COVID-19: Temporary shut down and employee furloughs advice

As the Coronavirus lock down continues, many non-essential premises have already been forced to close. This includes restaurants, cafes, pubs and bars, cinemas, leisure centres, theatres, electronic and clothing shops.

The commercial impact of COVID-19 lock down is also being felt in many other industries. In either case, the UK Government is offering support for workers who are temporarily not required to work because there is no work for them to do. These workers are known to be on furlough.

What financial support is available for furloughed employees?

The UK Government has introduced the Coronavirus Job Retention Scheme to provide financial support for furloughed workers. 

This scheme is available to all employers who use PAYE payroll from 28 February 2020. This may include:

  • Employees
  • Workers
  • Those who do casual work
  • Those who have zero-hours contracts

For your business to qualify for the scheme, you must do the following:

  • Select and tell (?designate?) the employees affected that they?re furloughed
  • Keep employees on your payroll
  • Make sure furloughs last at least 3 weeks

Selecting and informing your employees

You must select employees for furlough in a fair way to make sure to avoid any kind of discrimination. 

You will also need to get agreement from the employee to do this, unless it?s covered by a clause in their employment contract. You will need to clearly explain how much the employee will get paid in total whilst they are on furlough.

Be sure to confirm in writing with the employee the terms of their furlough. You should include the following details:

  • The date furlough starts
  • How much the person will be paid
  • When it will be reviewed
  • How to keep in contact during furlough

How much will furloughed employees earn?

The government will allow you to claim up to 80% of the employee’s wages, up to a maximum of ?2,500 per month. You can, however, choose whether you will top up the wages to 100%, but you do not have to. If you decide not to top up the wages, you should tell the employee and explain why you are not doing so.

Payments for furloughed employees will be made to you every 3 weeks – in line with the shortest period of time a furlough can last.

How to handle disagreements

If an employee disagrees with your decision to put them onto furlough, you will need to continue to talk to them and try to come to an agreement on how to proceed. If you can’t reach an agreement with an employee, you may need to make changes to the written contract of an employee.