It seems that everyone is talking about ‘furlough’ at the moment. But for employers, understanding the finer detail of what can and can’t be done is adding pressure to an already difficult situation.
Mogers Drewett partner and head of its employment and HR department Sean McDonough answers some frequently asked questions. 
Q: What is it furlough leave?
A: Furlough leave or Coronavirus Job Retention Scheme (CJRS) is a scheme that provides all UK employers with support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis.
Q: Who is eligible?
A: All UK employees enrolled on PAYE scheme on or before the February 28, 2020, including the public sector, local authorities, and charities. HMRC will reimburse 80% of furloughed workers wage costs up to a cap of £2,500 per month plus (but not including) the associated employer NICs and minimum auto enrolment pension contributions at that wage. Fees, commissions, and bonuses are not included.
Q: Do employees need to agree to be furloughed?
A: In the absence of an express lay-off clause in their contract of employment, an employee will need to agree to be furloughed, and to only be paid 80% of their salary while furloughed. This will be achieved via a Furlough Leave Agreement.
Q: What is a Furlough Leave Agreement?
A: It’s a variation to an employee’s contract of employment and is signed by both employee and employer. The document is an agreement that the employee is to be furloughed and will confirm any reductions in salary while on furlough leave. The agreement also confirms circumstances that will end furlough leave and could also include a lay-off clause for any future reductions in work.
Q: Are employers required to pay the remaining 20% of an employee’s salaries?
A: No. An employer can choose to top up the payment to 100%, but they are not required to.
Q: How do employers claim?
A: The scheme is now up and running. To claim, employers need to confirm:
- Their ePAYE reference number
- The number of employees being furloughed
- The claim period (start and end date)
- Amount claimed (per the minimum length of furloughing of 3 weeks)
- Bank account number and sort code
- Contact name and phone number
Q: How should employers select employees to be furloughed?
A: An employee will only be eligible for furlough leave if they were on payroll on or before February 28, 2020. If they were hired later, they are not eligible. Aside from this, there are no criteria for selecting who should be on furlough leave. Employers must be careful not to discriminate but our view is that prioritising vulnerable workers is unlikely to be seen as discrimination.
Q: How long can employees be furloughed for?
A: Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding. So far, there is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks.
Q: What can employees do while they are on furlough leave?
A: The employee must not work. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
Q: Can employers furlough employees who are on sick pay or are self-isolating?
A: Employees on sick pay or self-isolating cannot be furloughed but can be furloughed afterwards. Employees on unpaid leave cannot be furloughed unless they were placed on unpaid leave after February 28, 2020.
Q: Can employees on maternity leave be furloughed?
A: No, but guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed. Employees on maternity leave can continue to draw SMP (or similar) payments.
Q: Is it unreasonable to make redundancies now furlough leave is available?
A: There is no clear guidance on this yet. However, if cashflow issues mean that an employer can’t be reasonably expected to find the 80% of salary until money is reimbursed by the government, then it is likely to be reasonable to make redundancies. Employees can still be made redundant while on furlough or immediately after. There is no requirement to bring the employee back to work after the period of furlough. If an employee is made redundant during the period of furlough then grant payments will cease.
Q: What if an employee refuses to be furloughed?
A: This is a really difficult one. Employers will need to explain carefully that it has had to make choices which are intended to ensure the survival of the business and the protection of everyone’s jobs in the long term. The alternative for those that do not agree to be furloughed is redundancy. Employers may not rush to pay notice or redundancy pay in those circumstances, owing to cash flow concerns at this time.
For more information go to: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme
