By Shah Qureshi And Sacha Sokhi
We understand that this can be a stressful and confusing time for employees placed on furlough leave. It’s new to many employers and lawyers alike. We’ve removed the legal jargon and put together some FAQs to help you get the information you need to know.
What exactly does it mean to be ‘furloughed’?
Being furloughed means that your employer is able to keep you on the payroll if they’re unable to operate or have no work for you to do because of coronavirus (COVID-19), by claiming part of your wages through the Coronavirus Job Retention Scheme (“the Scheme”).
You must have been on your employer’s PAYE payroll on 28 February 2020 on any type of contract.
You can be furloughed for a minimum period of 3 weeks under the Scheme. This means that your employer could either rotate you in and out of furlough leave or one period can follow straight after an existing furlough period, depending on the company’s requirements and whilst the Scheme is open. The chancellor, Rishi Sunak announced that the furlough scheme will be available until the end of October but from 1 August, employers that use it must contribute towards the costs.
It's not entirely clear what percentage the government will continue to fund, but there have been suggestions that it will reduce funding to 60%. If that's the case, the remaining 20% will have to be topped up by the employer as the Chancellor made it clear that employees must still receive up to 80% of their normal salaries capped at the existing rate of £2,500 per month.
Can I refuse to be furloughed?
Yes. You cannot be forced into being furloughed and any changes to your employment contract should be agreed. However, do carefully consider the risk that if you refuse your employment may be potentially terminated (fairly) or you could be “laid off” (if your employer has the contractual right to do so) if there is no work for you to do.
If you are made redundant, you will only receive a redundancy payment if you are an employee (as opposed to a ‘worker’) and have worked for your employer for at least two years (together with whatever notice period you are entitled to).
If you are made redundant, your employer must follow a fair procedure before dismissing you.
My employer made me redundant but now wants to re-employ me and furlough me. Is this legal?
Prior to the Scheme being announced, many employers laid off staff or made them redundant. The Scheme guidance confirms that employees who have been made redundant since 28 February 2020 can be furloughed if they are re-hired and put on furlough. It’s not yet clear if employers can ask you to pay back any redundancy payment if they subsequently re-hire you but it seems likely that this would be the case as you would no longer be “redundant”.
If you do consider that there was anything unfair about your initial redundancy please seek specific legal advice as you may be able to bring a claim for unfair dismissal.
My colleague has been furloughed but I have been told I have to work. Surely that’s not fair?
The nature of your employer’s business may mean that they still require some employees to continue working. Most businesses will have a cohort of staff that continues to work throughout this crisis. If you consider that your selection, either to be furloughed or not to be furloughed, was unfair or discriminatory, please seek legal advice.
Some employers are rotating staff in and out of furlough to help with this. However, the Scheme only applies if staff are furloughed for at least 3 weeks. Speak to your employer if you would like to be furloughed but haven’t been selected. However, remember, they don’t have to agree.
I’ve been told that I won’t be eligible for the Job Retention Scheme because I’m on a zero-hours contract. Is that correct?
As long as you were on your employer’s PAYE payroll on 28 February 2020 or on 19 March 2020, you can be on any type of contract to be eligible, including:
- full-time employees;
- part-time employees;
- employees on agency contracts; and
- employees on flexible or zero-hour contracts.
However, your employer does not need to furlough you so if you are on a zero hours contract that does not guarantee a minimum amount of hours per year, your employer may instead choose not to provide you with any work, rather than furlough you.
How much will I be paid while on furlough?
Your employer will claim a grant to cover 80% of your monthly earnings, up to a maximum of £2,500 (this includes National Insurance contributions and Income Tax) together with the employer’s contribution to the pension scheme up to a value of 3%. Your employer can ‘top up’ the remaining 20% themselves, however they are under no legal obligation to do so.
If your monthly earnings vary and you’ve been employed for a full year, your employer will claim for the higher of (subject to that cap) either:
- the amount you earned in the same month last year; or
- an average of your monthly earnings from the last year.
If you’ve been employed for less than a year, employers will claim for an average of your monthly earnings since you started work. If you started work in February 2020, your employer will pro-rata your earnings from that month.
Bonuses, commissions and fees are not included as part of your monthly earnings for this purpose.
The chancellor, Rishi Sunak announced that the furlough scheme will be available until the end of October. The scheme will continue unaltered until Friday 31 July but, from the start of August, a number of changes will be made to make it more "flexible".
Furloughed workers will be able to return to work on a part-time basis and claim furlough for their full time hours.
Employers will also have to pay a percentage towards the employee's furloughed salary. The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.
But 80% of my salary will mean I’m earning less than the National Minimum Wage. Is that legal?
Yes. As you aren't working, your hourly pay once furloughed may fall below National Minimum Wage rates. However, if you are required to complete training courses whilst furloughed, then you must be paid at least the National Minimum Wage or National Living Wage for the time spent training.
I want to undertake paid work or volunteering while furloughed. Is that allowed?
Once you are on furlough you will not be able to work for your employer up to Friday 31st July, but you can undertake training or volunteering work subject to public health guidance, as long as you’re not:
- making money for your employer; or
- providing services to your employer.
It is important to remember that while you are furloughed, you remain an employee and whilst you may also potentially work for a different employer during the period of furlough, your contract of employment may stipulate further restrictions with regards to working for any additional employer and indeed prohibit it. If in doubt, speak to your employer and take legal advice if necessary.
From August furloughed workers will be able to return to work on a part-time basis and claim furlough for their full time hours.
I’m on sick leave and only receiving Statutory Sick Pay. Can I be furloughed instead?
If you are currently on sick leave or self-isolating, you can’t be furloughed. You may only be entitled to Statutory Sick Pay, but can be furloughed after this.
What if I’m on maternity leave?
Your employer can decide to furlough you if you are on maternity leave. If you are eligible for enhanced contractual maternity pay, your employer can then claim this through the Scheme as wage costs. If you are only eligible to receive Statutory Maternity Pay, you should continue to receive this in the usual way.
If you are currently pregnant and due to start maternity leave, you will start maternity leave as usual. If your earnings have reduced due to a period on furlough or statutory sick pay prior to your maternity leave starting this may affect your Statutory Maternity Pay. The same principle applies to contractual adoption pay, paternity pay and shared parental pay.
Can my employer make me redundant during or at the end of my furlough?
Your employer can still make you redundant while you’re furloughed or afterwards. However, any redundancy should be in line with normal redundancy rules and procedures which depending on the numbers of people at risk of redundancy, may require collective consultation.
My employer has furloughed me and I believe the decision was discriminatory and unfair.
When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way. Your rights not to be discriminated against therefore remain and being furloughed should not affect this, and employers may be able to justify choosing certain people or not choosing them. Seek legal advice if you think that you have been discriminated against or treated unfairly.
If you have a query that we haven't answered or for specific advice regarding your circumstances and rights, please contact us.
This article was updated on 14 May following recent announcements by the Government.