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Coronavirus Job Retention Scheme: Guidance for law firms

14 April 2020

Legal disclaimer

This guidance is the Law Society’s view on the Job Retention Scheme as at 14 April 2020. It is not legal advice. If you wish to use the scheme you should read all the government guidance before deciding how best to proceed. You may need to seek independent legal advice from an employment lawyer, especially if you are considering changing employment contracts.

About the scheme

The Coronavirus Job Retention Scheme (the scheme) is a financial package which helps all UK employers pay the wages of workers in organisations that would otherwise have to reduce their workforce due to the coronavirus pandemic.

The government wants to help organisations to keep as many workers as possible on their payroll until the longer-term economic impact of coronavirus, and the associated suppression measures, are known.

Through the scheme you can claim a grant to cover 80% of a worker’s salary, up to £2,500 per month, who you’ve furloughed. The grant also covers associated employer national insurance and minimum auto-enrolment employer pension contributions.

You can choose to top up the grant if you wish, for example to ensure that the worker receives their full salary.

The scheme does not cover discretionary fees, commission and bonuses, although you can claim for any regular payments you’re obliged to pay your employees. This includes:

  • wages
  • past overtime
  • fees
  • compulsory commission payments

The scheme is backdated to 1 March 2020 and will run for at least three months.

There is no legal definition of furlough leave, but colloquially “to furlough” a worker means to put them on a paid leave of absence. The scheme does not directly change the employment relationship between employer and worker, which means that you may need to agree a contractual change with those who are furloughed.

View more information and updates on the scheme  


The scheme is open to all UK organisations that:

  • had a PAYE payroll system on 28 February 2020
  • have a UK bank account

Those you furlough can be on any kind of employment contract, although they must have been paid through your PAYE system.

Some restrictions have been placed on the furloughing of public sector workers, including those who work for non-governmental bodies but have their salary directly funded by the government. The Ministry of Justice has confirmed that staff at criminal legal aid firms are not classified as public sector workers, and can have their wages covered by the scheme.

Claiming a grant

HM Revenue & Customs (HMRC) is creating an online claims portal for the scheme. This is expected to be live at the end of April.

In the meantime, HMRC has published guidance on how organisations can claim a worker’s wages through the scheme (the guidance).

Only those workers who were on your PAYE payroll on or before 28 February 2020 are eligible for being furloughed. They must also not do any work for your organisation during the time you claim the grant for. This includes providing services or generating revenue.

Workers who joined your organisation after 28 February 2020 cannot be furloughed.

HMRC also requires you to write to all those you’ve furloughed, confirming their new situation, and to keep a record of this communication.

Choosing who to furlough

The guidance does not offer any advice on selecting staff to be furloughed, although it does suggest that discussing the scheme with staff is good practice.

It also makes clear that employment and equality law applies to this process, and that this includes coming to an agreement with the worker if the employment contract needs to be changed.

It’s good practice to create an objective selection procedure to govern how you decide who to furlough. This will ensure you’re fair and consistent, limiting the risk of falling foul of discrimination law.

Direct discrimination occurs when a person is treated worse than another person because of a protected characteristic. For example, if you chose a woman because you assume that she would not be able to do her job as well as a man because she is a parent, you’re likely to be guilty of sex discrimination.

Indirect discrimination occurs when a policy applies in the same way for everybody but disadvantages a group of people who share a protected characteristic. For example, if you selected people on a “last in, first out” criteria you risk discriminating against workers based on age, because the criterion is likely to unfairly target young people.

You must ensure that the decision on who to furlough is not based on something discriminatory, unless you can justify this. For example, you may be able to justify giving preference to those in vulnerable groups because you cannot meet your duty of care towards them if their job requires them to break social distancing guidelines.

In some cases, the job role will determine who is selected. If you wish to furlough only a percentage of those who perform certain roles you should consider asking for volunteers first – while making no guarantees that they’ll be selected.

Getting agreement from workers

It’s best to get the agreement of workers that you intend to furlough, even where it may not be legally necessary. This will minimise the risk of claims for discrimination or breach of contract.

As furloughing is a new concept in employment, it’s good practice to discuss the practical aspects with those workers that will be furloughed. For example, discuss how they can access training and development opportunities, and stay informed about changes at work. This will support their return to work at the end of their furloughed period.

In some circumstances you’ll need to get the worker’s agreement as you’ll be making a significant change to their employment contract. For example, if you are not going to top up the furloughed workers’ salary then you must reach an agreement to change the employment contract, otherwise you risk workers bringing claims for breach of contract and unlawful deduction of wages.

If those who are furloughed still receive their full salary, then consent may not be needed as most workers have the right to be paid a certain amount, not the right to work. In either event you should seek advice from an employment lawyer before deciding how to proceed.

Frequently asked questions

Can I get funding for workers if they are still working but on reduced hours?


No. The government has explicitly ruled this out.

You can still reduce costs by temporarily reducing the hours of some or all of your remaining workers, and so reducing your salary bill, but you will not be able to apply to the scheme to fund the lost wages. This would be a significant change to the employment contract so can only be done with the worker’s agreement.

Can I have a roll-on/roll-off approach to furloughing?


Yes, as long as those who are furloughed are away from work for a continuous period of at least three weeks. The guidance states that workers must be furloughed for a minimum of three weeks. Beyond that workers can rotate between being furloughed and being at work.

This means that you could furlough a worker for three weeks, then recall them to work for as many weeks as you wish, before furloughing them for another three weeks, and then recall them again.

This possibility allows you to share the need to furlough among a wider pool of staff and keep more workers involved in the organisation while you consider the financial implications of coronavirus.

If you’re going to operate a roll-on/roll-off furlough scheme you should consider how this will operate in practice and create a policy that explains this to your workers.

Technically you do not have to give workers notice that you’re recalling them from furlough, but you should consider whether they have enough time to make necessary arrangements to be able to work.

See also How can I recall a worker who has been furloughed?

Can a worker refuse to be furloughed?


Yes. If this happens you can explain to the worker that the alternative is redundancy, if that is the case. The worker will still have their statutory rights protecting against unfair dismissal, so if they refuse to be furloughed you would still need to follow a fair redundancy process.

Can I still furlough workers if I cannot afford to pay them until I receive the grant?


Yes, although you will need to agree with the workers that their salary can be deferred until you receive the grant. This agreement should be in writing as it’s a significant change to the employment contract.

Can I make a furloughed employee redundant?


Yes, although you must follow legal redundancy processes, such as consultation, as furloughed workers maintain all of their employment rights.

If you decide to automatically make redundant those on furlough without going through a proper redundancy process you may be judged to have instigated an unfair selection process.

What contact can a furloughed worker have with the organisation?


While workers are not allowed to do any work while they are on furlough leave, they can still have contact with the organisation.

You should think about how best to keep those who are furloughed in touch with how the business is operating and offer them the same opportunities to update their skills as those who continue to work.

Those furloughed may still be able to:

  • attend (virtual) social events
  • be consulted on any changes happening in the organisation
  • take part in formal HR duties, such as giving evidence in disciplinary investigations

What’s important is that they do not work for the organisation, including doing anything that creates revenue.

It’s best to develop a clear policy about how furloughed workers can stay in contact with the organisation, so everyone understands where the boundaries are.

Can a furloughed worker work or volunteer for someone else?


The government does not prohibit those who are furloughed from earning a salary from another employer while on furlough leave. If your worker did this, it would not affect your ability to receive the grant.

In reality the employment contract you have with your worker will demand a certain level of exclusivity. You may want to consider whether these terms could be modified while the worker is furloughed, especially if they have agreed to a salary cut. For example, you could say that you’ll allow those furloughed to take up a role with a non-competing business, with your prior consent, as long as they can respond to a request to come back to work in an agreed timeframe.

The government explicitly says that those who are furloughed can volunteer while on leave, but this again could be constrained by in the terms of the employment contract.

You may wish to consider whether any restrictions on volunteering should be lifted while the worker is furloughed – as long as any volunteering activity does not make money or provide services for your organisation.

How can I recall a worker who has been furloughed?


The government has not provided guidance on how to end a furlough period. Most employment contracts require a person to be available for work during a certain time if their employer asks them to be, so it’s unlikely that a furloughed worker will be able to turn down a request to return to work.

It’s good practice to develop a policy that states how furloughing ends so everyone understands the process from the outset. This might include a reasonable period of notice, for example one week. The furloughed worker might have to change some of their personal arrangements, such as caring arrangements, before they can return to work.

Do furloughed workers still accrue holiday?


Yes. While on furlough leave all their contractual arrangements remain the same, and workers maintain their rights under the Working Time Regulations 1998.

You may face a challenge when furloughing ends as those who are furloughed may want to use their accrued holiday just as your workload is increasing. You may wish to offer to buy back the annual leave that is in excess of statutory leave.

A new regulation has been introduced, allowing those who cannot take their full annual leave entitlement because of coronavirus to spread out their extra leave over two years.

You should consider whether it would be sensible to create a new holiday policy, such as capping the amount of leave a worker can take in a three-month period to three weeks, to manage this challenge.

Does a furloughed worker need to inform you that they are sick?


In most circumstances, no. Furloughed employees who become ill must be paid at least the amount they would have received if on statutory sick pay (SSP). Employers should make it clear to furloughed workers that they do not need to report sick days while furloughed, unless their salary is below £95.85 per week.

From a legal point of view, it could be argued that it’s not technically possible to be sick while furloughed as your worker’s condition does not stop them from fulfilling their duties during that time. The worker would not be ready, willing and able to work when they are sick, but this is not relevant until the furloughing arrangement ends.

From a practical point of view, it does not benefit anyone to temporarily remove a furloughed worker to put them onto SSP. It would break the furlough period as they would be classified as working. During this time their salary could not be covered by the scheme, and you might not be able to claim for previous furloughed time if the move onto SSP happens before the three-week qualification period.

The government says that it's up to employers to decide whether to move workers onto SSP or to keep them on furlough.

How does furloughing work with parental leave?


The guidance states that the normal rules for maternity and other forms of parental leave pay apply. You can claim through the scheme for any enhanced maternity pay that you offer for maternity or paternity leave, subject to the £2,500 and 80% caps.

If a maternity/paternity leave period comes to an end while the scheme is in operation you can furlough that worker, as long as they meet the standard criteria of the scheme.

Can trainees be furloughed?


Yes, as long as they meet the standard criteria of the scheme.

The Solicitors Regulation Authority (SRA) has stated that trainees can be supervised remotely and that it is the firm’s responsibility to make suitable arrangements. Therefore, working from home does not need to mean that a trainee should be furloughed.

You can find more information about education and training on the SRA website.

Business continuity toolkit

We’ve produced a toolkit that law firms and practitioners could and should consider when looking at how to strengthen their business in these challenging times.