Definition
A temporary leave of absence in which employees are retained on the payroll but are not required to work, or work reduced hours. The term became widely used during the COVID-19 pandemic when the UK government's Coronavirus Job Retention Scheme subsidised furloughed employees' wages.
UK Context
The Coronavirus Job Retention Scheme (CJRS) ran from March 2020 to September 2021, with the government paying up to 80% of furloughed employees' wages (capped at 2,500 pounds per month). While the CJRS has ended, the concept of furlough remains relevant in employment law. Employers can still furlough employees by agreement, but must fund it themselves. Any furlough arrangement requires the employee's consent unless the employment contract contains a lay-off clause.
Best Practices
- Obtain written agreement from employees before placing them on furlough
- Review employment contracts for lay-off or short-time working clauses before implementing furlough
- Continue pension contributions and other contractual benefits during furlough periods where required
Frequently Asked Questions
Can employers still furlough employees after the CJRS ended?
Employers can agree furlough arrangements with employees outside the CJRS, but must fund the wages themselves. This requires either a contractual right to lay off or the employee's agreement. Without agreement, imposing unpaid furlough could be a breach of contract.
Do furloughed employees accrue annual leave?
Yes, employees on furlough continue to accrue their statutory and contractual annual leave entitlement as normal. This was confirmed during the CJRS and applies to any furlough arrangement.