the employer needs to ensure that their criteria for employees coming off furlough are justifiable and non-discriminatory. If they have a temporary requirement for fewer employees with the same skills they should consider job rotation.

Mrs silvia sacco says:
12 May 2020

I am self employed holistic therapist now what do I do if it is furlough until october

I’m a Self-employed Dental Hygienist, I’m not working with very little prospect of working in short term. I’ve applied for HMRC/Gov 80% help scheme. I’ve also applied to be a NHS Clinical Contact Worker part time to help out in this difficult time. Totally confused now as if I do this work and get paid for it, would I then “lose” any of the base 80% benefit? not trying to be greedy just cannot get a straight answer anywhere!

HMRC says:

“If you receive the [Self-Employment Income Support] grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.”

The company I work for has asked me to take unpaid leave because they have informed me that the company have been told the staff will not be put on the furlough pay scheme. Basically leaving me with no money or income.
Does this seem right

Does anyone know, given the latest announcement about the furlough scheme becoming more flexible, if this can be used before August? I have 3 employee’s on furlough, we are re-opening our dog walking business, but on a gradual basis from June. I can afford to pay 1 member of staff to come back part time, meaning the furlough amount claimed would be less than it is at the moment. However as the flexible rules don’t look like they apply until august, I would have to cover all of my employee’s wages (not possible) or leave them on furlough??

Many thanks

Em says:
18 May 2020

I’m not sure what more flexible rules you are referring to, as I cannot find a definitive statement, other than some vague newspaper reports.

Provided an employee is furloughed for a minimum of 3 weeks, they can be called back to work as required and re-furloughed later for a further 3 weeks minimum.

You could, for instance, operate a simple one week working / three weeks furloughed rota. You would need to cover the fourth week, when none of your furloughed employees would be immediately eligible to return to work.

Other rotas are possible that would work with just the 3 employees, e.g. two weeks on / four weeks off. The fastest rota you can operate with three employees, only one of whom is working, is 11 days on / 22 days off.

I have full time job and on top of that I’m self-employed. Up until now I was doing both. But from today my employer put me on furlough leave and my furlough agreement says that I can’t work for ‘any other organisation or on my own account’. My employer will only pay me 80% of my salary. So I’m loosing 20% of my income from employment & 100% from my self-employment. Is this right? Can’t I continue with my self-employed work while being on furlough leave from employment? My self-employment work is completely unrelated to my full time job.

Em says:
18 May 2020

Let’s disregard furlough for a minute.

Your contract of employment should cover any arrangements or restrictions on you holding a second employment, or being self-employed in addition to your main job. Often, you would need to notify or even request the permission of your main employer to take up additional employments or run a separate business. This is to ensure there is no conflict of interest, e.g. working for a competitor, or an additional call on your availability when you should be working full time at job number 1. However, an employer cannot cannot unreasonably stop you taking up additional employment(s), if it does not interfere with your work for them.

Make sure your original contract of employment is being complied with and you have previously notified your employer of your self-employment arrangements, if required. If there is nothing in your contract and your employer has become aware of your second self-employed job, then they have effectively consented to that arrangement, and it will have become an implied term of your employment contract over time that they cannot suddenly change now.

Back to furlough.

There is nothing in the furlough arrangements that stops you working for a different employer, being self-employed, or even taking up a new employment or starting a new business. Subject to what was said above about your explicit or implied employment contract terms being complied with prior to furlough, your employer cannot suddenly introduce a new term that prevents you from working for ‘any other organisation or on [your] own account’.

Em says:
18 May 2020

Further to the above, HR departments can sometimes be a little over-zealous or rely too much on standard boilerplate terms and conditions. Having verified your contract, the next step is to contact your employer and point our that your previously agreed or accepted arrangements are in conflict with the new furlough agreement they are expecting you to adopt.

Maybe a friendly phone call is all that is required, but make a note of what is discussed.

“Ultimately what happens may be a question of negotiation between the employer and employee. Employees do have to agree to being furloughed, unless there are lay off provisions in their contract, so an informed employee may say they only agree to being furloughed and taking a pay cut if the employer agrees to them working elsewhere during their normal working hours. The safest course of action is to agree with the employee the nature and length of any other work that may be done, ideally in writing. Employers may ask employees to agree new or reconfirmed restrictions on working elsewhere, especially if for a competitor. The employer may agree to furloughed employees working in limited sectors, for example, food, health and social care or other essential services. Special rules also govern volunteering.