bto solicitors - Corporate & Commercial Business Lawyers Glasgow Edinburgh Scotland

  • "really fights your corner..."
    "really fights your corner..." Chambers UK
  • "Consistently high-quality work and client-friendly approach."
    "Consistently high-quality work and client-friendly approach." Chambers UK

Furlough scheme – some clarity at last?

14 April 2020

It is clear that many of our employer clients have questions about the government’s furlough scheme which are not being answered by the government.

Problems are created by the fact that there is still no furlough legislation, and employers have to rely on guidance issued by the government. This guidance unfortunately tends to use language quite colloquially (terms such as “laid off”, “employee” etc being used in a non-technical sense) and has been updated on several occasions, often contradicting the previous advice.

The latest guidance has now been made available and answers one of the most pressing questions from employers:

Can we place an employee on furlough who is “shielding” even if they would not otherwise have been at risk of redundancy or lay off?

Many employers have staff who are “shielding” – they are in a highly vulnerable category and have been instructed to stay at home for at least 12 weeks. Other staff may be in a less vulnerable category but still strongly encouraged to practice social distancing and not go to work if that can be avoided. They are not therefore attending work and if they cannot work from home, what should they be paid?

They are not due contractual sick pay as they are not sick. Recent amendments to the SSP Regulations have made clear they are not deemed to be entitled to SSP either (as would be the case if they were self-isolating for 7 / 14 days). Can they be placed on furlough and receive 80% of salary?

Initial guidance stated that employees who were shielding could be placed on furlough, but we advised employers to be cautious about this. The whole purpose of the furlough scheme (as stated) was to protect employees who would otherwise have been laid off/made redundant, and the guidance did NOT say that employers can furlough staff who are shielding even if there was work for them to do and they would not be at risk of lay off/redundancy.

Sure enough, the next version of the guidance stated that staff who were shielding could be furloughed but only if they would otherwise have been made redundant.

Again, though, this did not seem right, as the guidance also addressed staff who had caring responsibilities (looking after children) and stated that they could be furloughed, with no restriction stated as to being at risk of redundancy otherwise. This was a significant inconsistency, with vulnerable staff who were shielding being worse off that those with childcare responsibility and, given the shielding staff are not due SSP, with no obvious source of income.

Further clarification was expected and indeed has now arrived – the latest version of the guidance states that shielding staff can be furloughed and makes no mention of the requirement that they would otherwise have been made redundant – these words have been removed. Furlough can also apply to those who are staying home because they live with someone who is shielding – potentially they have decided they should not attend work due to the risk of bringing infection home.

It seems likely that this will also apply to those in the less vulnerable category who have not received the NHS letter but are still in a vulnerable group.

While nothing appears to ever be set in stone it seems that this change has been made deliberately to address the inconsistency that had arisen, and employers can probably be fairly comfortable about furloughing staff who cannot work due to the coronavirus pandemic (assuming the reason for absence is in some way attributable to Covid-19), even if they would not otherwise have been at risk of redundancy/ lay off.

Additional clarifications

The latest guidance addresses a number of additional issues:

  • Confirmation that employers who make pension contributions above the mandatory auto enrolment employer levels cannot reclaim these extra payments under the scheme. Employers may wish to ask employees to agree that pension contributions will reduce for the furlough period
  • Similarly, employers who top up the 80% furlough payments to 100% of salary cannot seek to recover employer NICs on that additional 20% (as they can with the 80%).
  • Where employees have entered into salary sacrifice arrangements, it is the lower reduced salary which is the relevant salary for furlough pay calculations. However it may be permissible for employees to cancel these salary sacrifice arrangements
  • It is expressly stated that an employee can take up work for another employer without affecting entitlement to furlough pay. However if this was prohibited by the contract of employment, or the employer’s consent was required, the usual contractual terms would apply. But if the employee does not propose to work for a competitor it is difficult to see what objection an employer could reasonably have.
  • Employees who are on long term sick can be furloughed, but cannot receive SSP and furlough pay for the same period – they are either on sick leave or furlough leave, not both at the same time.
  • Where a furloughed employee becomes sick it is up to employers to decide whether to move onto SSP or to keep them on furlough
  • The HMRC portal is expected to go live on 20 April. Expect teething problems. 

Remaining questions

A number of issues would benefit from further clarification:

  • To what extent will HMRC insist on the requirement that the employer’s business be severely affected by coronavirus, to trigger eligibility under the scheme? The latest guidance states that the scheme “is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.” Certainly the guidance suggests that employees who are absent due to childcare/shielding and who cannot work from home, can be furloughed, but it appears that furlough cannot be used in cases which are entirely unrelated to Covid-19.
  • The guidance states that where an employer receives public funding for staff costs, and that funding will continue, then it would not be expected that staff will be furloughed. But what about the case where the employer will (due to illness/shielding etc) incur additional staff costs which will not be covered by funding? Can those extra costs be addressed by furloughing staff?
  • The vexed question of holidays. It seems fairly clear that bank holidays can still be taken during furlough and must be paid at 100% (not 80%) of salary. Potentially, different considerations apply to other periods of annual leave. Could it be argued to be unreasonable to require staff to use up holidays when they are not working anyway? If they do take holidays, will HMRC pay 80% of that? Will the period of annual leave interrupt furlough (which must be at least 3 weeks)? These questions remain unknown
  • Those on maternity leave and other such leave – the guidance states that employers can claim through the scheme for “enhanced” maternity pay (contractual pay over and above SMP). What does this mean? Should the employee be furloughed? Will HMRC pay 80% of that “enhancement”? Can someone be on maternity leave and furlough leave at the same time?
  • We are told that company directors can, if appropriate, be furloughed, and although they are not allowed to work for the company, they can do what is necessary to fulfil their statutory duties as a director. The guidance states they must “do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.” What does this mean? What sorts of actions are consistent with carrying out statutory duties rather than providing services to the company?

Employment law

Caroline Carr, Partner: E: / T: 0141 225 5263
Laura Salmond, Partner: E: / T: 0141 225 5313
Jacqueline McCluskey, Partner: E: / T: 0131 222 2936
Douglas Strang, Senior Associate: E: / T: 0141 225 5271

Employment _team _photo _2020-v2


“The level of service has always been excellent, with properly experienced solicitors dealing with appropriate cases" Legal 500

Contact BTO


  • 48 St. Vincent Street
  • Glasgow
  • G2 5HS
  • T:+44 (0)141 221 8012
  • F:+44 (0)141 221 7803


  • One Edinburgh Quay
  • Edinburgh
  • EH3 9QG
  • T:+44 (0)131 222 2939
  • F:+44 (0)131 222 2949