What is furlough leave?

6 May 2020

This article was updated on 04/01/2021. Read our latest version of this article.

The Coronavirus Job Retention Scheme (CJRS or ‘furlough leave’) was due to end on 31 October 2020, and be replaced with a new Job Support Scheme. However, when the Prime Minister, Boris Johnson, announced the need for a second national lockdown on 31 October 2020, he confirmed that the furlough leave scheme will be extended until December. Read our latest article on the extension.

An important part of the business support measures, provided by the government to help business during the economic crisis created by coronavirus pandemic, is the Coronavirus Job Retention Scheme (or ‘furlough leave’). Furlough leave is a temporary leave of absence for economic reasons and is designed to save jobs.

On 29 May 2020, the Chancellor, Rishi Sunak, announced a number of important changes to the furlough leave scheme. The key features of the amended scheme are:

An employee can be placed on ‘furlough leave’ instead of being dismissed or laid off
The employee will remain on the payroll and continue to accrue continuous service/annual leave
Until 30 June 2020, HMRC will reimburse a maximum of 80% of furloughed workers wage costs (capped at £2,500 per month) plus employer’s NIC’s and minimum automatic enrolment employer pension contributions on that wage
From 01 July 2020, a new flexibility is introduced into the scheme to allow the employee to work part time for their own employer (with the employer being required to meet the costs associated with such work)
From 01 August 2020, employers will need to meet some of the costs of the furloughed employee on a sliding scale (summarised in more detail below), irrespective of whether or not they work part time
The amount claimed can include any regular payments the employer is contractually obliged to pay, e.g. past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips), commission payments, and non-cash payments cannot be included
An employer can choose to top the 80% up to full pay
The furlough scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before 19 March 2020, enrolled for PAYE online and have a UK bank account
The last date upon which an employee can be placed on furlough leave for the first time is 10 June 2020, as the scheme is closing for new entrants after then. However, due to a last minute concession announced on 9 June 2020, if an employee is returning to work from a period of family friendly leave (e.g. maternity, paternity, adoption, shared parental or parental bereavement leave) they can be furloughed for the first time after 10 June 2020.
The furloughed employee must have been employed, and on your PAYE payroll on or before, 19 March 2020. An RTI submission notifying payment in respect of that employee must also have been made to HMRC on or before 19 March 2020. However, there are various exceptions:
- Re-employment: in some circumstances it may be possible to re-employ an employee and then furlough them (see below)
- TUPE transfer: a new employer is eligible to claim in respect of employees who have TUPE transferred into their employment after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership of the business
Payments can be backdated to 1 March (but reimbursement will not apply to periods of active work after that date)
The scheme has been extended until 31 October 2020, and may be further extended
The minimum period of furlough leave is 3 weeks
The scheme opened for claims on 20 April and payments are being made under the scheme
Employers submit information to HMRC confirming which employees have been put on furlough leave and their earnings through a new online portal

Read our recent article for further details of the flexible furlough scheme.

Furlough leave eligibility

Which employers are covered by the furlough leave scheme?

Any UK organisation with employees, can apply provided:

They had created and started a PAYE payroll scheme on or before 19 March 2020
Enrolled for PAYE online (this can take up to 10 days)
Have a UK bank account

Public sector and quasi-public sector organisations are not really expected to use the scheme in most circumstances. HMRC guidance states: “Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.” However, this does also acknowledge that: “In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.” There is also Cabinet Office guidance on how payments to suppliers of contingent workers impacted by coronavirus should be dealt with where the party receiving the contingent worker’s services is a Central Government Department, an Executive Agency of a Central Government Department or a Non-Departmental Public Body.

Which staff can be furloughed?

Furloughed employees must have been on your PAYE payroll, and an RTI submission notifying payment in respect of that employee must have been made, on or before 19 March 2020 (although see the exceptions outlined above for re-employment and TUPE). They and can be on any type of contract, including:

employees (whether full or part-time)
fixed-term employees
employees who were dismissed or who changed jobs after 28 February 2020
apprentices
employees on flexible or zero-hour contracts
office holders (including company directors)*
salaried members of Limited Liability Partnerships (LLPs)*
workers working under a contract for personal service who are not in business on their own account*
agency workers (including those employed by umbrella companies)*

*Provided they are paid via PAYE

Fixed-term employees can be furloughed until their contract ends (either because it is not extended or renewed) and their contracts can be extended and renewed in the usual way.

Employees hired for the first time on or after 20 March 2020 cannot be furloughed.

Employees who were dismissed or who changed jobs between 28 February and 19 March 2020 can be eligible in some strictly limited circumstances:

Re-employment in non-TUPE situations: there are three exceptions depending on the nature of the contract and when the employee stopped working for you:
- if an employee (who was on the PAYE payroll as at 28 February 2020 and for whom an RTI submission was made before 28 February 2020) was subsequently made redundant, or stopped working for their employer between 28 February 2020 and 19 March 2020, the ex-employer has a choice to re-employ them and put them on furlough leave (but there are some implications of doing so – see below)
- if an employee was employed on 19 March (and who was on the PAYE payroll on or before 19 March 2020 and for whom an RTI submission was made on or before 19 March 2020) was subsequently made redundant, or stopped working for their employer on or after 19 March, the ex-employer has a choice to re-employ them and put them on furlough leave (but there are some implications of doing so – see below)
- an employee on a fixed term contract can be re-employed and furloughed if either:
  - their contract expired after 28 February 2020 and an RTI payment submission for the employee was notified to HMRC on or before 28 February 2020
  - their contract expired after 19 March 2020 and an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020

If the employee meets the strict qualifying criteria for re-employment outlined above, they may approach their old employer and ask to be re-engaged and furloughed. However, there is no obligation on the old employer to do so. Re-engagement in such circumstances is not risk-free for an old employer as continuous service will be preserved (which may alter redundancy entitlements and unfair dismissal protection), and there are some cost implications, because annual leave will continue to accrue. Specific advice should therefore be sought

TUPE situations: the new employer is eligible to claim in respect of employees who have TUPE transferred into their employment after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership of the business

Apprentices can be furloughed and they can continue to train whist furloughed provided they are paid at least the apprenticeship minimum wage/national living wage/national minimum wage for all the time they spend training. There is official guidance on changes in apprenticeship learning arrangements.

Office holders and salaried company directors paid via PAYE can be furloughed and can still fulfil the statutory obligations they owe, provided they do no more than would reasonably be judged necessary, and are not working to generate commercial revenue or provides services to or on behalf of their company. Those paid annually are eligible to claim, as long as their earnings in the 2019/20 tax year were notified to HMRC on an RTI submission on or before 19 March 2020.

Salaried LLP members paid via PAYE can be furloughed and their reference salary is their profit allocation, excluding any amounts that are determined by the LLP member’s performance, or the overall performance of the LLP.

Workers working under a contract for personal service who are not in business on their own account and who are paid via PAYE can be furloughed. If they are paid via invoice (e.g. via their personal service company) they cannot be furloughed and must claim as a self-employed individual.

Agency workers paid through PAYE (including where they are employed by umbrella companies) can be furloughed.

Furloughing staff

What is the last date upon which we can furlough someone for the first time?

The last date upon which an employee can be placed on furlough leave for the first time is 10 June 2020, as the scheme is closing for new entrants after then. However, due to a last minute concession announced on 9 June 2020, if an employee is returning to work from a period of family friendly leave (e.g. maternity, paternity, adoption, shared parental or parental bereavement leave) they can be furloughed for the first time after 10 June 2020.

Can we furlough staff who are shielding or who have caring responsibilities?

Staff can be furloughed because they are:

Shielding in line with public health guidance because they, or someone they live with, is extremely vulnerable to coronavirus; or
Unable to work because they have caring responsibilities e.g. they need to look after children or a vulnerable relative

In the alternative, new regulations came into force on 16th April 2020, which mean that an employee can be deemed incapable of work for SSP purposes, if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield.

What evidence will HMRC require us to provide for furloughed staff?

To be eligible for the furlough leave grant employers should write to their employee confirming that they have been furloughed and keep a record of this communication. In many cases, this will require an agreed change of contract (see the next question for guidance on this). A record of the letter placing the worker on furlough leave should be retained for five years. We are aware of some speculation around tensions between the wording of HMRC’s guidance and the Treasury Direction, but HMRC have confirmed that the employee does not have to provide a written response to the letter placing them on furlough leave. Further, collective agreement reached between an employer and a trade union is also acceptable evidence of agreement when making a claim.

Can we force employees to accept a period of furlough leave?

This will depend on whether you intend to pay them in full or not.

With some limited exceptions, there is no general implied term requiring an employer to provide work, provided it continues to pay the employee’s salary. Therefore, it is unlikely to be a breach of contract to place an employee on furlough leave (without their express agreement) provided you pay them their full pay, and deal with the matter appropriately, proportionately and sensitively.

If you intend to pay less than full pay during furlough leave (typically the 80% element from the Government), then express agreement will almost certainly be required. Most UK employment contracts are unlikely to have provisions allowing the employer to force the employee to take a period of furlough leave. Therefore, placing an employee on furlough leave will involve a temporary change of contract. Employers should make sure any process followed is fair and involves consultation with employees; furlough leave should not be unilaterally imposed without consent. In seeking to agree a temporary variation to the contract to place an employee on furlough leave, the following key points are relevant:

Generally, where a variation of contract is expressly agreed by the employer and the employee, it will be enforceable if the employee’s consent was not obtained by duress
In workplaces were a trade union is recognised for collective bargaining purposes, the trade union should be consulted with about the proposed furlough leave and contractual variation
In these extreme circumstances, employees (and any trade unions) are likely to agree to a period of furlough leave, because the alternative is likely redundancies
If more than 20+ employees are involved, and a dismissal and re-engagement process might be followed if voluntary consent to the change is not forthcoming (to force the change through without agreement), then the employer will have a duty to inform and consult appropriate representatives (which may require an election to select representatives). Please note that shorter consultation than the usual 30 or 45 days may be permissible. We advise you to take legal advice in respect of this
To minimise the risk of potential claims, the employer should act in a manner that would be expected of a reasonable employer. This could include having a business reason for making the change, following a fair procedure (including one-to one meetings with employees) and acting reasonably in treating the employee’s refusal to sign as a reason for dismissal. Given the unusual circumstances we are dealing with, we again suggest you take legal advice in respect of this process

How long can workers be furloughed for?

Three weeks is the minimum length of time that an employee can be furloughed in order for the employer to be eligible for HMRC reimbursement. The furlough leave scheme has already been extended once to 31 October 2020 (but it may be extended further). Therefore, employers may want to retain some flexibility to allow them to extend the period of furlough leave if necessary and/or to recall employees on furlough leave back to work to cover staff absences etc.

Will the furlough leave scheme pay the wages of my staff who are still working?

No, the HMRC guidance makes it clear that an employee must not work to be eligible. However, a furloughed employee can:

Take part in volunteer work for another organisation, as long as they does not provide services to, or generate revenue for or on behalf of, their employer
Be encouraged to undertake training (e.g. to complete online training courses) whilst they are furloughed, provided they are paid at least the national minimum or national living wage for those hours; or
Find work for another employer if the contract permits this or you allow it
Undertake duties and activities, as a trade union or non-union employee representative, for the purpose of individual or collective representation of employees/workers (e.g. in a collective redundancy consultation exercise)

From 01 July 2020, a new form of flexibility will be introduced into the furlough scheme, which will allow employees to work part time for their own employer. The employer must pay the worker 100% of their normal pay for any hours worked and, as we understand it, will not be eligible to claim for those hours worked under the furlough leave scheme. In practical terms, short time working on anything less than full pay can only be imposed in accordance with any contractual terms, or by express agreement to vary the terms of the contract. We recommend that specific advice be sought on this.

Can we ask an employee to go on ‘partial’ furlough leave?

The answer to this depends on what you mean by ‘partial’. In summary, HMRC guidance currently suggests that:

If an employee continues working on reduced hours (short-time working), they will not be eligible for this scheme. However, from 01 July 2020, a new form of flexibility will be introduced into the furlough scheme, which will allow employees to work part time for their own employer. The employer must pay the worker 100% of their normal pay for any hours worked and, as we understand it, will not be eligible to claim for those hours worked under the furlough leave scheme. In practical terms, short time working on anything less than full pay can only be imposed in accordance with any contractual terms, or by express agreement to vary the terms of the contract. We recommend that specific advice be sought on this
However, a furloughed employee can:
- take part in volunteer work for another organisation, as long as they does not provide services to, or generate revenue for, or on behalf of their employer
- complete online training courses whilst they are furloughed, provided they are paid at least the national minimum wage/national living wage for the time spent completing such training
- undertake duties and activities, as a trade union or non-union employee representative, for the purpose of individual or collective representation of employees/workers (e.g. in a collective redundancy consultation exercise)

It also appears to be in keeping with the scheme, to rotate which staff are placed on furlough leave (provided each period of furlough leave is at least three weeks long).

How do we choose which employees are placed on furlough leave and which are required to carry on working?

You do not need to place all of your employees on furlough. Many employers will be unable to place their entire workforce on furlough leave. Critical business functions may need to carry on (e.g. Board or management oversight, IT support teams, finance teams etc). Choosing who needs to be placed on furlough leave, and who must continue to work, may prove a challenging task for some employers. This is especially difficult if you intend to pay staff on furlough leave their full pay, whilst other staff are being asked to work as normal for their pay.

The starting point is to consider business needs – which roles are critical to the business functioning during the next 3 months? Care must be taken to avoid direct or indirect discrimination in the selection process and, if you must select between staff doing identical business critical roles, you may wish to consider either asking for volunteers to work, having a selection matrix (akin to in a redundancy selection exercise), or using a method of randomised selection. You may also wish to factor into your assessment of who should be furloughed:

What will happen if a member of staff who is required to carry on working later falls ill or has to self-isolate? Have you allowed yourself sufficient staff to cover their absence?
Do any of the staff you could furlough fall within any of the high-risk or shielding categories (and therefore could placing them on furlough leave offer a way to minimise their risk)?
Do any staff with caring responsibilities (including caring for an individual who is shielding) want to be furloughed?
Should staff rotate between periods of work and periods of furlough leave? HMRC guidance on the furlough leave scheme appears to allow people to alternate periods of work, with periods of furlough leave (provided each period of furlough leave lasts at least three weeks)
Do you have employees who cannot be furloughed under the scheme rules e.g. because they entered your payroll too late?

Can an employee on furlough leave work elsewhere?

The answer to this depends on the circumstances:

If the employee already has more than one employer, they can be furloughed for each job (the furlough leave reimbursement applies to each employer individually). This could lead to a situation where an employee with two employers is furloughed from neither, one, or both of their jobs
A furloughed employee can undertake voluntary work (e.g. delivering food parcels to vulnerable individuals) and, in due course, may be permitted take a period of emergency volunteering leave (if this is brought into force) to allow them to volunteer in the fight against coronavirus
If contractually allowed, or with the express agreement of their employer, a furloughed employee is permitted to work for another employer during furlough leave

Claiming the furlough grant

How much pay can we recover under the furlough leave scheme?

Until 30 June 2020, employers will receive a grant from HMRC to cover:

The lower of 80% of an employee’s regular wage or £2,500 per month
Plus, the associated employer’s national insurance contributions
Plus, the employer’s minimum automatic enrolment employer pension contributions

HMRC guidance originally said that fees, commission and bonuses could not be recovered. However, the new HMRC guidance on how much you can claim now clarifies that an employer can claim for any regular payments it is contractually obliged to pay its workers (e.g. wages, any non-discretionary overtime, fees, commission payments, and piece rate payments), but that discretionary bonus (including tips), discretionary commission payments, non-cash payments and benefits in kind cannot be recovered.

Workers are not entitled to be paid the national minimum or national living wage during furlough leave, as they are not ‘working’. However, they must be paid at least the minimum for any hours they spend training at their employer’s suggestion (see below).

An employer cannot claim the furlough grant for:

Additional National Insurance or pension contributions made because the worker’s pay is topped- up above 80%
Any pension contributions that are above the mandatory employer contribution
The cost of non-monetary benefits provided to employees (e.g. taxable benefits in kind such as life cover)
Benefits provided through salary sacrifice schemes (including pension contributions) – although it may be possible for the worker to opt-out of salary sacrifice and HMRC agrees that coronavirus and being furloughed is a ‘life event’ for the purposes of any opt-out of salary sacrifice

Where the employer provides benefits to furloughed employees, these should be additional to the minimum wages that must be paid under the terms of the scheme.

For salaried employees, their pay entitlement will be calculated using their salary as at the last pay period before 19 March 2020. For employees whose pay varies see the next question.

Starting on 1 July 2020, a number of changes will be made to the furlough leave scheme that will increase the employer’s minimum financial contribution. In summary, these are:

Key date:	Summary of change	Employer minimum contribution
01 Jul 2020	Part-time working will be allowed	Pay for any hours worked Employer’s NICs and minimum pension contributions on those hours
01 Aug 2020	Employer must start to contribute	Employer’s NICs / pension contributions
01 Sep 2020	Employer contribution increases	10% contribution (70% CJRS grant) capped at £2500 pcm
01 Oct 2020	Employer contribution further increases	20% contribution (60% CJRS grant) capped at £2500 pcm

The furlough leave scheme is currently expected to close on 31 October 2020.

How do I calculate the furlough pay of an employee whose pay varies?

This depends how long the employee has been employed for:

If the employee has been employed for at least 12 months, the employer can claim for the higher of either the same month’s earning from 2019, or their average monthly earnings from the 2019-20 tax year
If the employee has been employed for less than 12 months, the employer can claim for an average of their monthly earnings since they started work
If the employee only started work in February 2020, the employer can use a pro-rata of their earnings so far

Do we have to top up the pay of a worker on furlough leave to 100%?

The HMRC guidance makes it clear that this is the employer’s choice and is not compulsory. The decision may depend on the financial circumstances in the particular business (or in the part of the business in which the employee works). It may also be possible to justify doing so for only part of your workforce e.g. critical workers, but care should be taken to ensure selective top-ups are not discriminatory. Specific advice should be sought.

We cannot afford to top-up our staff pay to 100% during furlough leave, but are worried they will struggle to cope financially?

In the event that you cannot afford to make a top-up, you may wish to consider:

Either instructing, or permitting, furloughed employees to take some of their accrued annual leave during furlough leave, or at the end of each furlough leave period. Possible methods of doing so could include:
- Taking one week’s annual leave per month, taken after the end of a three-week furlough period; or
- Taking one day’s annual leave per week during furlough leave.
  The official guidance was initially silent on taking annual leave during furlough leave, but the new HMRC guidance on calculating the furlough grant now makes it clear that “employees can take holiday whilst on furlough” (provided they are paid in full as required by the Working Time Regulations 1998). It is also now clear that the employer can partially reclaim holiday pay via the furlough grant.
  However, we have heard anecdotally that the rules regarding annual leave may change in the future, so employers may wish to expressly agree with furloughed staff that the days allocated as annual leave may need to be re-allocated or re-credited if the scheme rules are subsequently amended.
Alternatively, to the extent that an employee’s contractual annual leave entitlement exceeds the minimum statutory entitlement of 5.6 weeks, it may be possible to expressly agree that the employee will ‘waive’ their enhanced holiday entitlement in exchange for their pay being ‘topped-up’ (beyond 80%) during the period of furlough leave. For example, if an employee’s contract provides for 25 days’ holiday plus eight days’ bank holidays, then agreement could be sought to waive five days of this entitlement and ‘convert’ that entitlement into cash which can be then used to ‘top-up’ their furlough leave pay.

This could have the effect of: (a) topping up the monthly pay of employees; and (b) meaning there is not a glut of accrued holiday to be taken later in the year. Please also see the next three questions, which deal expressly with the interplay between annual leave and furlough leave.

Employees, whose income has fallen during these challenging times, may be eligible for other government support such as universal credit, or housing benefit. They may also be eligible for a three-month mortgage holiday.

Terms and conditions during furlough leave

Will an employee on furlough leave accrue annual leave?

Currently yes, HMRC’s guidance on calculating the furlough grant has been amended to expressly deal with annual leave. It confirms that: “Furloughed employees continue to accrue leave as per their employment contract”.

To the extent that an employee’s contractual annual leave entitlement exceeds the minimum statutory entitlement of 5.6 weeks, it may be possible to expressly agree that the employee will ‘waive’ their enhanced entitlement in exchange for their pay being ‘topped-up’ (beyond 80%) during the period of furlough leave. For example, if an employee’s contract provides for 25 days’ holiday plus 8 days’ bank holidays, then agreement could be sought to waive 5 days of this entitlement and ‘convert’ that entitlement into cash which can be then used to ‘top-up’ their furlough leave pay.

However, we have heard anecdotally that the government may change the rules regarding the interplay between annual leave and furlough leave, so please watch for updates to this note if those changes materialise.

Can an employee on furlough leave be required to take their annual leave during furlough leave?

In many situations, it is possible for an employer to require an employee to take some of their annual leave at a time chosen by the employer. HMRC’s guidance on calculating the furlough grant now expressly deals with annual leave. This confirms that: “Employees can take holiday whilst on furlough”, provided they are paid their full pay calculated in accordance with the Working Time Regulations 1998 in the usual way.

Requiring furloughed employees to take some of their annual leave could have the effect of: (a) topping up the monthly pay of employees; and (b) meaning there is not a glut of accrued holiday to be taken later in the year.

The starting point is to check the employment contract to make sure if there are any contractual provisions, which allow the employer to designate a specific period of annual leave (such provisions are very common). Secondly, check if there is any ‘relevant agreement’ under the Working Time Regulations, which permits the employer to force an employee to take annual leave. If the contract or relevant agreement contains such provisions, the employer should comply with those terms (which may include giving a minimum amount of notice of a period of leave).

In the absence of such express provisions, an employer requiring an employee to take leave at specified times, must give notice equivalent to at least twice the period of leave to be taken. For example, the employer must give two days’ notice to take one day’s leave, or two weeks’ notice to take one week’s leave.

Can an employee unable to take holiday due to coronavirus carry-over their annual leave?

Anyone who is incapacitated due to coronavirus, and therefore unable to take all of their annual leave before the current leave year ends, will be entitled to carry it over in the usual way.

In addition, new regulations are now in force, which allow a worker to carry-over up to four weeks of their annual leave (that required under the EU Working Time Directive) into the next two leave years, if it was not reasonably practicable for them to take that leave as a result of the effects of coronavirus (including on the worker, the employer or the wider economy or society). However, employers with furloughed employees should seriously consider requiring them to use at least part of their holiday entitlement during the furlough period. If it is not managed, in the return to normality, employees will return to work with significant accrued but untaken holiday which may add pressure to an employer’s financial situation and also to staff resourcing (see above).

Will a furloughed employee be entitled to their contractual benefits and to accrue annual leave?

The furloughed employee will be entitled to continue to receive all of the non-discretionary benefits of their contract, including the right to accrue annual leave, unless they expressly agree to waive these. Statutory benefits e.g. 5.6 weeks holiday per annum and minimum pension contributions under the pension’s auto-enrolment scheme cannot be waived and must therefore continue. It may be possible to agree with staff the waiver of other contractual benefits. However, this will involve a change of contractual terms, so we recommend you take advice on this.

Rules applying during furlough leave

Can we undertake collective consultation during furlough leave?

Yes, you can. Taking part in a collective consultation process (e.g. for collective redundancies, or in connection with a proposed contractual variation) is unlikely to amount to ‘work’, because it does not provide services to, or generate revenue for their employer. By analogy, consultation of this nature can be undertaken during maternity leave without the employee having to terminate their maternity leave early.

Will we need to bring trade union or employee representatives off furlough leave during any collective consultation process?

No. The guidance has been amended to confirm: “Whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers.” Therefore, provided the activities undertaken do not provide services to the employer, or generate an income for the employer, they can be undertaken whilst the trade union or elected employee representative remains on furlough leave.

Can we give notice of dismissal whilst employees remain on furlough leave?

We are not yet certain whether you can do so. The guidance does not deal with notice pay – it states that: “grants cannot be used to substitute redundancy payments”. One argument in favour of allowing notice to be served during furlough leave is that HMRC could have expressly dealt with notice pay in their guidance and have chosen not to do so. However, a counter-argument is that allowing notice to be served during furlough leave is not in keeping with the underlying rationale of the scheme (which is to save jobs). This is one key area where HMRC clarification is desirable.

Does furlough leave interrupt maternity leave?

No. An employee can simultaneously be furloughed and on maternity leave (or other family leave, such as adoption, paternity or shared parental). Special rules apply to calculate your employee’s average weekly earnings differently, if an employee was furloughed and then started leave on or after 25 April 2020. These rules aim to remove any financial disadvantage suffered, due to having reduced earnings during furlough leave.

If an employer is paying enhanced (earnings related) contractual pay for an employee on family friendly leave (e.g. maternity, adoption, paternity, shared parental leave pay) then the employer can recover this within the furlough grant (subject to the ordinary limits).