9 April 2020

What you need to know about UK furlough leave

The term ‘furlough leave’ was almost unheard of until a few short weeks ago. But what does the leave entail, and what are its implications for employees and employers?

Author

Maryam Munir

Maryam Munir

Maryam Munir worked as a content marketing writer at Ciphr from 2019 to 2021.

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Employment law

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The term ‘furlough leave’ was almost unheard of until a few short weeks ago. But what does the leave entail, and what are its implications for employees and employers?

According to a recent survey by the CIPD, over 50% of UK employers plan to furlough staff – but what does the scheme entail? And how do employers take advantage of it?

What is furlough leave?

‘Furlough’ generally means a temporary leave of absence from work. While the expression hasn’t carried any meaning in employment law in the past, in spring 2020 – as governments and organisations around the world adjusted to the impact of Covid-19 – it’s taken on a new meaning.

Under new UK government rules, employers can put employees on furlough, meaning that workers will still be on the company payroll even if they are not working (because the coronavirus pandemic means there is no work to do). Through the coronavirus job retention scheme – which the government aims to have up and running by the end of April – employers can pay workers 80% of their regular wage, up to a monthly cap of £2,500, with the government funding these payments through a grant.

This scheme was originally intended to be open until October 2020 but the government’s decision to implement a second lockdown in November have meant the scheme has been extended to September 2021.

Employers will be expected to pay 10% towards the hours their staff do not work in July, increasing to 20% in August and September.

The scheme covers all UK employers that had created and started a PAYE payroll scheme on or before 19 March 2020, enrolled for PAYE online and have a UK bank account. This includes businesses, charities, recruitment agencies and public authorities.

Employees on zero-hour contracts or those working flexibly can be furloughed, and employees who are finding it difficult to juggle work and caring responsibilities can request to be furloughed. However, those who are self-employed cannot be furloughed.

Parents on statutory maternity and paternity leave who return to work in the coming months will be eligible for the furlough scheme even after 10 June cut-off date. This will only apply where they work for an employer who has previously furloughed employees.

What is the Job Retention Bonus Scheme?

On 8 July, chancellor Rishi Sunak announced that businesses will be paid a £1,000 bonus for every furloughed employee they bring back to work.

To be eligible, employees will need to:

  • earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
  • have been furloughed at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
  • have been continuously employed by you up until at least 31‌‌‌ ‌January 2021.

What do employers have to do?

Employees themselves cannot apply to claim through the job retention scheme, so it’s up to employers to claim on behalf of employees.

Both the employer and employee must agree to put the individual on furlough and, once this has been agreed, written confirmation must be provided to the employee, stating that they have been put on furlough.

To make a claim, employers will need to provide:

  • Their ePAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date)
  • The amount claimed (employees must be furloughed for at least three weeks)
  • A bank account number and sort code
  • A contact name and phone number

How can employers process furloughed staff on HR systems?

Users of Ciphr’s HR solutions can use our new furlough wizard to quickly and easily furlough individuals by altering job and pay records. This free tool is available for existing customers now at no extra charge – simply contact the Ciphr service desk to arrange activation.

If you don’t already use Ciphr, and want to find out how our people management solutions can help you adjust to adapted ways of working – including working with remote teams – email us to request a demo.

This post was updated on 3 March 2021 to reflect the extension of the furlough scheme.