Furloughed staff: how it works and what you need to know

STOP PRESS: This guide relates to the Coronavirus Job Retention Scheme prior to its extension on 1 November 2020. For information about the extension of the scheme from 1 November onwards, see our Q&A on the Coronavirus Job Retention Scheme extension, or see our blog for an overview of the key points for employers.

We find ourselves in unprecedented times.

Your business may be faced with the difficult prospect of needing to reduce the size of your workforce because of an unexpected disruption to cashflow. Equally, there may be staff who cannot work because of caring responsibilities or because they are in a vulnerable group.  Anticipating this, the Government introduced the Coronavirus Job Retention Scheme to pay a proportion of the salary of those who cannot work and/or who you would otherwise have had to lay off. Under the scheme, you will keep those staff on your payroll, but HMRC will reimburse 80% of their wages, up to a maximum of £2,500 per month until 31 July 2020.

From 1 August 2020, the amount of the reimbursement began to be tapered and employers were asked to begin contributing towards the grants as the scheme winds down through to 31 October 2020. The purpose is to allow businesses to retain staff they will need in the future when they are in a position to rebuild, rather than making them redundant, although the Government has confirmed that all employers are eligible to claim.  Government guidance has emerged gradually and in May 2020, it announced that ‘flexible furloughing’ would be introduced on 1 July 2020, which means that the final date by which employers must have furloughed staff for the first time to continue to benefit under the scheme was 10 June 2020.

 

How does furlough work and who is eligible?

 

1. Which businesses can use it? 

All UK businesses who use the PAYE system (and had it in place on or before 19 March 2020) can access the scheme. Businesses will need to have enrolled for PAYE online and have a UK bank account. It applies to companies as well as sole traders or individuals who employ people, as well as the public sector, local authorities and charities. It also includes recruitment agencies who employ agency staff. Note that the Government has confirmed that if your business is part of a group of companies which have multiple PAYE schemes, if you decided to consolidate them after 28 February 2020 and pay all staff through a new PAYE scheme, you can still claim. In an important update on 29 May 2020, the Government announced that the Coronavirus Job Retention Scheme would change from 1 July 2020 to ‘flexible furloughing’. This means that the scheme closed to new entrants from 30 June, therefore employers must have furloughed staff for the first time by 10 June 2020 to benefit from the scheme. There is an exception to this for staff who have been away on maternity, paternity, shared parental, adoption or parental bereavement leave, returning after 10 June 2020 (see below). 

2. What types of staff does it cover?

The scheme covers all those paid via PAYE who are:

1. 1. employees, whether full-time, part-time or on fixed-term contracts (such contracts can be extended or renewed during furlough leave);
   2. apprentices;
   3. casual workers (including those on zero-hours contracts);
   4. agency workers who are employed by an agency (provided they are not working);
   5. office holders, including company directors; and
   6. salaried members of LLPs.

Staff must have been on the PAYE payroll on or before 19 March 2020 to qualify and an RTI submission notifying payment in respect of that staff member must have been made on or before 19 March 2020. However, note that the Government has confirmed that if staff were transferred to your business under TUPE after 28 February 2020, you are entitled to use the scheme for those staff if their former employer had a qualifying PAYE scheme (see our content on TUPE transfers for more information about TUPE). Equally, if staff were transferred to your business under TUPE after 10 June 2020, you will be eligible to claim for them provided their previous employer furloughed them for at least 3 consecutive weeks at any time before 30 June 2020. Staff who were employed by you on or before 28 February 2020 but who were made redundant prior to 19 March 2020 may also qualify (see below for more information).  Note that staff on fixed term contracts which have not yet expired may have them extended or renewed and their employer can continue to claim for them under the scheme. For those whose contracts have already expired, it will be possible to re-employ them and claim for them under the scheme if:

• Their contract expired on or after 28 February 2020 and an RTI submission notifying payment was made on or before 28 February; or
• Their contract expired on or after 19 March 2020 and an RTI submission notifying payment was made on or before 19 March 2020. 

Any staff who started a new contract on or after 28 February which then ended on or before 19 March 2020 will not be eligible for the scheme.  The Government has confirmed that pay under the scheme will not count as ‘access to public funds’, so you are not prevented from furloughing those on certain types of visa.

3. How does it work?

The steps are as follows:

1. 1. Designate the staff you want to furlough as ‘furloughed workers’; note that the way you do this is impacted by general employment law, as explained further below. The latest date by which you must have furloughed staff for the first time if you want to claim under the scheme is 10 June 2020.
   2. Write to your staff to notify them that you intend to place them on furlough leave and to ask them to agree to this (see below). Your staff must specifically agree to cease all work for your business for at least 21 days; you must ensure that you specify the main terms and conditions upon which they must stop working for you. It is best practice to agree this in writing, but you are also permitted to agree it orally provided that you follow up with a confirmation in writing (which could be by email). You can use Furlough leave agreement letter for a current member of staff or Furlough leave agreement letter for a staff member who has been made redundant for staff members who have been made redundant since 1 March 2020, or Furlough leave agreement letter for a staff member on family leave if you want to furlough staff who are on maternity, paternity, adoption or shared parental leave. To place a director on furlough, use Furlough leave agreement for a director. You must keep a record of the agreement (or your written confirmation) until at least 30 June 2025. If you will be placing a member of staff on flexible furlough leave on or after 1 July 2020, you can use Flexible furlough agreement letter.
   3. Once your staff have confirmed their agreement, write to them to confirm they’ve been furloughed and keep this communication on record for 5 years. You can use Furlough leave confirmation letter.
   4. Submit information to HMRC about the furloughed staff and what they earn, through its online portal, which went live on 20 April 2020. Note that the claim end date must be no more than 14 days in the future from the date you make the claim. You must have submitted all claims for any furlough leave during the period up until 30 June 2020 by 31 July 2020. Following this, all claims for any furlough leave during flexible furlough up to 31 October 2020 must be made by 30 November 2020. 
   5. HMRC will, having received the claim and assessed it, make a BACS payment to your bank account within 6 working days and you must then pay your staff the full amount they are owed under the scheme through your payroll. You must not make any deductions from it, whether for administration costs or for any other reason.

Note that the claim begins from the date furlough leave actually began, not the date you wrote to your staff or made the decision to place them on furlough leave. Employers who wish to benefit from the scheme must have furloughed eligible staff by 10 June 2020 at the latest. This is because the scheme changed from 1 July 2020 to ‘flexible furloughing’ and closed to new entrants; furloughed staff must have completed their 21 day minimum furlough period by that point if their employer wished to continue to benefit from the scheme.

4. What process will I need to follow when making a claim through HMRC’s online portal?

To make a claim under the Coronavirus Job Retention Scheme, you will need to submit information to HMRC about the furloughed staff and what they earn through HMRC’s Government Gateway. This portal went live on 20 April 2020 and to access it you will need the Government Gateway ID and password you use for PAYE online. The following process will then need to be followed:

1. 1. You will need to confirm:
      1. your ePAYE reference number;
      2. the number of staff being furloughed;
      3. the following information about the furloughed staff: national insurance numbers, names and payroll/employee numbers;
      4. your self assessment unique taxpayer reference, corporation tax unique taxpayer reference or company registration number;
      5. the claim period (start and end date);
      6. amount claimed including employer National Insurance contributions and employer minimum pension contributions;
      7. your bank account number and sort code; and
      8. your contact name and phone number.
   2. You’ll need to calculate the amount you are claiming, including the total employer NICs and pension contributions; HMRC has warned it may carry out audits to check for fraud later. You should use the amounts in your payroll, which will need to be updated to reflect reduced amounts to be paid to furloughed staff (HMRC won’t do this for you).
   3. If you’re claiming for less than 100 staff, you’ll need to enter the details set out above for each of them individually. If you’re claiming for more than 100, you will have to upload a file containing the information, which can be in any of the following types: .xls .xlsx .csv .ods .
   4. You must retain records and calculations in relation to your claims for 6 years (including your claim reference number) as you will not receive an email confirmation.
   5. HMRC warns that it will not be able to provide your staff members with details of claims you make that relate to them, and asks that you keep them updated and warn them not to contact HMRC.
   6. You can use an agent to make claims for you, but only if authorised to act for you for PAYE purposes.

Note that you will only be able to make one claim per each claim period and that claim must include all relevant staff members for that period, even if they are paid at different times. Any claim periods starting before 1 July have to end by 30 June, and a separate claim made for 1 July onwards. This is the case even if the person remains continuously furloughed. From 1 July, claim periods must start and end within the same calendar month. If you cannot complete your claim in one session, you can save a draft but you must complete it within 7 days. If you make an error, you can delete your claim within 72 hours after submitting it. You have until 31 July 2020 to make any claims for staff who have been furloughed in the period prior to 1 July 2020 when ‘flexible furloughing’ was introduced. Bear in mind that the scheme closed to new entrants on that date, therefore the final date by which any new staff members could be placed on furlough for the first time was 10 June 2020, with a limited exception for staff members who have been away on some types of extended family leave. From 1 July 2020, you have until 30 November 2020 to make any claims for staff who have been furloughed in the period prior to the scheme closing on 31 October 2020. 

5. How long will the scheme run for?

It is intended to cover an 8 month period, from 1 March 2020 to 31 October2020. Originally due to end on 31 May 2020, the scheme was initially extended by one month on 17 April 2020, following which a four month extension was announced on 12 May 2020. 

In an announcement on 29 May 2020, the Government confirmed that the scheme would close to new entrants from 30 June 2020 and that only staff who have already been furloughed prior to that date would be eligible for the scheme from 1 July 2020 when  ‘flexible furloughing’ was introduced. This means that the final date by which employers could furlough staff for the first time was 10 June 2020 in order that they could complete their minimum three week furlough period prior to 1 July 2020.

Employers will have until 31 July 2020 to make any claims under the scheme for staff who have been furloughed up until 30 June 2020. Following this, employers will have until 30 November 2020 to make claims for staff furloughed up to 31 October 2020.

Employers should also note that from 1 August 2020, the amount that they are expected to contribute towards their furloughed workers wages changed. 

6. When will the grants be paid?

The scheme opened on 20 April 2020 and HMRC has confirmed that employers will receive payments six working days after making an application. 

7. Do the grants available under the scheme cover just salary or things like bonus and commission as well?

The Government has confirmed that the grants cover ‘regular payments’ you are obliged to make to your staff member (ie payments that cannot be varied and arise under a legally enforceable agreement or understanding that sets out the way in which those payments are calculated, even if the method of calculation involves some discretion) and will include:

1. 1. wages;
   2. non-discretionary past overtime;
   3. non-discretionary fees and compulsory commission payments; and
   4. non-discretionary payments made in recognition of your staff member having undertaken additional or exceptional responsibilities or of the circumstances in which or time when they have undertaken their duties.

It will not include discretionary bonuses, tips, discretionary commission payments, non-monetary payments including taxable benefits in kind or benefits provided through salary sacrifice schemes. For example, any payments based on your staff member’s performance (eg discretionary bonuses) or the performance of the business should be excluded. Note that from 1 August 2020, the level of grant provided by the Government changed (see below).

8. Can I claim back NICs and pension contributions as well as wage costs?

Yes. The Government has confirmed that employers can claim back employer NICs and minimum automatic enrolment employer pension contributions on the subsidised wage (you won’t be able to claim them on any top-up salary you decide to make).  Note that you won’t be able to claim for any voluntary automatic enrolment contributions above the minimum mandatory employer contribution. See our guidance on Paying for a staff pension scheme for what your obligations are. 

Note that from 1 August 2020, the level of grant provided by the Government changed and no longer includes employer NICs and pension contributions (see below).

9. How do I calculate 80% of wages?

Calculating 80% of wages is easy if staff are paid the same each month; the Government has confirmed that for full and part-time staff, it is to be based on their actual salary before tax, as in their last pay period prior to 19 March 2020. HMRC has developed an online calculator to help you.

Note that this changed on 15 April 2020; the Government’s previous guidance was that pay should be based on their pay as at 28 February 2020. The Government has confirmed that if, based on the previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.

If their wages are irregular, you base the payment on the higher of the same month’s earnings in the previous year, or their average earnings in the 2019-2020 tax year (if they’ve been working for you less than a year, it can be the average since they started work).

If your staff member was on a period of unpaid leave at any point during that time, or if they were on a period of statutory paid leave (eg they were receiving Statutory Sick Pay or Statutory Maternity Pay), you must calculate their pay on the basis of what they would have been paid if they were on a normal period of paid annual leave.  

Note that when you are submitting your claim, you must have calculated the total amount that you are claiming, including employer NICs and pension contributions. HMRC has produced an online calculator and a step-by-step guide to help employers whose staff receive regular pay to calculate their claim based on 80% of their staff member’s wages, plus the relevant NICs and pension contributions.  Note that from 1 August 2020, the level of grant provided by the Government changed and employers are expected to contribute (see below).

10. Do I have to top up the remaining 20% of wages?

No; this is a decision for you, and there is no obligation to do so. However, because (as noted above) employees have a contractual right to full pay, they will need to expressly agree to a reduction in wages. As noted above, employees are likely to agree to this if the alternative is redundancy.

Note that if you choose to top up, you will not be able to claim back employer NICs and automatic enrolment pension contributions on the additional amount. Note that from 1 August 2020, the level of grant provided by the Government changed and employers are expected to contribute (see below).

11. What if paying 80% of wages means that staff are paid less than the national minimum or living wage?

The Government has confirmed that individuals are only entitled to the national minimum wage/living wage when they are actually working. This means that you won’t need to top up their pay to meet those levels whilst they’re on furlough even if, based on their usual working hours, this means they are getting less than the national minimum wage/living wage under the scheme.

Note that staff are allowed to undertake training whilst on furlough, as long as they are not providing services to or making money for their employer; if they are doing this, you will need to make sure they get national minimum wage/living wage during this time, even if it means topping up the Government grant. This may be particularly relevant to apprentices, who can continue their training, but who must be paid at least the appropriate national minimum or living wage rate for that time.

Note that from 1 August 2020, the level of grant provided by the Government changed and employers are expected to contribute (see below).

12. How and when should I pay my staff?

You must pay the full amount that you have claimed through the scheme to your staff member (plus additional sums if you are topping them up). You should pay your staff in the same way you normally pay them (eg through your payroll) and on their usual payment date. Grants you receive through the scheme should be treated in the same way as normal wage payments, with the usual payroll deductions. 

13. How much do I need to contribute towards my furloughed worker’s pay from 1 August 2020?

The Government announced on 29 May 2020 that the level of grant it will provide under the Coronavirus Job Retention Scheme will be tapered from 1 August 2020. This means that up to and including 31 July 2020, the grant will continue to be 80% of a furloughed worker’s wages, up to a cap of £2,500 per month, in addition to employer NICs and pension contributions. It is up to employers to decide whether to top their furloughed staff members’ pay up to 100% (or any other percentage of their usual salary).

Following this:

• from 1-31 August, the Government will continue to pay 80% of a furloughed worker’s wages up to the £2,500 per month cap, but employers must pay the applicable employer NICs and pension contributions for their furloughed staff;
• from 1-30 September, the Government will pay 70% of a furloughed worker’s wages, up to a cap of £2,187.50 per month. Employers will be expected to contribute the applicable employer NICs and pension contributions for their furloughed staff and to pay 10% of their furloughed worker’s wages, to ensure that they receive at least 80% of their normal wages (up to the £2,500 per month cap); and
• from 1-31 October 2020 and for the final month of the scheme, the Government will pay 60% of a furloughed worker’s wages, up to a cap of £1,875 per month. Employers will be expected to contribute the applicable employer NICs and pension contributions for their furloughed staff and to increase their contribution towards their furloughed worker’s wages to 20%, to ensure that their workers continue to receive at least 80% of their normal wages (up to the £2,500 per month cap). 

Throughout the entire period, it remains up to employers to choose whether to top their furloughed staff members’ pay up beyond the amount that the Government pays under the scheme.

Note that from 1 July 2020, the Government introduced ‘flexible furloughing’ and the scheme therefore closed to new staff (ie those who hadn’t previously been furloughed by you) from 10 June 2020. It also means that you can bring furloughed workers back to work on a part-time basis provided you pay their normal wages during that time. There is a small exception to the closure of the scheme for staff who have been on extended family leave – if they come back to work after the 10 June deadline, they can still be furloughed for the first time, so long as you have previously furloughed other employees.

14. What happens if I have claimed too much under the Coronavirus Job Retention Scheme?

If you realise that you have claimed too much under the scheme within 72 hours of submitting your claim, you can delete it.

If you do not delete your claim and you receive too much money under the scheme, you must repay HMRC. You can either do this when you make your next claim or, if you will not be making a further claim, you should contact HMRC to make your repayment . You must notify HMRC by the latest of:

• 90 days after you received the overpaid grant;

• 90 days after the date your circumstances changed resulting in you no longer being entitled to the grant; or

• 20 October 2020.

Failure to repay an overpaid grant could lead to HMRC both recovering the overpayment and charging additional penalties up to the amount by which you were overpaid. HMRC also has the power to name and shame businesses who deliberately claimed grants they were not entitled to.

Note that if your company is in insolvency, its directors can be held personally liable to HMRC for the amount overclaimed.

How do I select staff for furlough leave and place them on leave?

1. How do I decide which staff to furlough?

You don’t have to furlough all your staff, although you can do.

If you are going to continue to operate but on reduced capacity, you will need to decide which staff to furlough. When doing so, you will need to make sure that you don’t base your decision on discriminatory factors and that you operate fairly. 

The Government has confirmed that short-term sickness or self-isolation should not be a factor when deciding which staff to furlough, but a business could decide to furlough someone who is currently off sick for other business reasons. You must agree with your staff member that their period of sick leave will come to an end, and then you should re-classify them as furloughed; they would not be able to receive statutory sick pay at the same time. Staff who are shielding due to Government guidance can be furloughed and are likely to be prime candidates if they cannot work from home.

You may wish to ask for volunteers (those having to care for children or other relatives may be particularly attractive); note that staff cannot demand to be furloughed, as it’s ultimately a decision for you. If you need to make a selection, you should use a similar selection process as you would for redundancy, and laws on equality and discrimination will apply to this process.

If you are going to furlough 20 or more staff, you will need to follow a specific consultation process. See our guidance on redundancy process for more information on this. Bear in mind that if staff refuse to furlough and are made redundant instead, they may be able to bring an unfair dismissal claim against you if you do not follow a proper process.

2. Must my staff agree to be furloughed?

Yes, because doing so requires you to change the terms of their contract. Under most employment contracts, employees have the right to be paid their normal pay if they are ready and willing to work, even if the employer doesn’t have work to give them; with furlough leave, you are asking them to take reduced pay. (Note that some contracts give employers the right to lay off staff if there’s no work, but this is rare). 

The Government has confirmed that you must write to those you are going to furlough to confirm agreement, and then to confirm that they have been furloughed. They must specifically agree to the terms and conditions upon which they will stop working for your business during furlough leave, and this agreement must be incorporated (either expressly or by implication) into their contract. You must keep a record of this communication until at least 30 June 2025. You can use Furlough leave agreement letter to confirm the agreement of a current staff member or Furlough leave agreement letter for a staff member who has been made redundant to request the agreement of a staff member you have made redundant since 1 March 2020, or Furlough leave agreement letter for a staff member on family leave to request the agreement of a staff member on maternity, paternity, adoption or shared parental leave. To place a member of staff who has already been furloughed by you before on flexible furlough leave, you can use Flexible furlough agreement letter.  To confirm that a staff member has been placed on furlough leave once they have consented, you can use Furlough leave confirmation letter.

3. What if my staff won’t agree to be furloughed?

In practice, it is unlikely that they will disagree, if the alternative is redundancy. 

If they don’t, you will need to think about running a redundancy process which will involve pooling and selecting employees for redundancy. Note that the Government has announced that it will be offering employers assistance with making redundancy payments if they can’t afford to pay these.  See our guidance on redundancy process for more information about running a redundancy process.

4. What if I’ve already made staff redundant?

The scheme is backdated to 1 March 2020, and the Government has confirmed it will cover those who were made redundant on or after 28 February 2020 and until  19 March 2020, provided they were still employed and on payroll as at 28 February 2020; you can use our Furlough leave agreement letter for a staff member who has been made redundant to do so. If you made a staff member redundant after 19 March 2020 they will also be covered by the scheme provided they were employed by you on 19 March 2020. 

5. What about staff who have resigned or were dismissed for reasons other than redundancy?

As long as they were employed by you and on payroll as at 28 February 2020, there is nothing to stop you re-engaging staff who have resigned or were dismissed between then and 19 March 2020 (or agreeing to withdraw their notice, if they are still working out their notice) and placing them on furlough leave, since the Government has confirmed the scheme can be backdated to cover staff who ceased working for you from 1 March 2020. However, there is no obligation on you to do this and whether or not you do so is a decision for your business.

6. Can staff on sick leave be furloughed?

The Government has confirmed that the Coronavirus Job Retention Scheme is not intended to cover short-term sickness absences and that this should not be a consideration when deciding whether to furlough a staff member. Employers should also remember that there is a minimum 3 week period for furlough leave. 

However, if there are business reasons for furloughing someone who is on sick leave, you can do so. You must agree with them that their period of sick leave will come to an end and then you should re-classify them as a furloughed worker and start paying them furlough pay rather than sick pay. A staff member cannot be placed on furlough leave while they are receiving SSP and you will not be able to claim back pay for the staff member under the Coronavirus Job Retention Scheme and under the SSP Rebate scheme (see our Q&A for more information about this scheme) at the same time.

Those on long-term sickness absence or who are shielding in line with public health guidance can be furloughed; again you must agree with them that their period of sick leave will come to an end and they would need to be classified as furloughed workers and receive furlough pay rather than sick pay.  Bear in mind that you must not be discriminatory when you are selecting staff for furlough; make sure furloughed staff are selected based on business requirements and not, for example, because of a disability. 

7. What happens if my staff member becomes sick whilst on furlough leave?

The Government has confirmed that it’s up to you what to do if a staff member becomes sick whilst on furlough leave. You could take them off furlough leave and put them on sick leave instead, at which point they become entitled to sick pay, or keep them on furlough leave and continue to pay furlough pay. The Government has confirmed that you cannot claim for furlough pay under the Coronavirus Job Retention Scheme if you’ve decided to put them onto statutory sick pay, and you can’t claim under the Coronavirus Job Retention Scheme and under the SSP Rebate scheme (see our Q&A for more information about this scheme) for the same staff member at the same time.

8. Can staff on maternity (or another type of family leave) be furloughed? 

The Government has stated that employees on maternity leave should continue to take maternity pay whilst on maternity leave. 

However, they have said that any enhanced maternity pay a business offers could be claimed under the Coronavirus Job Retention Scheme, indicating that they could remain on maternity leave but also be put onto furlough leave. As with other types of staff, you will have to agree with them that their contract will be amended if you want them to be placed on furlough leave, and ask them to specifically agree to a drop in their contractual maternity pay if you can only pay what you are able to claim under the scheme.

Bear in mind that you must not be discriminatory when you are selecting staff for furlough; make sure furloughed staff are selected based on business requirements and not, for example, because they are on maternity leave. The Equality and Human Rights Commission recommends that, if possible, it is best practice to consult with your staff.  The above also applies to those on paternity, adoption and shared parental leave.

If you want to furlough a member of staff who is on maternity, paternity, adoption or shared parental leave, use our free template Furlough leave agreement for a member of staff on family leave to seek their agreement to this. 

9. Could staff on maternity (or another type of family leave) be placed on furlough once they return to work?

Yes, they could, in some cases even after the 10 June 2020 deadlines for furloughing someone new. 

So long as you have previously furloughed some employees, those returning from long-term maternity, paternity, adoption, shared parental and parental bereavement leave can be furloughed for the first time on their return to work even after 10 June 2020. 

Note that the Government has confirmed that those returning from maternity leave and placed on furlough should have their furlough pay calculated on the basis of their usual salary, not the pay they received whilst on leave. 

10. Can staff on unpaid leave be furloughed?

Yes, if they were placed on unpaid leave after 28 February 2020. Note that grants can be backdated to cover such staff from 1 March 2020 onwards. This could include, for example, staff who are unable to work because of caring responsibilities.

If staff were placed on unpaid leave on or before 28 February 2020, they can’t be placed on furlough until the date on which they were due to get back from leave.

11. Can a company director be furloughed?

Yes, if they receive a salary and are paid through PAYE. The Government has confirmed that this would include directors of their own personal service companies.

Note that a decision to furlough a company director should be done formally via a board decision, with a record of this kept. As with other staff, you must also write to the director to let them know; you can use Furlough leave agreement for a director.

 

What are my staff’s rights and obligations during furlough leave?

 

1. Can staff do any work for me if I have furloughed them?

No, not during the time they are furloughed. Note that for staff on flexible furlough (available from 1 July 2020), this means that they cannot work for you during the hours you record them as being on furlough. 

Any staff who were furloughed in the period up to 30 June 2020 must have stopped work entirely when furloughed and could not, for example, have been asked to work reduced hours. From 1 July 2020, furloughed staff can now be asked to work reduced hours, and be on furlough for the rest of their normal working hours. During the hours that staff are furloughed, they are not allowed to do any work for any organisation that is linked to or associated with yours or indirectly work for you in any way during their furloughed hours. This will need to be agreed in writing. 

However, they will be allowed to undertake training that is directly relevant to their employment (eg if it is intended to improve their effectiveness or performance), as long as they are not providing services or making money for their employer or anyone connected to their employer (including by contributing to the production of goods).  Bear in mind that if your furloughed staff are doing any training at your request, you must ensure that they are paid at least the national minimum or living wage for that time.

Furloughed workers are also permitted to do volunteer work, as long as they are not providing service or making money for their employer. As an employer, you can help them find volunteering work (as long as doing that work is in line with public health guidance), but you cannot ask furloughed staff to volunteer for you in their previous role or a different one. 

Company directors who have been furloughed can still carry out statutory duties on behalf of the company, as long as this does not amount to providing services on or behalf of the company or generating revenue. It could include, for example, filing annual accounts or confirmation statements on the company’s behalf. Company directors are also permitted to make claims under the Coronavirus Job Retention Scheme for staff of their company and to pay the wages of their staff. 

2. If I choose to top up wages, can I ask staff to work for the top-up money?

No. A requirement of being furloughed is that the staff member does not do any work, so you cannot require them to do so as a condition of topping up the Government’s grants. 

This remains the case for any staff who come back part-time under the flexible furlough scheme from 1 July 2010. During the days or hours that they are on furlough, they cannot work for you. During the time that they are working, you are responsible for paying their usual wages. 

3. What is ‘flexible furloughing’ and how does it work?

The Government brought in ‘flexible furloughing’ from 1 July 2020. This allows employers to bring back furloughed staff to work on a part-time basis, while still being able to claim under the scheme for the hours that they are not working. You are free to decide on the working hours and/or shift patterns that your furloughed staff members work, but you must pay your staff as normal for those hours.

Equally, the Government has confirmed that, as a result of it introducing this new flexible furlough scheme to support furloughed staff back into work, the Coronavirus Job Retention Scheme has now closed to new entrants. This means that the final date by which employers could place staff on furlough leave for the first time was 10 June 2020, to allow them to have completed their initial minimum furlough period of 3 weeks by 1 July 2020.

Bear in mind that you will only have until 31 July 2020 to claim under the scheme in respect of any periods of furlough up to 30 June 2020. Following this, for periods of furlough up to 31 October 2020, you will have until 30 November 2020 to submit your claim.

4. Who can I put on flexible furlough?

The scheme is now closed to new entrants, so only the following people can be put on flexible furlough:

1. anyone who you have already furloughed for the minimum 3 week period before 1 July 2020 (meaning you must have put them on furlough for the first time by 10 June 2020 at the latest); and
2. anyone who has been away on extended family leave – if they come back to work after the 10 June 2020 deadline, they can be furloughed for the first time, so long as you have previously furloughed other employees.

Use Flexible furlough agreement letter to put eligible staff on flexible furlough.

5. How do I put someone on flexible furlough?

Provided that they qualify, you simply need a new written flexible furlough agreement with any staff members you want to put on flexible furlough. It should make clear when they will be working and when they will be furloughed. You can use Flexible furlough agreement letter. 

You must keep proper records. You need a written record of the agreement which you must keep for five years, and keep a record of the hours that the furloughed staff work and the hours they are furloughed. 

You use the same HMRC claims portal for flexible furlough as you have for earlier furlough claims. 

6. How many people can I furlough at once?

From 1 July 2020 there is a limit to the number of staff you can furlough at the same time. You cannot furlough more people than the maximum you have claimed for in any one claim before 30 June 2020.

For example, if you employ ten people and have been rotating them on and off furlough, so five are working and five are furloughed at any time, the most you can claim for at once from 1 July 2020 is five.

There is a small exception to this for people returning from maternity, paternity, shared parental, adoption or parental bereavement leave after 10 June. If furloughed, they are not counted towards your total for these purposes. Equally, if you are furloughing staff who transferred to you under TUPE after 10 June 2020, the maximum number of staff you can furlough will be the total of the maximum your business has claimed for in any one claim before 30 June 2020, plus the number of staff who are being transferred to you who were previously furloughed for at least 3 weeks by their former employer. 

7. Is there a minimum furlough period to qualify for flexible furlough?

It depends when the (previously furloughed) person starts the new furlough period: 

1. Before 1 July 2020 – three week minimum furlough period. The person must be fully furloughed for three weeks before you can move to a flexible furlough arrangement, even if the three weeks ends after 1 July.
2. 1 July 2020 onwards – no minimum furlough period. You can put the person straight on a part-time schedule which can last for any amount of time up to the end of the scheme on 31 October 2020. 

Note that when making your claim through the online government portal, any claim periods starting before 1 July have to end by 30 June, and a separate claim made for 1 July onwards. This is the case even if the person remains continuously furloughed. From 1 July, claim periods must start and end within the same calendar month.

8. Is there a minimum number of furloughed hours per week on flexible furlough?

No. Under the flexible furlough scheme, from 1 July 2020 you are free to arrange the balance of working hours to furloughed hours that make up a staff member’s normal working week in any proportion you wish.

9. When the scheme ends, do I need to keep my staff or can I make them redundant?

This is a decision for you; there is nothing to stop you making them redundant at that point.

Note that if you make staff redundant whilst they are on furlough leave you can continue to claim for them during their statutory or contractual notice period, but you cannot use grants under the scheme for redundancy payments. You should also bear in mind that the Government has passed a new law, which came into force on 31 July 2020 to ensure that furloughed workers who have been made redundant have both their statutory redundancy payments and statutory notice pay calculated on the basis of their normal wages and not their furlough pay. See our Q&A on redundancies and notice pay for further guidance.

10. Could an employee carry out work for another employer whilst on furlough leave?

Yes, they could. 

If the job is pre-existing, the Government has confirmed that each job is separate for the purposes of furlough and that a staff member could be furloughed for several jobs at a time. It has also confirmed that a staff member can start a new job whilst on furlough leave, provided this is allowed under their employment contract (this may involve you coming to an agreement with your staff member to permit this).

Note that the Government has said that a staff member is not allowed to do any work for an organisation that is linked to or associated with yours whilst on furlough.

11. Do holiday and other benefits continue to accrue whilst the employee is on furlough?

The Government has confirmed that employment rights and benefits continue whilst on furlough, including the right to SSP, maternity and other parental rights, rights against unfair dismissal and rights to redundancy payments. 

Note that staff members who have been furloughed and who begin a period of family leave on or after 25 April 2020 should have both their eligibility for and rate of payment of statutory family leave pay (ie SMP, SPP, SAP, SShPP, parental bereavement leave or maternity allowance) calculated on the basis of what their normal weekly earnings would have been had they not been on furlough leave. For further guidance about calculating eligibility for and rates of statutory family leave pay, see Maternity leave and pay, Adoption leave and pay, Paternity leave and pay, Shared parental leave and pay, or Bereavement leave. For further guidance about maternity allowance, see Maternity leave and pay.

Staff will also continue to accrue annual leave whilst they are on furlough leave. You can ask your staff members to agree to amend their contracts to reduce their holiday leave entitlement for the period on which they are on furlough, but you cannot reduce this below the statutory minimum, which for most staff is 28 days at full pay. Note that the Government has confirmed that any holiday taken by flexibly furloughed staff during a claim period should be counted as furloughed hours rather than working hours, but that staff should not be placed on furlough for a period just because they are taking holiday.  If staff take holiday whilst they are on furlough leave, this will not disrupt their period of furlough leave. They must be paid their normal full rate of pay for that time, which means that you must top their pay up to 100% (but you will still be able to claim the grant from the Government under the Coronavirus Job Retention Scheme). This includes bank and public holidays if your staff usually take these off.

For further guidance about annual leave and furlough leave, see our Q&A on putting staff on furlough leave and for guidance about how to calculate how much you need to pay staff whose pay is variable whilst they are on annual leave, see our Q&A on Dealing with annual leave.

12. Can I require or restrict my staff from taking annual leave during furlough leave?

You may wish to require your staff to take annual leave during their period of furlough, to prevent them having a large chunk of unused holiday to be taken when they come back to work. The usual rule is that it is open to you to require staff to take annual leave at a certain time, provided you give them appropriate notice. See our Q&A on Dealing with annual leave for guidance about notice requirements.

Whilst the Government has confirmed that the usual rules on notice apply where employers wish their staff to take holiday during their furlough leave, it has warned that you will need to weigh up whether requiring staff to take annual leave whilst they are under certain restrictions (eg if they are self-isolating or due to the nature of the social distancing rules) would prevent them from benefiting from a proper period of rest and relaxation. Given the scope of the dispute, the best approach is likely to be to aim to reach agreement with your staff about when they take holiday rather than seeking to require them to take it against their wishes; they may be amenable to take it given that they are entitled to full pay during this time. See our Q&A on Putting staff on furlough leave for further guidance about this. 

It is also open to you to restrict when your staff can take their annual leave, provided that you give them appropriate notice. Remember, however, that your staff must usually take at least four weeks of their annual leave entitlement in the year in which it falls due. There is an exception if staff cannot take annual leave due to coronavirus; see our Q&A on Dealing with annual leave has more information about this. 

13. Can I rotate furlough leave amongst my staff, so that they come on and off it?

Yes, the Government has confirmed that you can do this. From 1 July 2020, flexible furlough means that you no longer have a three week minimum period for each time you re-furlough someone, so you can rotate people on and off furlough at whatever intervals you like. Depending on your business needs, it is likely to be more efficient to place all relevant staff on a flexible furlough arrangement, which provides for you to decide on an ongoing basis what hours they will work and what hours they will be furloughed. In doing so, bear in mind that you cannot claim under the scheme in any one claim period for more people than the maximum you have claimed for in any one claim period before 30 June 2020. 

You can use Flexible furlough agreement letter to place a member of staff on a flexible furlough arrangement.  For further guidance see our Q&A on the Coronavirus Job Retention Scheme and for guidance about putting staff on furlough leave, see our Q&A on putting staff on furlough leave.

14. What is the Job Retention Bonus and who’s eligible?

STOP PRESS: On 5 November 2020, the Government announced that, following its extension of the Coronavirus Job Retention Scheme, the Job Retention Bonus will not be paid in February 2021 as anticipated.  See Coronavirus Job Retention Scheme extension for more information about the extension.

The Government announced on 8 July 2020 that it is introducing a Job Retention Bonus to incentivise employers to bring back furloughed members of staff. The Bonus will be a one-off, taxable payment to employers of £1,000 for each previously furloughed worker who remains continuously employed by them through to 31 January 2021.

All employers who have previously claimed under the Coronavirus Job Retention Scheme are eligible to claim the Job Retention Bonus for all previously furloughed staff, provided that in respect of each staff member:

• a grant was successfully claimed under the Coronavirus Job Retention Scheme;
• the staff member was continuously employed from the end of the last furlough claim period made for them, until 31 January 2021;
• they earned at least £1,560 (gross) in total between 6 November 2020 and 5 February 2021 (the ‘minimum income threshold’), and for each of those months (6 November to 5 December 2020; 6 December to 5 January 2021; 6 January 2021 to 5 February 2021), received at least one payment (of any amount) of taxable earnings; and
• they are not serving a contractual or statutory notice period on 31 January 2021.

The Bonus will not be payable for employees for whom claims under the Coronavirus Job Retention Scheme were made incorrectly or where all of the grant was repaid. 

Eligible businesses will be able to claim the bonus between 15 February 2021 until 31 March 2021. HMRC is expected to publish further guidance in January 2021 about how businesses can make their claims. For now, you should ensure that you have up-to-date RTI records,  you remain enrolled for PAYE online and you cooperate with any requests for information from HMRC about your furlough claims. 

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