One of the largest packages of support for UK businesses suffering the effects of the COVID-19 pandemic is the Coronavirus Job Retention Scheme, which allows companies to ‘furlough’ workers and claim a salary back from the government.

While furloughed, businesses must pay the employee at least the lower of 80 per cent of salary or £2,500, and are not obliged to top up. Fees, commissions and bonuses should not be included according to the guidance.

The scheme will currently be in place for at least three months, running from March 1.

What are the finer details businesses should be aware of?

The £2,500 is a gross payment, and the government guidance suggests businesses can claim, on top of that amount, employers National Insurance and the minimum automatic enrolment employers pension contributions.

The scheme will only cover employees who have been on the payroll since Feb 28, 2020. It will not cover employees put on unpaid leave before that date and an employee must be furloughed for a minimum of three weeks.

It includes employees who are full time, part time, on agency contracts, and on flexible or zero hours contracts.

Employees on sick leave or who are self-isolating should get Statutory Sick Pay, but can be furloughed after this time. Employees who are shielding in line with public health guidance can be placed on furlough.

Can employees still work?

No. A furloughed employee is only furloughed if they do no work for the employer, such as providing any service or generating revenue. The scheme excludes those whose hours are merely reduced.

This has some practical implications as many businesses need to ensure that furloughed employees actually do no work, such as cutting off work emails and access to the internal IT systems.

How should businesses let employees know about this status?

Engage with employees and ensure written communication is made to employees that they have been furloughed, (and keep copies), as this will be evidence of a variation to the employment contract, ideally get their agreement in writing.

While following a full consultation is practically difficult at the moment, many employees will likely prefer furloughing to being laid off or potentially losing their job.

What if an employee’s income varies?

In order to calculate the payment, businesses should use the employee’s earnings in the same month the previous year or the employee’s average monthly earnings in the 2019/2020 tax year.

For a new employee, use the average monthly earnings since they started, save for employees who only started in Feb 2020. The employer will be required to pro-rata the employee’s earnings so far.

If you have an employee on the National Minimum Wage, as they are not working, they only get the 80 per cent rate based on their usual working hours, even if below the applicable National Minimum Wage guidelines.

If, however, employees are required to complete online training courses for instance they must be paid at least the National Minimum wage for the time spent training even if more than the 80 per cent subsidy. Any online training must not provide services to or generate revenue on behalf of your organisation.

Do furloughed workers retain their usual employment rights?

Equality and discrimination laws will apply in the usual way and employees have the same rights as they did previously, such as unfair dismissal, Statutory Sick Pay entitlements and maternity rights.

It is understood that employees will still accrue holidays during this period, with the government having also now announced that holidays accrued but untaken this year can be carried over for two years.

In certain circumstances, an employer may be able to agree with an employee to waive this accrual, but specific advice needs to be taken for each case.

How can businesses claim?

A new online portal is being set up and is expected to be ready by the end of April.

For further advice on the Coronavirus Job Retention Scheme, or any other employment law matter, call Michael Shroot on 0161 761 4611 or email him at