Furlough: Coronavirus Job Retention Scheme

Aga Khan Economic Planning Board for the United Kingdom
Furlough: Coronavirus Job Retention Scheme
(Last Updated: 29 March 2020)

About furlough

What does furlough mean?
When an employer cannot cover staff costs due to COVID-19, they can temporarily designate certain staff as furloughed workers and temporarily ask them to stop working. This is different from redundancy which results in an employee permanently losing their job. There is an expectation that furloughed workers will be able to resume work with their employers once the COVID-19 crisis has passed.

When does furlough apply?
Furlough applies when there is a temporary reduction in the ability for a company to provide employees with work. Each set of circumstances is considered before your company recommends that they furlough your employment.

Can I work while on furlough?
No. You can however undertake training or volunteer subject to public health guidance as long as you are not making money for or providing services to your employer.


What does it mean to be a furloughed employee?

How will I be identified as a furloughed employee?
Your employer will work with Human Resources (HR) to identify the potential to apply furlough.

Who will let me know if I will be placed on furlough?
Your manager will discuss the request to move you to a furloughed status. The HR team will support your manager to ensure that you are appropriately paid in line with the furlough rules.

Are my unions involved?
If you are supported by a union agreement, they will engage with contacts to discuss the situation and the approach taken by your employer.

How will I stay in touch with my company while on furlough?
Please ensure that all your company has your up-to-date contact details and discuss with your line manager who will advise how they will keep in contact with you.

What if I am asked to take on a new role instead of being furloughed?
Your company may look to redeploy you to an alternative role and their expectation would be that you agree to that redeployment, if the financial terms are no less favourable.  If you refuse to take on an alternative role, then you may not be eligible for furlough payment.

If my role was about to be made redundant due to business changes, will I now be placed on furlough and receive 80% of my wages?
If this redundancy process is not related to the COVID-19 impact, the business will continue with the redundancy consultation process and you will not be placed on furlough.


Pay and benefits

How much of my pay will I receive if I am furloughed?
If you are furloughed as a result of the COVID-19 impact, then you will be paid 80% of your wages, up to a maximum of £2,500 per month.  The scheme is currently set to run until the end of May 2020 and is linked to government timeframes.

Will my employer ‘top up’ furlough payments?
Employers can, if they wish to, top-up the additional 20% (or any amount in excess of £2,500). You will need to speak to your employer about this and discuss what is in your contract.

How will I get paid?
The same way as you are today – through normal payroll systems.

What action do I need to take to be furloughed and paid?
You do not need to do anything; your employer will take care of the background actions to make sure you are paid appropriately.

Do I still have to pay tax and national insurance contributions?
Yes, as you are still an employee you will have to pay the normal payroll deductions such as tax and national insurance.

How will my benefits be impacted as a result of a reduced furlough pay?
Looking at each in turn.

  • Life insurance – this is usually tied to your original base salary so should not be impacted (salary before furlough).
  • Pension – the company contributions will be aligned to your furlough payment.
  • Healthcare – this will continue as normal, if applicable.
  • Holidays – you will continue to accrue holidays.  You may be asked to take these during the furlough period.
  • Car allowance – this will continue as normal, if applicable.
  • Other voluntary benefits – you can continue to pay for your voluntary benefits and payroll deductions will occur as normal.

Does this affect other pay policy decisions?
You should discuss these directly with your employer.


Further Guidance

For more information on the Coronavirus Job Retention Scheme please read the government’s guidance for employers or guidance for employees.