Furlough leave


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Employment law- Furlough Leave


What is Furlough leave, otherwise known as the Coronavirus Job Retention Scheme “(CJRS”)?

The government has announced that the Coronavirus Job Retention Scheme (CJRS) would be extended in order to provide support to businesses and employees until 30th September 2021.

The support level under the extended scheme mirrors what was available under the CJRS in August 2020. This means the Government will pay 80% of wages up to a cap of £2,500 for the hours you are not working in any claim period . Your employer should pay employer NICs and pension contributions.

Your employer should also continue to pay you for hours worked in the normal way.

In addition, flexible furloughing is allowed under the extended CJRS, as well as full-time furloughing.

Your employer can still choose to top up your wages above the scheme grant at its own expense if they wish.

My employer wants to put me on furlough, do I have to accept it?

The government has said that the scheme must be implemented in accordance with existing employment law. This means that putting you on furlough is a change to your employment contract. In the vast majority of cases, you need to agree to any changes to your contract that your employer proposes.

You may have a variation clause in your contract of employment that appears to give your employer wide powers to enforce fundamental changes including a reduction in pay. The effectiveness of such clauses is very much a grey area in employment law. It is always going to be open to interpretation of the exact wording, and the background circumstances of it being used. It is certainly not a given that it would be reasonable for your employer to rely on such a clause, even if they have reserved the right in your contract.

That said, if your employer is proposing furlough leave which you wish to reject, it is likely that the alternative is going to be a redundancy unless you are too valuable for your employer to lose.

Does my employer need to confirm my furlough leave in writing?

Yes, this is a condition of the scheme and your employer must keep a written record for 5 years. If you have already been furloughed without a written agreement, you may not fall within the meaning of the scheme.

What would a typical written furlough agreement look like?

The following points are likely to be covered in the agreement:

  • That you are taking a temporary leave of absence.
  • The start date of the leave of absence.
  • If you have already been made redundant, an agreed withdrawal of your termination of employment and, if relevant, repayment of any redundancy payments, payments in lieu of notice and/or severance payments already made.
  • How your employer will end the furlough leave in terms of notice give to you.
  • What pay you will receive and your agreement to accept a lower level of remuneration than you are entitled under your contract of employment.
  • Whether you are expected to use up your holiday entitlement during your leave.
  • Confirmation that your statutory rights, such as rights to maternity, shared parental or adoption leave and pay, will continue.
  • Confirmation that other than the provisions of the furlough agreement, the terms of your contract of employment remain in force and unaffected

Can I choose to be placed on furlough?

Simply put, no. The scheme will only be available where the employer offers it and the employee accepts. There will be no ‘right’ to be placed on furlough.

Does my employer have to pay the additional 20% of my wages?

The government has said that employers do not have to ‘top up’ employees’ wages to full pay, although your employer may choose to do so.

Of course, being paid 80% of your salary (up to a maximum of £2,500) is a change to your employment contract, so your employer should seek your agreement in advance. You may otherwise have breach of contract/deduction from wages and/or unfair dismissal claims.

Depending on your employer’s financial circumstances, you may in fact be able to negotiate payment of the additional 20%, but this may not be possible if your employer is under financial pressure.

In September and October, the government’s contribution will reduce to 70% (up to a cap of £2,187.50) in September and 60% (up to a cap of £1,875) of your wages. You will still be entitled to 80% of your wages up to £2,500 but your employer will be obliged to pay the difference. Your employer could still choose to top up to full pay but does not have to.

In most cases, if it is necessary to put you on furlough, then it is likely to be in your best interests to accept this, as the alternative is likely to be redundancy.

Can I do any work for my employer while on furlough?

You cannot undertake work for your employer (or any organisations linked to your employer such as another group or associate company) while you have been furloughed. The government guidance says that this includes “providing services or generating revenue”. If you do carry out any work, then your employer may have to repay the grant. HMRC may be conducting audits to check if work is being carried out as this represents a fraud on the system. Further, HMRC has called for employees to report any abuse of the system by employers who make employees work.

On a practical level, if your employer insists that you carry out work whilst you are furloughed, this understandably puts you in a difficult and tricky position. We would suggest you draw the rules of the furlough scheme to your employer’s attention and query why you are being asked to work. You probably won’t want to put your job too much at risk by raising obstacles with your employer as you may find the alternative is redundancy. However the fact remains that the whole point about being furloughed is that you should not be working.

From 1 July, the ‘flexible furlough scheme’ will start, meaning your employer can bring you back to work for any amount of time or shift pattern, while still claiming for any hours not worked. You can, however, remain fully furloughed.

Can I be furloughed if I am a director, and would I be able to undertake any work?

Directors and owner-managers can be furloughed if on PAYE and will still be allowed to carry out statutory duties in these roles, but these are very limited. It would for example, permit the filing of the company’s accounts or the provision of other information relating to the administration of the company, but that is all.

What is the position where I am working for two different employers?

If you have two jobs, you can work for one employer, whilst on furlough from the other.

Can I start a new job whilst at the same time being on furlough from my other employer?

Yes you can, if your contract of employment does not have a clause restricting you from doing so. Even if there is such a clause, your employer is able to waive this if they chose do so so. This means you could end up earning 80% of your old salary and 100% of the new one.

Can I be furloughed if I am on sickness absence?

You are not able to be furloughed if you are claiming Statutory Sick Pay because you are ill, or it is necessary for you to self-isolate. Furlough is possible however, after you are no longer receiving SSP. Also, the government guidance states your employer is free to switch employees from sick pay to furlough and vice versa, although this should not be abused for short term absences.

It appears from the government guidance that you are also able to be furloughed if you are still absent, but no longer receiving SSP.

Can I be furloughed if I am receiving contractual sick pay?

The answer is not clear, but on balance, this appears to be possible when looking at the spirit of the guidance. It is not certain yet if HMRC will reimburse 80% of contractual sick pay only or whether you are able to be paid at your regular rate of pay.

What happens if I am furloughed, but then fall ill and become entitled to SSP?

The position is not clear yet. Either the furlough arrangements will continue unchanged or you could be moved to sick leave and receive only SSP.

As a “shielding” employee, can I be furloughed?

Yes, the guidance from the government is that this allowable and you do not have to be placed on sick pay.

Will I still be entitled to benefits such as health insurance, gym membership if I am placed on furlough leave?

Yes, these will need to be maintained, unless you agree something different with your employer, even though employers are unlikely to be able to claim the cost of these benefits from HMRC.

If your employer offers you permanent health insurance or death-in-service benefits, they should ideally check with their scheme provider about what salary would be used in the event of a claim – would it be normal annual salary or pay during furlough?

Your employer will not be able to claim as part of the 80% the value of your benefits.

Does my holiday entitlement continue whilst I am on furlough?

Yes, you continue to accrue statutory holiday entitlements, and any additional holiday provided for under your employment contract.

Can I take my annual leave whilst on Furlough?

Yes, you can, but you need to obtain your employer’s authorisation in the usual way.

What rate of pay will I receive if I take holiday whilst on Furlough?

The government guidance has made it clear that you are entitled to your normal rate of holiday pay (not the reduced furlough rate). This means your employer may need to top up 20%  to bring you up to your normal salary.

Can my employer insist that I take my holiday during furlough?

Yes, it appears that your employer can do this, as the government has now published guidance which supports the view that employers can compel employees to take holiday during furlough.

The relevant part of the guidance states:- “Employers should engage with their workforce and explain reasons for wanting them to take leave before requiring them to do so. If an employer requires a worker to take holiday while on furlough, the employer should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday”.

You do, however, need to be provided with the required notice period. This is double the length of the holiday if your employer wishes to require a you to take holiday on particular days.

Can I carry over my annual leave if I am on Furlough?

If your employer has a policy that you cannot take annual leave while you are on furlough, then you would be able to carry over up to 20 days into the next year if you cannot take your full holiday entitlement this year.

Does my employer have to put me on furlough instead of making me redundant?

Your employer is not obliged to put you on furlough instead of making you redundant. Of course, if your employer has told you that you will be made redundant, you can request that you be put on furlough instead, in accordance with the government scheme. However, your employer does not have to accept this.

If you have worked for your employer for more than 2 years, your employer would still be at risk to an unfair dismissal claim should it not follow a fair redundancy procedure, and this includes exploring alternatives to redundancy. It would, therefore, be reasonable to consider furlough as part of the consultation process.

Will I lose out on my redundancy payment if my employer gives me the choice of furlough or a termination of employment?

Yes, this may be possible. Your employer could be relying on a clause in your contract allowing for a variation in your terms of employment. It would be this type of variation clause that they would argue enables you to be given the choice of either furlough, or a dismissal for unreasonably refusing to accept furlough as a variation.

Whether they can do this would largely depend on what the variation clause says, but it could still be argued that furlough is not something which is reasonable to enforce whether you have variation clause or not. If you do not want to be furloughed, you should insist that you either your full salary must be maintained or failing that, you should be made redundant (and receive the appropriate redundancy payment).

Can my employer put me on furlough simply to claim 80% of my salary to meet the cost of redundancy?

No, your employer is liable to pay you full contractual or statutory redundancy. The government has specifically said that employers can’t use furlough to get out of paying full redundancy payments themselves (presumably because the scheme is intended to avoid redundancies).

My employer does not want to put me on furlough (instead of making me redundant) because it will have to pay my wages now then wait to be reimbursed. Is there anything I can do?

If your employer is having cash flow issues because of the Coronavirus crisis, then it may be eligible for a ‘Coronavirus Business Interruption Loan’ which could be used to pay your wages until HMRC begins reimbursing employers under the Job Retention Scheme.

You could suggest this to your employer as a way to resolve the issue, however there is no obligation on your employer to accept this suggestion.

Can my old employer re-hire me and put me on furlough?

Yes, the furlough scheme specifically allows this if you were on the payroll and stopped working for them after 19 March 2020.  You should speak to your ex-employer and ask whether they would be willing to put you back on the payroll and designate you as ‘furloughed’. Your employer may very well agree (particularly if the business is likely to recover quickly after the crisis) but there is no obligation to do so.

Do I have to re-pay any termination payments if I am rehired?

You may have already received a redundancy payment, notice pay and other lump sum payments. It is entirely a matter of agreement between you and your ex-employer on whether you would have to repay any sums already received.

If my employer puts me on furlough, then eventually makes me redundant, will I still get my full notice pay?

Yes, a new law has now been passed by the government has passed to ensure that furloughed employees who are made redundant receive statutory redundancy and notice pay based on their “pre-furlough” rate. The new law came into force on 31st July 2020.

There has been no change the cap on a week’s pay for the purpose of calculating statutory redundancy pay (currently £538), so there is no effect on the overall maximum statutory redundancy payment or unfair dismissal basic award that an employee can receive (currently £16,140).

As the new regulations come into force on 31 July 2020, any redundancy or notice payments already made before that date will not be covered by the new rules, meaning that employees who have already been made redundant may have missed out.

Can my employer make some people redundant and furlough others?

Yes. The guidance clearly says that an employer does not need to place all employees on furlough.

How should my employer select which employees should be furloughed?

It is likely that those who cannot work from home and who currently have no work to do will be obvious candidates for furloughing. Otherwise, employers would probably need to consider a process of calling for volunteers, pooling and selection – as with a redundancy process. If you think you have been discriminated in the selection process because of a protected characteristic (such as race, sex, disability) you may have a claim for discrimination.

If I have been given the option to become furloughed or resign, would I still be entitled to my full contractual or statutory notice pay?

Yes, your usual contractual notice period will still in in place or in the absence of a contract, then your statutory notice pay of 1 week for every year worked up to a maximum of 12 weeks will apply.

Can I be furloughed if I have care responsibilities?

Yes, the guidance states “Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed”.

What happens to my maternity pay?

These payments appear to apply as normal, but if the employer offers enhanced earnings-related contractual pay for maternity leave this can be claimed as a furloughed wage cost. The same proposition applies for contractual adoption, paternity or shared paternity.

Will my holiday continue to accrue whilst I am on furlough leave?

The position is not entirely clear. However it is likely that as the scheme does not affect your entitlements under your employment contract and that you remain employed, your holiday should accrue as normal. Until the government produces further clarification, you should try to agree the full terms for any furlough period to include that your holiday leave remains unaffected.

Can my employer extend my fixed-term contract and then furlough me?

Yes, if your fixed-term contract was due to come to an end, the scheme appears to allow this.

Will I be in breach of my visa requirements if I am placed on furlough?

The government has confirmed that those with certain work visas will not be regarded as breaching their visa conditions if they receive funds under the furlough scheme. In other words this will not be counted as “access to public funds”.

What will happen at the end of the furlough period?

You will retain your employment status during the furlough period. At the conclusion, you will have the same rights as you did previously including Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments. Of course your employer will need to make some difficult decisions about to what extent they need to restructure the business, including of course their staff requirements.


We are a leading firm of employment law solicitors, acting for employees and senior executives in the City and throughout the UK. For more information on the coronavirus and a free consultation, please get in contact on 020 7100 5256 and ask to speak to Philip Landau or any member of the employment team, or email us.






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