What is furlough leave and the job retention scheme?

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In response to the COVID 19 crisis and its impact on jobs, the government has introduced the Coronavirus Job Retention Scheme. As an alternative to mass layoffs, the scheme will allow all UK employers to pay employees’ salary (in whole or in part depending on salary level) to those employees that would otherwise have been laid off due to the crisis. In order to distinguish this special leave from other circumstances, government has introduced new terminology which was not previously used in a UK employment law context. Employees are to be ‘furloughed’. The truth is (as at 24 March 2020) nobody really knows the detail behind the job retention scheme yet… but we will find out soon.

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What do we know about furlough leave?

  • Affected employees are designated ‘furloughed’ and notified of the change (subject to existing employment law rules). This means that depending on existing contracts, it is likely that agreement will need to be sought from employees and that the change in arrangements is documented properly.

  • HMRC will set up a new online portal for information to be submitted by employers about the furloughed employees and their earnings. HMRC will set out further details on the information required. As the scheme was pitched at those who would otherwise have been laid off, we await further details surrounding criteria for eligibility

  • HMRC will reimburse 80% of wages up to a maximum of £2,500 per month

  • Employers will not need to top up the remaining 20%

  • Scheme applies to any employee on the payroll on 1 March 2020

  • Payments will be available from the end of April and backdated to 1 March 2020

How do I find out more and keep up to date with coronavirus and employment law changes?

Our employment law solicitors are keeping up to date with developments and will be interpreting and applying this new law to your questions as quickly as we can. Follow us for more information on Facebook and Twitter. Government published information is available here.

Furlough Scheme Update

We now offer an Employer’s Furlough Package. This package offers continuing support and guidance to employers throughout the furlough process. To find out more about how we can help you, contact our employment lawyers Cathy Donald and Emma Reid.