How to furlough employees under the Coronavirus Job Retention Scheme
Authors: Darren Newman
NOTE: This guide is based on the HM Treasury Direction originally published on 15 April 2020 and a further Direction issued on 20 May 2020. On 29 May 2020, the Chancellor announced further changes to the Coronavirus Job Retention Scheme, which will take effect from July 2020 onwards and for which a new Direction will be required. The guide also relies on HM Revenue and Customs guidance originally published on 26 March 2020 and most recently updated on 29 May 2020.
Click on any of the hyperlinks to go to more detailed guidance below.
- Understand how the Coronavirus Job Retention Scheme will operate and what wage costs can be reimbursed to employers.
- Be aware that furloughed employees must not undertake any work for you other than training.
- Check that any employee you propose to place on furlough was on your PAYE system on 19 March 2020.
- Consider if it is necessary to furlough all employees at the same time.
- Obtain the employee's agreement to cease all work, and ensure that this is confirmed in writing.
- If you are not able to top up the employee's pay, check if the contract allows the employee to be laid off without pay.
- If necessary, seek a variation in the contract to allow the employee to be paid at a reduced rate.
- If the employee agrees the variation, or if no variation is needed, write to them to confirm that they are being furloughed from a specified date for a minimum of three weeks.
- Work out the correct sum to be claimed in respect of each employee.
- Make a claim for a government grant through the online portal for the scheme.
- Pay employees in full for any period of annual leave they take while furloughed.
- Understand the issues around furloughing employees who are on sickness absence.
- Consider how to deal with employees on maternity leave and other types of family-related leave.