What is ‘furlough leave’?

April 15, 2020

When COVID-19 became a global pandemic, many employees in the UK were facing redundancy. The UK government’s response was to announce something called ‘The Coronavirus Job Retention Scheme’ – also known as ‘furlough leave’. This meant that the government would pay up to 80% of an employee’s wage, on behalf of their employer, if they could not work due to the coronavirus.

The reason for this was to prevent an onslaught of redundancies. Many companies, particularly those on the High Street, had to unexpectedly shut their doors on their customers. And while some companies were able to send staff home on full pay for the rest of the month, others were faced with the prospect of permanent business closure.

For official information and guidance on accessing this scheme, please visit the government’s help page here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

What we know about furlough leave

The initiative was announced by Chancellor Rishi Sunak on Friday 20th March 2020. Here are a few key facts you might want to know:

  • Furlough leave covers up to 80% of an employee’s wage. There are caps for higher earners. But for most employees, the government will pay 80% of their normal salary, if they are unable to work due to coronavirus. For example, because they are in self-quarantine, or your business is unable to continue trading for a while.
  • Employees must not ‘work’ during furlough leave. You cannot send an employee home on furlough leave, and then ask them to continue their job from home. Any activity that is directly related to profit generation for your business, makes the employee ineligible for furlough leave. This is to prevent employers claiming money for payroll from the government, despite being able to run their business as usual. You may, however, allow employees to engage in volunteer work, or to undertake training, while they are furloughed.
  • Furlough leave must last a minimum of three weeks. You cannot furlough an employee for a week, then return them to their job. Furlough leave must be taken in periods of three weeks or more. You may furlough an employee twice, but each individual period must be three weeks or more.
  • You may backdate claims to the 1st March. Despite the initiative being announced on the 20th March, Rishi Sunak said that companies would be able to claim from the 1st March onwards.

If you are furloughing employees, then, if you can afford to do so, I would highly recommend paying them the 20% difference, to ensure they go home with their full pay packet. This is within the rules announced by the government, and your employees will not forget your kindness.

Just because you are struggling to operate business as usual, does not mean you cannot work on strategic areas of HR such as employee engagement and employer branding. And looking after your employees in any way you can during this difficult time, is certainly a great way to help with this.

Recording furlough leave in People HR

We have had a lot of questions from customers about furlough leave – in particular, how to record this type of leave within your People HR system. So if you use People HR, you’ll be pleased to know that there is a very easy way to do this.

Within the system, you have all your regular leave types – holiday, sickness, etc. But you also have a category called ‘other’, which you can fill with as many custom types of leave as you like.

For furlough leave, you will want to create a custom ‘other event’ that is separate from any other type of leave in the system. I.e., don’t go bundling it into ‘sick leave’ or something else that you feel is similar.

Recording furlough leave by creating your own custom leave type will help you keep your HR nice and tidy. It will also make your life a lot easier in future, for example if you need to run a query or a report on employees who have been furloughed.

My colleague Kallum Johnson has written a wonderful little tutorial showing you how to do this, which you can find on the People HR help website here.

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