Furlough: what does it mean for employees and employers?

The term “furlough” is not something that we have really heard before in the UK, but in essence it means a short-term stop of work during which time you remain on payroll and continue to accrue things like holidays, as detailed in your employment contract.

The reason for this new initiative launched by the government as part of the Job Retention Scheme is to try to protect as many jobs as possible and decrease the amount of redundancies through a government grant to help with wage costs.

So what does furlough mean for employers and their staff?

A large majority of employee contracts in the travel and tourism industry will not have a clause regarding short-term lay-offs and temporary stopping of work, which means that, in order to put one or more members of staff on furlough, they would have to agree this change with them and get their consent in writing.

These agreements should contain the terms of the furlough, such as the dates and the pay that they will receive while they are not working. In order to get consent, I urge employers to have human conversations with their teams. Everyone is worried about their jobs and how they will pay their bills, and good communication and consultation is more important than ever.

The minimum length of time for someone to be placed on furlough is three weeks. Some employers may extend this and some may bring staff back to work for a period and then may have to place them on furlough again. At the time of writing, the government has committed to keep this scheme open until the end of May but this may well be extended and can be backdated to 1 March.

Therefore, if you were on your company’s payroll on 28 February then you may be eligible for furlough, however it is your employer that decides who or who should not be put on furlough and, while you have the right to volunteer, this does not guarantee that you will be accepted.

Once agreement has been reached and you are furloughed, you are not permitted to work for your employer. You are allowed to volunteer (I know there are already industry colleagues working for the NHS volunteer scheme) and you are allowed to undergo training and personal development (so a great opportunity to develop new skills).

However, if your employer requires you to undergo company training while you are on furlough, then they are obliged to ensure that you are paid at least the National Living/Minimum Wage for the time you are training, even if this is more than the grant you will receive. If you are working for another employer, you can continue to work for one and be on furlough for the other or placed on furlough by both.

HMRC pays the grant and the employers will have to apply for this reimbursement through them. Until they receive this grant from HMRC, your employer is obliged to continue to pay your furlough wages.

Employers are entitled to claim the grant to cover 80% of an employee’s monthly earnings, up to a maximum of £2,500. Employers are not obliged to make up the difference in your salary during the furlough period and you will still pay Income Tax, National Insurance contributions and any other deductions from your wage.

We know that the current crisis will end, but when and what the new normal will look like remains the big unanswerable question. Until then, businesses will be doing their utmost to stay afloat, protecting the jobs of their staff wherever possible. I genuinely hope that as many of us as possible get through this unprecedented crisis with businesses and jobs protected and I continue to be amazed by the stories of resilience, camaraderie and support I read daily.

Stay safe and healthy, both in mind and body, look after yourselves, be kind and keep smiling – it will end.