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