COVID19 Employment Law Update #2



All UK employers, including law firms, should familiarise themselves with key aspects of the Coronavirus Job Retention Scheme, a temporary scheme running for at least 3 months from 1 March 2020, designed to support employers whose operations have been severely affected by coronavirus. The 1 Essex Court employment team are currently providing advice and assistance to employers across a broad range of businesses on this and all employment law related aspects of the Covid-19 crisis. If you would like any further information or advice on this or any matter please contact Ian Hogg by email at or by telephone on 020 7936 3030. 1 Essex Court will remain open for business as usual.

What is ‘furlough’?

‘Furlough’ is a temporary suspension of employment without pay. It is a term more frequently used in the USA. Under the Coronavirus Job Retention Scheme (“CRJS”) announced by the Government on 20 March 2020, Employers will be able to access temporary financial support to pay part of the salaries of furloughed employees who would otherwise have been laid off during the coronavirus outbreak. The aim of the scheme is to avoid permanent job losses. Furlough under the CJRS Scheme is not the same as lay-off and short-time working which is outside the scope of this note.

Who can claim?

Any UK organization with employees can apply provided they have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account. The guidance says that this includes businesses, charities, recruitment agencies (agency workers paid through PAYE) and public authorities. Where companies are under the management of an administrator the administrator will also be able to access the CJRS.

What do I need to do to claim?

Employers will need to

  • select the affected employee as being on furlough (see: Are there restrictions on who should be selected for furlough?)

  • notify the employee of this (see: How do I furlough an employee?)

  • keep employees on their payroll; and

  • submit information to HMRC to receive a grant (see: What will I need to make a claim?)

Which employees are covered?

Furloughed employees must have been on the employer’s PAYE payroll on 28 February 2020 to qualify, but can be on any type of contract which includes:

  • full-time employees;

  • part-time employees;

  • employees on agency contracts (who are not working); and

  • employees on flexible or zero-hours contracts.

Employees hired after 28 February 2020 cannot be furloughed or claimed for under the scheme. Employees made redundant on or after 28 February 2020 can be re-hired and put on furlough.

Are there restrictions on who should be selected for furlough?

Yes. The guidance states that when employers are making decisions in relation to the furlough process, including decisions on who to offer furlough to, equality and discrimination laws will apply in the usual way. This means that employers should consider if they are treating an employee with a protected characteristic in a way that may fall foul of the provisions of the Equality Act 2010.

How do I furlough an employee?

The guidance says employers:

  • should discuss with their staff and make any changes to the employment contract by agreement;

  • when making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way;

  • may need to seek legal advice on the process;

  • if sufficient numbers are involved (i.e. 20 or more) may need to engage in collective consultation processes to procure agreement to changes to terms of employment;

  • should write to their employee with a furlough agreement confirming that they have been furloughed and keep a record of this communication.

We are currently drafting furlough agreements for clients.

What will I need to make a claim?

Employers can only submit one claim at least every three weeks and will need the following information:

  • their ePAYE reference number;

  • the number of employees being furloughed;

  • the claim period (start and end date);

  • amount claimed (per the minimum length of furloughing of 3 weeks);

  • employer’s bank account number and sort code;

  • a contact name; and

  • a contact telephone number.

How is the financial support given?

HMRC will reimburse employers 80% of furloughed workers’ wages, up to a cap of £2,500 per month per employee, plus the associated Employer NI contributions and minimum automatic enrolment employer pension contributions on the subsidised wage. Fees, commission and bonuses should not be included. Where employees’ pay varies, there is a formula for calculating average earnings.

Once HMRC have received the employer’s claim and determined they are eligible for a grant, they will pay it via BACS to the employer’s UK bank account.

Payment will be made every 3 weeks but it is unclear how long an employer can expect to wait before receiving a grant.

Where can I apply for the scheme?

The system for reimbursement is not yet up and running but an online portal is expected by the end of April 2020. It will be possible to backdate claims to 1 March 2020. The Government are currently saying that the CRJS will last for ‘at least three months starting 1 March 2020’. It is possible that it will be extended beyond 1 June 2020.

What about the remaining 20% of the employee’s wages?

The employer can choose to top up the remaining 20% of the employee’s salary but is not obliged to do so under the CRJS. This will be a matter of agreement between employers and employees.

How do you calculate the NI/ pension contributions.

It is currently unclear how employers should calculate claims for employer’s NI contributions and minimum automatic enrolment pension contributions. More guidance has been promised before the scheme goes live.

How long does furlough last?

To qualify for a grant under the CRJS, an employee must be furloughed for a minimum of 3 weeks up to a maximum of 3 months currently, although the scheme may be extended.

Can I furlough an employee on unpaid leave?

Yes but only if they were placed on unpaid leave after 28 February 2020.

Can I furlough an employee who is off sick, self-isolating or shielding?

No and Yes. Employees on sick leave or self-isolating should be paid Statutory Sick Pay and cannot be furloughed during this period, but can be furloughed afterwards. An employee who is shielding, in line with Public Health England’s guidance for people defined on medical grounds as extremely vulnerable, can be placed on furlough.

Can you put employees on a furlough rota?

It is unclear: the CRJS is silent of whether employers can do this. Employers should always bear in mind that equality and discrimination laws will apply to the decision to furlough.

Can an employee work during furlough including at home or on reduced hours.

No (although there is a narrow exception in relation to volunteer work or training – see below). When on furlough an employee cannot undertake work on behalf of the employer. This includes providing services or generating revenue. Any employee working on reduced hours or for reduced pay will not be eligible for the scheme.

What is the exception on volunteer work or training?

There is an exception here in that employees can take part in volunteer work or training as long as it does not provide services to or generate revenue for their employer. However if they complete for example, online training whilst furloughed, they must be paid at least the National Minimum Wages/ National Living Wage for the time spent training, even if this more than the 80% of their wage that will be subsidized.

What rights do furloughed employees have?

The guidance says they have the same rights as they did previously including

  • statutory sick pay entitlement;

  • maternity rights

  • other parental rights

  • rights against unfair dismissal; and

  • the right to redundancy pay

Where can I find more information online?

The Government has issued guidance documents online:

  • For employers; and

  • For employees.


There are plenty of aspects of the CRJS that are still unclear, including the effect of the scheme on any statutory redundancy pay in the event of redundancy after furlough ends, the entitlement to sick pay whilst on furlough, and how the decision to furlough or not might feature in any redundancy unfair dismissal claim. Those matters will no doubt become clearer in the near future. In the meantime, we will strive to keep you up to date on all key developments as they unfold.

** (this article should not be taken or relied on as legal advice and it is important that you speak to a lawyer to get specific advice on your personal situation).

Lisa Hatch

1 Essex Court

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