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The Furlough scheme: a guide for workers and employees

Senior Lecturer and Barrister in The City Law School, Snigdha Nag, breaks down the details of the COVID-19 Job Retention Scheme.
by City Press Office (General enquiries)

By Snigdha Nag, Senior Lecturer and Barrister, The City Law School

The Coronavirus Job Retention Scheme or “Furlough” scheme was introduced by the Government to help those unable to work during the pandemic. It is intended to help people financially through this difficult time. The scheme does have some complexities, which hopefully will be made clear in this article.

Snigdha Nag thumb newThe scheme will run initially for four months, which started in March 2020. It will be reviewed after that time. Once your employer has decided you cannot work and chooses to furlough you, then you will receive 80% of your salary (not including discretionary commission or discretionary bonuses), up to £2,500 per month (subject to deductions for tax and National Insurance), for a minimum furlough period of 3 weeks. The employer gets paid back by the government, subject to following the right procedure. The scheme allowed employers to start making claims on 20 April 2020, and it is hoped that that first payments will be made imminently.

Contractual entitlement

Unfortunately, you cannot choose to furlough yourself. If self-isolating, you cannot claim furlough pay, you would need to either claim whatever sick pay your contract entitles you to, or statutory sick pay. If you are ill, it would only be if your employer decides to furlough you that you will be able to obtain furlough pay.

Otherwise, you would get statutory sick pay or your contractual entitlement to sick pay, if any. If you are self-shielding, you can only get furlough pay if your employer chooses to furlough you. The employer should decide whether to furlough for business reasons.

To qualify, the relevant employee needs to have been registered for payment on 19 March 2020, and you need to have received at least one payment of salary in the last year. (Please note that directors who pay themselves once a year may be eligible, depending on the circumstances).

 employmentlawthumbOnce your employer has decided to furlough you, it should be confirmed by them in writing, unless there is a collective agreement with your union entitling you to be furloughed.

It does not matter whether you are a full-time employee, part-time, agency staff, on flexible employment, “Limb b” worker, or on a zero-hour contract, or if you are a foreign national, you are still eligible. However, if you are working on reduced hours or reduced pay, you cannot claim the shortfall through the scheme. Your continuity of employment will be preserved, which is relevant for rights to unfair dismissal and redundancy for employees, but not “Limb b” workers.

Whilst on furlough, you can do training or volunteering, but not if it brings in money for your employer or provides them with the benefit of your services. In other words, you cannot work for your employer if you are put on furlough.

Whether you can work for someone else will depend on your contract of employment, so check your contract document, offer letter, staff handbook or other information provided to you by your employer about your rights and entitlements during your employment. Union representation activities, both on a collective or individual basis is permissible on furlough.

There are a number of issues which remain unclear, such as what happens with holiday pay and holiday entitlement, or what happens to a self-shielding employee whose employer does not choose to furlough them, or what the scheme has decided are non-claimable “conditional” wages/payments. Whilst the government have imposed provisions allowing the carrying over up to four weeks’ holiday into the next two annual leave years, it is currently unclear how this is affected by furlough. These details may have to be subject of later government guidance. Employees are being recommended to approach ACAS (the advisory, conciliation and arbitration service) if there is any dispute between employer and employee.

For further information

Current employee guidance on whether you are covered by the coronavirus job retention scheme or need to calculate furlough wages.

Current employer guidance regarding wage costs through the coronavirus job retention scheme.

Coronavirus guidance from the pension regulator on automatic enrolment and pensions contributions.

Guidance on the Coronavirus Self-employment Income Support Scheme.

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