Understanding furlough leave

On 20^th March 2020, the Chancellor of the Exchequer, Rishi Sunak, introduced furlough leave. Whilst placing an employee on furlough leave is commonly-used in the United States, furlough leave is an entirely new UK legal concept.

Currently, if an employer closes its workplace or does not have any work to provide its employees and wanted to send them home, the employer is still obliged to pay employees their normal full pay if it had no work to provide to them. The exception to this is if the employer already has a contractual right to ‘lay off’ an employee, by sending them home without work; such a clause is commonplace in the building and aviation industry, but less so in others.

The Coronavirus Job Retention Scheme (otherwise known as the introduction of ‘furlough leave’) now means that whilst employers would still have to pay 100% of their employees’ wages if they asked them to remain absent from work, they could claim back 80% as a grant from HMRC, up to a maximum of £2,500.00 per month. On top of the 80%/£2,500.00, HMRC will also reimburse the employer the equivalent Employer’s National Insurance Contributions, together with the minimum employer auto-enrolment pension contribution. The employer should pay the employee 80% of the wages that they were paid on or before 19^th March 2020.

Whilst furlough leave was announced on 20^th March 2020, we had to wait until the evening of 26^th March 2020 to receive further details of the scheme. However, now that we have the details, we are able to offer our clients clear and detailed advice as to how to comply with this scheme and how to place employees on furlough leave correctly, in order to allow employers to claim back the furlough leave grant from HMRC.

If you would like assistance in placing your employees on furlough leave, or if you are an employee who has been placed on furlough leave and would like to discuss your rights, please contact Ben Stanton on 01908 660966/ 01604 828282 or by emailing ben.stanton@franklins-sols.co.uk.