What does it mean if an employee is 'furloughed'
When on furlough leave, employees did not work but continued to be employed and paid. Continuity of service was unaffected and the employee would continue to accrue annual leave whilst on furlough leave. Although employees could not do any work for their employer whilst they were on furlough, they were able to do volunteer work or training.
Under the extended CJRS, the Government covered 80% of salaries, up to £2,500 a month of all workers who were placed on furlough leave. The Government contribution reduced to 70% in July and 60% in August and September 2021. Employers were required to pay employers’ National Insurance and pension contributions.
The furlough payments were subject to tax and National Insurance in the usual way. Employers had to claim for financial assistance by means of an HMRC portal (accessed via the Government Gateway) and employees were paid in the normal way.
Being ‘furloughed’ involved a change of employment status and so the employer had to:
· Designate (i.e. select and tell) the employee that he or she had been placed on furlough leave;
· Confirm the furlough leave in writing before the start of the furlough leave; and
· Keep the employee on payroll.
The employment contract would not change in any other way and the employee would remain bound by the terms and conditions of the contract and staff handbook.
Employers were not required to ‘top-up’ salaries to 100%. The Government scheme only required employers to pay staff 80% of their normal pay.