Tax & admin · 2 April 2020

GUIDE: How to furlough staff


With nearly half of UK businesses expected to furlough most of their staff due to COVID-19, it’s essential that employers who haven’t done it yet understand how the process works.

The British Chamber of Commerce expects nearly 50% of firms to furlough most of their staff next week as they struggle to cope with the economic impact of the coronavirus crisis.

With many business owners keen to keep those that have helped drive their business forward so far, it’s no surprise that many UK firms are furloughing staff during the outbreak.

For business owners that have never done it before, it’s important to understand what furloughing staff means.

What is furlough?

Putting workers on furlough means that a business has been forced to temporarily send them home as there isn’t enough work for them to do. Usually, this is due to economic conditions affecting the business.

If a business owner wants to furlough workers during coronavirus, there is financial support available.

The Government has provided businesses with the ‘Coronavirus Job Retention Scheme, ‘ which is open to employers who use PAYE payroll and have a UK bank account.

The scheme has been open since February 28, 2020, and will be available for at least 3 months.


UK businesses with employees; including businesses, charities, recruitment agencies and governmental organisations are eligible for the scheme.

Employers can put employees, casual workers and those on agency and zero-hour contracts on furlough, including staff who are on sick leave or are self-isolating.

However, there are some staff that can’t be furloughed, such as employees who were on unpaid leave before Feb, 28 or those employed after this date.

If staff are operating on reduced hours or on reduced pay, they won’t be eligible for the scheme either.

Selecting staff to furlough

Employers must tell staff they are being furloughed, or they won’t be eligible for the scheme.

While staff are on furlough, employers must keep them on their payroll and ensure the furlough lasts for a minimum of 3 weeks. If a member of staff was made redundant on the day the scheme was introduced (Feb, 28) or after, the employer has the choice to re-hire them and put them on furlough.

Selecting employees for furlough must be done in a way that prevents any accusations of discrimination, as equality and discrimination laws apply to this process.

Furlough agreements should be made in writing and include the date when the furlough starts, how much the employee will be paid over the furlough period and how the employee should keep in contact with the business, as well as when the furlough period will be reviewed. This should all be kept on record.

There are terms that employers must adhere to if they want to use government assistance to furlough staff, these terms are explained below:

Terms and staff rights

Learn about paid and unpaid leave

Employers cannot make furloughed staff do to any work for or on behalf of the business. Furloughed employees are not allowed to provide any services for the business, nor do anything that will generate revenue for the business.

Furloughed staff have the same rights as they did before, this includes a right to Statutory Sick Pay, (SSP), maternity and paternity rights, a right to redundancy pay and the right to pursue an unfair dismissal claim.

If not already covered by a clause in an employee’s contract, it’s essential for employers to reach an agreement with selected employees about being furloughed.

If an agreement cannot be reached and there are over 20 staff affected by this issue, employers should speak to elected representatives in the business and consult on the issue if changes need to be made to contract terms.

How it works



Annie May is the Features Editor at Real Business and Business Advice. Following her graduation from LSE, she embarked upon a freelance career in current affairs journalism. Annie has written on subjects varying from African history and contemporary politics to community business and current affairs news in London. At Real Business and Business Advice, Annie is passionate about highlighting inclusive and diverse business disruptors and organisations for our evolving readership. Annie believes in fostering community inclusion and has volunteered for organisations such as Fairfield House, a UK based Rastafari centre and a senior citizen association for ethnic minority men and women.