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The Coronavirus Job Retention Scheme

Articles | Thu 9th Apr, 2020

Under the Coronavirus Job Retention Scheme the UK government has agreed to pay 80% (up to a maximum of £2,500) of furloughed employees’ salaries for an initial three month period from 1 March 2020. The scheme operates on the following basis:

  • In order to qualify, the employee must have been on the employer’s PAYE system on or before 28 February 2020.
  • The scheme covers some workers beyond the traditional full-time employee category, so long as they are paid via PAYE.
  • The employee cannot undertake work for the employer while furloughed.
  • The employee may in some circumstances undertake work elsewhere, for a different employer, while furloughed.
  • The employer may choose to pay the remainder of the employee’s salary not covered by the grant, but is not under any obligation to do so.

It is the employer that must apply to the government for the grant to cover the 80% salary.

No change to employment rights

Employers must be wary that it is unlikely they can unilaterally place employees on furlough – the current guidance makes clear that this should be done by agreement between employer and employee. There is no impact on the law of unfair dismissal, redundancy, or discrimination. The employer should also be open to discussions with a trade union representative where applicable.

Discrimination considerations

Where an employer has to choose which employees to furlough, they will need to think carefully about their criteria for doing so. Where such decisions are based on the number of hours employees work, for example, they will need to consider whether their actions will constitute indirect sex discrimination. Disability discrimination and matters of reasonable adjustments will need to be thought through, as employers’ obligations in this regard will continue to apply despite the pandemic.

‘Holidays’ or Annual Leave

Many employees will have booked annual leave in advance of the pandemic and will not now be able to enjoy their leave as planned. As such, they may wish to cancel their leave so as to use it later once general travel restrictions have been lifted. Conversely, employers may wish to avoid the disruption of all their employees taking holiday once the pandemic is over. It must be said that there is currently uncertainty as to whether employees can be required to take their holiday during the present lockdown.

ACAS has published guidance on the issue (although the guidance is not law) which acknowledges an employer’s right to tell workers when to take annual leave under Reg. 15 of the Working Time Regulations 1998, and suggests that a worker will not be able to take holiday where they have been temporarily sent home as they have been put on furlough. That guidance is questionable in that the object of the WTR 1998 is to ensure that employees receive adequate rest, rather than to allow them to travel to holiday destinations (note the distinction between ‘annual leave’ and ‘holiday’). Sitting on a sofa and watching Netflix, whilst not the platonic ideal of a holiday, does constitute rest from work (see the Supreme Court’s discussion of ‘rest’ in Russell v Transocean [2011] UKSC 57). Conversely, Employment Tribunals will likely have considerable sympathy with employees who haven’t found the present lockdown (which former Supreme Court member Lord Sumption has described as “house imprisonment”) to be conducive to rest and recuperation. The safest option for employers would accordingly be to avoid requiring employees to take holiday at present, where feasible.

The government has promised to relax the rules on carrying over holiday entitlement and will do so by amending the WTR 1998 so that where at the end of the year it has not been reasonably practicable for a worker to take some of all of their leave as a result of the pandemic, the worker will be allowed to carry over up to 4 weeks’ holiday.

The government’s guidance on the Job Retention Scheme (discussed above) is silent on the issue of holiday, so it is to be presumed that as the scheme does not alter existing general employment rights and obligations, holiday entitlement will continue to accrue whilst the contract of employment continues.

Sick pay and furlough

Employees who are on sickness absence and entitled to Statutory Sick Pay are not eligible to be furloughed, but can be furloughed as soon as they are no longer receiving SSP.


This is a difficult time for employers and employees alike, and there is inevitable uncertainty given the unprecedented nature of the pandemic (at least in the context of modern employment law). The government has done its best to offer general guidance, but where individual employment situations raise difficult or uncertain issues, 1 Chancery Lane’s employment team is happy to advise on best practice and procedure.

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