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Following the introduction of COVID lockdown 3 on 5 January 2021, we have released a series of articles explaining the legal impact on eight areas of daily life. This article looks at the Coronavirus Job Retention Scheme, more commonly referred to as the furlough scheme, which is still in place to support employers.

How does furlough work?

If you do not have enough work for your employees to work their normal hours, you can place them on furlough. Flexible furlough has been available since 1 July 2020 which means that you don’t have to completely furlough them. If there is enough work for some hours, you can pay them to work those hours and furlough them for the remaining time. This has been a big help for many employers who struggled to operate with most employees on full furlough in the first months of COVID.

What can employees do while on furlough?

Whilst on furlough, the employee is not allowed to do any work for you, although they can still take part in training, volunteer for another organisation, or work for another employer (as long as their employment contract permits this).

Which employees qualify for furlough?

To qualify for furlough, the employee must have either been on payroll on 30 October 2020 or been made redundant on or after 23 September 2020. In the latter case an employee can be re-employed and put on furlough. If you are unsure about eligibility we strongly suggest taking advice, especially if you are considering re-employing a redundant employee.

What can you claim?

If the employee qualifies and is placed on furlough, you can recover 80% of their wages (up to a cap of £2,500 per employee per month) for the hours they are not working.

You can top their pay up to full normal salary if you decide to, but there is no obligation to do so. You are required to cover National Insurance and employer pension contributions for whatever salary the employee is paid, including any furlough pay.

Getting agreement to furlough

Placing an employee on furlough is technically a change to their contract of employment, so you should obtain their agreement in writing to this change and keep it on file in case of queries from HMRC.

For more information on COVID and furlough

To find out more about furlough or to purchase one of our furlough packs to assist you with the process, please contact the Backhouse Solicitors Employment team for help.

If furlough does not seem like the right option for you and you would like to understand how to keep the workplace running, you may also wish to refer to our COVID and Keeping your Workplace running article for further alternatives.