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COVID-19 Furloughed Workers

Although the government portal is not yet live, and the mechanism for making a claim is not yet clear, we have been asked to clarify what we understand so far. The first point is that as this is a contract change, you cannot force this. It must be agreed between employer and employee and we would suggest that you have written confirmation via email of what you are offering as the employer and ask the employee to provide email confirmation that they accept. Most employees will accept but may refuse and ask to be made redundant instead. Should this happen we would suggest that you seek help from an employment specialist. Once agreed the employer must put confirmation in writing to the employee that they have been furloughed in order to be eligible to claim under the scheme. (This means they must undertake no work) As an employer you must then pay a minimum of 80% of gross pay (you may pay more but will not be able to claim for this) capped at £2500. This will apply to any employee on a payroll as at 28 February, including those on zero hours contracts. Most employers will not be able to afford to pay more than 80% and it should be remembered that this is still going through a payroll, so will still be liable to tax, national insurance and pension deductions. 80% is not take-home pay. This is not a replacement for long term SSP or SMP and those being paid under those schemes will continue. For staff employed for more than a year, the 80% will be calculated on the higher of:

  • The amount earned in the same month last year

  • On average of monthly earnings for the last year

For those employed for less than a year, it will be based on an average of monthly earnings since they started. The employer will in due course be able to claim the 80% plus employer NI and employer pension contributions to a maximum of 3%.

Points to note

1. Although the employee cannot undertake work for the employer, they could do voluntary work

2. The minimum furlough period is 3 weeks

3. Bonuses, commissions and fees are not included as part of their monthly earnings

4. Employment rights continue, including holiday entitlement

5. An employee can return and then be furloughed again at a later stage

6. Although it may be extended, the current maximum is 3 months

7. This can be backdated to 1st March

8. Please make sure that your payroll provider is aware of who is furloughed and when from

This is based on current understanding which may be subject to change. Please seek advice before making payments.


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