COVID-19: Furloughing employees
Apr 23, 2020
PAGE UPDATED: 24/04/20
Under the Government’s Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme are able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise known as ‘furloughed workers’.
HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant. Although this option provides financial reassurance to businesses, there are many important issues to consider before implementing it.
Key considerations for furloughing employees
- Treat furloughing employees as if it were a redundancy situation. Ensure that you document your thought processes and discussions when deciding which employees are to be designated at ‘furloughed’ – think about how you would need to evidence your decision.
- Consider if putting employees on furlough leave is absolutely necessary and reasonable to do in the circumstances. Again, make sure you record your reasons (in writing).
- Ensure that you notify employees being designated as ‘furloughed’ in writing, giving your reasons, making clear any terms that will apply during this period, and offering reassurance that financial support via the CJRS will be available.
- Ensure you receive a response in writing from all affected employees, acknowledging that they are being furloughed (see example below). A record of this communication must be kept for five years.
- Be aware that the CJRS is a reimbursement scheme. Employers will have to make the payments to employees first and then seek reimbursement from HMRC.
- If you are not placing everyone on furlough, you should consider carefully which employees it applies to. Be understanding that there may be groups of employees who feel hard done by, e.g. those who are genuinely sick with the Coronavirus, those having to self-isolate as a family member is sick, the over 70s and those in vulnerable groups who are only entitled to SSP or contractual sick pay (which may be less than 80% pay). These employees may feel it is unfair that those who are ‘furloughed’ are getting much more. You might also consider asking for volunteers across the workforce. There is not a maximum number of employees who can be furloughed.
An employee furlough refers to a temporary leave or modification of normal working hours for a specific amount of time. It’s a leave of absence given to an employee with the promise that they will still have their job once the leave is over.
If you decide that putting employees on furlough is the best option for you and your employees, then you need to prepare a notification letter – see example above. Your furlough notice letter should contain the following:
- Address – This is a formal letter, a furlough notice should clearly state the date, employee’s name, and their address.
- Purpose – State the purpose of the letter. Get straight to the point. Include the employee’s position, department, reason for the furlough, and information about any changes to employee benefits. It is advisable to tell the employee that this action does not reflect dissatisfaction in job performance.
- Detail – Explain what a furlough is, determine the length of the furlough, and communicate employee benefits during this period to employees.
- Future communication – Offer a way for the employee to keep in touch. End the letter on a positive note.
Your employees must respond to you in writing to acknowledge acceptance of being furloughed. This can be done by completing a form such as this example, and a record must be kept for five years.
This document contains detailed answers to a host of questions in relation to furloughing employees.
We understand these are challenging times, and you may have a number of concerns regarding your employees due to Covid-19. If you would like to speak to a member of the PT team, please get in touch and we will be very happy to help advise you.