Private furlough schemes

Furlough was originally introduced at the beginning of lockdown in March 2020 and has been extended multiple times. It is due to end in September 2021. Until the end of June 2021 the government contribution was 80%. From 1 July the government contribution has been reduced to 70% and employers have to pay 10% for hours not worked plus NICs and pension contributions. In August and September the government will pay 60% and employers 20% plus NICs and pension contributions. Some employers may choose to introduce their own private furlough schemes from September. If employees agree to a private furlough scheme, the agreement entered into should cover:

  • the hours employees will be working (if any) and the hours they will be furloughed
  • the length of term of the arrangement
  • the notice required to bring the arrangement to an end
  • if the employee is allowed to take on other paid work
  • any restrictions on working, for example for a competitor
  • the temporary nature of the arrangement and, if agreed, that the employee will go back to previous contractual terms, pay and hours when the variation ends
  • the employee’s agreement to the variation by signing a copy of the letter
  • what happens if government guidance changes and the agreement needs to be varied
  • terms involving payment as a percentage of normal pay
  • deductions for tax, national insurance and any pension contributions
  • if other aspects of the contract of employment will continue on the same terms as before entitlement to annual leave.

Crucially, employers must ensure that employees chosen for private furloughed are selected fairly and that there is no discrimination relating to any of the protected characteristics. Other options for employers after the end of the Coronavirus job retention scheme include redundancies, agreements over unpaid sabbaticals or other time off while remaining employed which still preserves continuity of employment. Also, by agreement, there could be reduced hours or working weeks, minimum-hours or zero-hours contracts, temporary or permanent reductions in working days for all employees, alternate week working patterns, reduced bonuses, recruitment freezes or salary reductions.