Updated Friday 27 March

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Who is eligible?

All UK businesses are eligible.

How do I access this?

You will need to:

• designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required).

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Furloughed Employees

An employee who is furloughed 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.

There are numerous reasons why employers implement a furlough employee policy, such as plant shutdowns, seasonal work, company reorganisations and reduced demand due to COVID-19.

Don’t rush into implementing an employee furlough policy without talking to your solicitor or HR specialist first.

If you decide that putting employees on furlough is the best option for you and your employees, then it is vital you ensure the correct procedures are followed, should HMRC decide to check your records anytime in the future.

You will need to prepare a notification letter. 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.

For our clients, we have produced some further detailed guidance on the furlough process, which has been legally checked, together with a template letter which can be used to notify their affected employees that they are being put onto a furlough basis.

If you wish to receive a copy please complete the form below: