Furlough benefit, HMRC would pay 80% of the employee's wages, up to £2,500/month during the pandemic. It was phased out in Sept 2021. Know more.
  • Author: Siva
  • Last updated: July 23, 2022
  • 5 Minutes
coronavirus job retention scheme and furlogh in UK explained by Papershift

Furlough is a term that has been around for years but has been brought into contrast in recent years due to the Coronavirus pandemic. With many small and medium-sized businesses being unable to operate (either partially or fully) during this time, the Government set out to help them with The Coronavirus Job Retention Scheme (CJRS), which is also referred to as the furlough scheme. 

Even though this scheme has now ended, many businesses and their employees are left with lingering questions, like:

  • What exactly is furlough?
  • How does furlough work?
  • How do you know if you are eligible to be furloughed?

In this guide we will answer these question and many more.

Let’s begin. 

What does furlough mean?

A furlough is a temporary leave of absence by employees due to the special needs of a company or employer, which may be due to economic conditions or issues in society as a whole. These furloughs may be short or long term.

Why did Coronavirus need such an extensive furlough scheme?

The Coronavirus pandemic hit the economic sector hard. With many employees forced to stay at home due to Government guidance and lockdowns, companies were left footing the bill for workers who couldn’t work and businesses that couldn’t function.

This is why the government had to step in to help out with the Coronavirus Job Retention Scheme.

How did the Coronavirus job retention scheme work?

The aim of the Coronavirus job retention scheme was to provide financial support to businesses of all sizes during the coronavirus pandemic.

All UK businesses were eligible to apply for it and were given the option to furlough their staff whilst the pandemic was in full flow.

The terms of the scheme saw the Government pay employers a specific amount for their employees so that wages (at least part of them) could still be paid whilst employees were furloughed and unable to work.

How much was the Government furlough scheme?

Whilst there was some variation throughout the pandemic, the general amount that HMRC would pay the employer was 80% of the employee’s wages, up to £2,500 a month.

From July 2021 onwards, this amount was reduced by 10% each month (to 60% in August 2021) before being phased out all together at the end of September 2021.

Did the Coronavirus Job Retention Scheme lead to a pay cut for employees?

In some cases, yes. The most the government subsidised wages was 80% (up to a cap of £2,500) and there was no requirement for employers to pay their employees more. 

Employers could choose to top up their employees’ wages above these levels at their own expense. However, if an employer did not wish to top up the employees pay, they had to reach agreement with the employee to reduce their salary. In most cases this was agreed as the alternative for many was redundancy. 

Can an employer force an employee to be furloughed?

Furlough does not change any pre-existing employment law rights or obligations between the employer and employee. Both employee and employer must agree to the furlough arrangement as this is a variation to existing terms and conditions. 

When the employer is making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

Can I be sacked whilst on furlough?

Government guidance explicitly states that ‘an employer can still make you redundant while you’re on furlough or afterwards’. However, redundancies still need to be administered fairly as per discrimination law and employees cannot be sacked without fair grounds. 

Can I work for someone else while on furlough?

The government guidance states that workers are able to work for another employer whilst they are on furlough, and this will not affect their existing employer’s ability to receive pay or other benefits. However, they will need to comply with their existing contractual terms and obligations and are advised to discuss this with their current employer before doing so.

Can an employee work voluntarily for their current workplace whilst on furlough?

Yes, they can. Workers can do volunteer work or training whilst they are furloughed, providing it does not provide a service to or generate revenue for their employer.

Equally, they can volunteer and train with other bodies whilst on furlough.

Will I lose continuity of service if I am furloughed?

This is a bit of a grey areas and is not explicitly addressed in Government guidance. It is understood, however, that whilst a worker is on furlough leave, they will remain employed, and continuity of service should be preserved by the employer. 

What if I have more than one job and get furloughed in just one of them?

If an employee has more than one job, they can be furloughed in one job but continue to work in the other job and receive their normal wages.

Can workers demand to be furloughed?

No. The decision to furlough a worker rests entirely with the employer. Workers who wish to be furloughed due, for example, to having caring responsibilities at home do not have the explicit right to place themselves on furlough. They can, however, ask their employers if this is an option in their circumstances.

Do employees accrue holiday during furlough?

Yes, they do. Holiday accrual should happen in the same way as normal during furlough. Also, employers can require employees to take holidays during furlough leave providing they give them the requisite notice under the Working Time Regulations. 

Where an employee takes annual leave during furlough, the rate of pay should be in line with their normal rate of pay rather than the furlough rate of pay. 

Can an employer carry out a redundancy consultation during furlough?

Yes. If the employer believes that they need to make redundancies, they can begin the warning and consultation process during the furlough period of their employees.

In conclusion

The word furlough has been at the forefront of many employers and employees’ minds over the past 2 years. We hope that with the help of this guide you now understand the subject a little better.

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Written by Siva

I write & describe the value & benefits delivered by Paperhift's rota planning, staff time tracking, and employee payroll management software. Especially useful for Shift Planners, Rota Managers, Team Admins, and HR Teams :-)