Article updated 30th March 2021
First published 31st October 2020

Template letter for putting an employee on full furlough
Template letter for returning an employee from furlough leave

Extended Furlough Scheme latest

Extended Furlough Scheme Q&As for Employers
How to put employees on furlough or move from furlough to flex furlough

Furlough has been extended for a third time. The CJRS furlough scheme will now run until September 2021 and the 80% of employee wages grant available to employers under the scheme remains in place until 30 June 2021. The criteria for the furlough scheme remains largely unchanged, with flexible furlough option remaining. This article includes the latest Government changes to furlough, the differences from the previous scheme and an FAQ answering the most common questions.

We have also included template letters for returning an employee from furlough leave – as well as for putting an employee on full furlough. Moving employees from full to flexible furlough is more involved, please get in touch with us for an example letter if you are looking to do this.

Extended CJRS furlough scheme latest:

  • In the spring budget on 3rd March 2021, the Chancellor announced that the extended furlough scheme is being extended again and will now run until 30 September 2021.
  • The Government have confirmed that they will continue to contribute 80% towards employee’s usual salaries for hours not worked, up to a maximum of £2,500 until 30th June 2021.
  • As previously, employers will continue to cover employer NI and pension contributions for hours not worked by their employee.
  • From 1st July 2021 the Government will begin reducing its contributions and employers will make up the difference,
    see chart below.
    Importantly though, employees must still receive 80% of their wages up to £2,500 for furlough to be valid.

Until 30th June 2021: the Government will continue to pay 80% of wages, up to a cap of £2,500
From 1st July 2021: the Government will pay 70% of wages up to a cap of £2,187.5. Employers will have to pay in addition 10% of wages to make up to the 80% total, up to a cap of £2,500
From 1 August 2021: the Government will pay 60% of wages up to a cap of £1,875. Employers will then pay an additional 20% to top up to the 80% total, up to the same cap.

Latest extension of furlough scheme until September 2021. Tapering of government support over July- September.
  • Guidance confirms that employers do not need to have used the furlough scheme previously and employers across the UK can claim, whether their businesses are open or closed.
  • For periods ending on or before 30th April 2021, employers can claim for employees who were on their PAYE payroll at 30th October 2020, which means an employer must have made a Real Time Information (RTI) submission to HMRC for that employee by 30th October 2020.
  • For periods starting or after 1 May 2021, employers can claim for employees who were on their PAYE payroll at 2nd March 2021 so long as they have made a PAYE RTI submission between 20th March 2020 and 2nd March 2021.
  • The scheme will close on 30 September 2021.

Please note that employers cannot use the CJRS grant to fund the (statutory or contractual) notice pay or redundancy pay of employees who are being made redundant.

  • It’s vital to keep clear and accurate records of employees’ working hours and days. Where the employee is on flexible furlough leave, the HMRC portal requires clear statements from employers about days/hours worked in the business and those unworked. HMRC are increasingly making checks on organisations claiming under the scheme. Requests include information on furlough calculations, salary pay slips and copies of employment contract amendments signed by employees.
  • From 26th January 2021 HMRC are also publishing details of all organisations making furlough claims, covering broadly the values of the claims. Only businesses claiming for periods between 1st December 2020 and 30th April 2021 will have details of their claims published.
  • From February 2021, furloughed workers are able to view claims made for them (on or after 1 December 2020) in their personal tax account. It’s hoped that making claims public will enable workers to highlight potentially fraudulent claims, especially from those still being made to work.

The announcement of the third national lockdown on 4th January 2021 led to a significant increase in the number of jobs furloughed. Official stats published by the Government in March revealed an increase of nearly a million in January 2021, from 3.8 million on 31 December 2020, to about 4.7 million by 31 January 2021. 68% of eligible jobs in accommodation and food services had been furloughed by this date, showing hospitality as the worst hit sector. Age was another factor, with workers aged 24 and under representing the highest proportion of those furloughed across different sectors.

Extended CJRS furlough scheme key reminders:

  • Available to all employers
  • All employees and workers whether full time, part-time, agency, flexible or zero-hours contracts are eligible for furlough, so long as they were on the HMRC RTI payroll submission by either 30th October 2020 or 2nd March 2021 as applicable.
  • Employees who are clinically extremely vulnerable, or are unable to work because they have caring responsibilities resulting from COVID-19 can also be furloughed.
  • Employers must submit any claims for the current month no later than 14th day of the following month. For example, claims for furlough days in March 2021 must be made by 14 April. You can claim before during or after you process payroll, so long as the claim is submitted by this deadline.
  • Keep any records that support the amount of CJRS grant you claim in case HMRC asks to check these. You can see or download previously submitted claims by logging onto your CJRS service on
  • Staff can be on full furlough (doing no work for the employer) or flex furlough (part working, part on furlough)
  • Claims can be for any time period, but the minimum claim period is for one full week or 7 calendar days.

HMRC Portal for claiming the CJRS grant:

Template letter for full furlough leave from November 2020 onwards

Download the template

Government guidance for the extended CJRS Scheme remains. Employers should still notify the employee that he/she is on furlough and send a letter showing changes to the employment contract. Employers are advised to gain the employee’s agreement to the changes and evidence of the agreement, by asking the employee to return a counter-signed copy of the letter, or at least an email confirming they understand and agree with the changes, when an employee goes onto furlough leave.

You can download this template letter which contains the changes to the employment contract and employees agreement. There are notes in the letter to help you complete it.

Just a reminder here, under employment law if the employer wants to change the 100% salary and benefits for the days/hours that an employee is working, then this will need to be by agreement with the employee which is why obtaining proof of agreement is important. 

When employers are making decisions in relation to the process, including deciding who to offer furlough to, or to return from furlough, equality and discrimination laws will apply in the usual way. We recommend regular communication with staff and giving sufficient notice for the return from furlough.

Remember to check employee and worker contracts to see what changes are needed to be agreed with staff either in the short term for either full or flexible furlough.

Paying employee taxes and pension contributions

Employees will still pay the taxes they normally pay out of their wages.

Employers must deduct and pay to HMRC income tax and employee National Insurance contributions on the full amount that they pay the employee, including any scheme grant and pay the employers pension contributions for the employee.

Employers must also pay the employer National Insurance contributions on the full amount that they pay the employee, including any scheme grant.

Employees will also still pay pension contributions (both employer and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension.

Employers must report these payments via a Full Payment Submission to HMRC on or before the pay date.

Strategic considerations : Furlough and redundancy

Employers need to remember that consultation may be needed with the employee representatives (who need to be elected in advance) or trade union representatives if the employer’s proposals will lead to the risk of 20 or more people being dismissed (for redundancy). Please remember that changes proposed by the employer to more than 20 staff which, if unaccepted, would lead to dismissals (for redundancy), will still require this consultation exercise.  

If you are planning to make furloughed employees redundant whether they are on full-time furlough or flexible furlough, you need to be aware that the CJRS grant payment cannot be used to fund (1) the employee’s notice period payment (whether under the contract or the statutory accrual of 1 week for each year of service) and/or (2) the statutory redundancy payment (if the employee has worked 2 or more years).

Using furlough to prop up roles that are going to be made redundant

It is important to bear in mind that the intention of the furlough scheme was to assist when jobs were impacted by Coronavirus and the resulting lockdowns and restrictions. The 3rd Treasury Directive stated that there should be a connection between the need to furlough an employee and the consequences of Covid-19. It would potentially not be within the sprit of the scheme to use furlough to effectively prop up a role that was going to be redundant regardless of Covid-19. 

Template letter for return from furlough leave

Download the template

We have put together this template return from furlough leave letter that, following discussions with furloughed employees, you should customise and send to them, confirming their return to work.

If the employee is returning on their pre furlough terms, there is no need to gain agreement. If you plan to ask a furloughed employee to return to work part-time however, then the part time arrangements, and any changes in their working hours and / or salary & benefits should be set out in the letter. The Government advises employers to gain the employee’s agreement to the new changes to their furlough leave arrangements and, keep a record of the communications for 5 years. We agree – otherwise there is the risk of employment grievances and claims and the wasted management time and costs defending an Employment Tribunal claims. Agreement must be sought where salary, benefits, working hours or place of work are changing. 

Furlough scheme Q&As for employers

What notice period can I give for bringing employees on flexible furlough back to work?

A well drafted furlough agreement will set out the period of notice to be given to an employee to return from furlough or to change days from working to flex furlough (not working) and vice versa. However, employers need to be mindful of employee’s rights to be protected if the employee cannot at short notice return to work (either full or part time). For example, emergency unpaid leave for dependents.

How do I make a claim for furloughed staff under CJRS?

By now all employers will have registered for the scheme and have arrangements set up with accountants and payroll agents who are authorised to make claims.

HMRC has produced updated guidance for employers on how to calculate your claims, it explains different pay and grant reclaim scenarios.

Guidance for employees can be found on GOV.UK check if your employer can use the CJRS scheme.

Which businesses are covered?

The scheme will be open to all UK employers, including charities, recruitment agencies, and public authorities (who are not receiving direct support from the government) so long as they have 1) created and started at PAYE payroll scheme on or before 30 October 2020, and 2) have a UK bank account.

How to put employees on furlough leave?

The steps below are equally relevant when deciding on and bringing fully furloughed employees back to work part-time under flexible furlough.

Employers need to:

  • Decide which employees to designate as furloughed workers.
  • Notify those employees of the intended change.
    The HMRC guidance states that it is important to take legal advice on this because the changes will affect each worker’s contract of employment and need the workers’ agreement.
  • Consider whether you need to consult with employee representatives or trade unions.
    For example, where the employer intends to vary the contracts of 20 or more employees, and it intends to dismiss employees who do not consent to the change in their terms, for the purposes of the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA), those employees who do not consent to the change in their terms will be classed as dismissed by reason of redundancy.

    The employer will therefore have a duty to inform and consult appropriate employee representatives and notify the Secretary of State using form HR1.

    The HMRC guidance states that employers will need to follow this process before placing employees on furlough leave.

  • Agree the change with the furloughed employees.
    Most employment contracts will not permit an employer to reduce an employee’s pay, provide them with no work, and change their employment status without agreement – otherwise there is the risk of a constructive/unfair dismissal, wrongful dismissal/breach of contract claims and unlawful deductions of wages claims.

    Technically under the employment contracts each employee should be given the period of notice in their employment contract (e.g. one month for most employees or the number of weeks equivalent to the years of service if longer) before the change takes effect, or agreement reached with the employee.

    However, faced with the alternatives, which are likely to be unpaid leave, lay-off or redundancy, the majority of affected employees are likely to agree to be placed on furlough leave.

    When employers wish to bring a fully furloughed employee back to work part time under flexible furlough, they will also need to agree additional practicalities regarding:
    – whether the employee will work on a fixed part-time pattern, or
    – whether their hours are subject to flexibility at the employer’s discretion, and
    – the time frame for notifying the employee to come back into work part time in work .

    Again, the majority of affected employees are likely to agree to return to work part-time, but some may struggle with childcare/caring commitments or have concerns about returning to work due to high risk of serious infection/living with a vulnerable household member. Taking the time to discuss with the employee the difficulties, options and concerns is the single most effective route to a solution.

  • Confirm the employees’ new status in writing. Ideally, the employer should advise how long it expects furlough leave to continue, however this may be difficult in the current climate. Employers may wish to put employees on furlough leave for an initial period, subject to review.
  • Submit information to HMRC about the employees that have been furloughed and their earnings through the new online portal, (see above).
  •  Ensure that the employees do not carry out any further work for the employer (except training). The employee can still volunteer as e.g an NHS or care volunteer.

What wages should employers pay during the period of furlough leave?

  • Employers can check exactly the wages that they can recover through the scheme on the HMRC guidance, and can check out worked examples in the links.
  • During the period of furlough leave, the employer should pay the employee at least the lower of 80% of the employee’s salary or £2,500, until 30th June 2021 and the respective percentage of wages up to the caps outlined above from 1st July through to 30th September. In each case PAYE (Income Tax) and NI is deducted before the salary is paid to the employee.
  • The HMRC guidance states that employers can choose to top up wages to 100%, but are not obliged to do so.
  • For full-time and part-time salaried employees, the employee’s actual salary, before tax, as at 30 October, should be used to calculate the 80%. 
  • The employee’s wage will be subject to income tax and other deductions e.g NI and workplace pension contributions.
  • The HMRC guidance notes that fees, discretionary commission and bonuses should not be included. 
  • Where an employee’s pay varies, the employer will be able to claim for either:
    -the higher of the employee’s earnings in the same month the previous year, or
    -the employee’s average monthly earnings in the 2019/20 tax year. 
  • In the case of an employee who has been employed for less than a year, the employer will be able to claim for an average of the employee’s monthly earnings since he or she started work. 
  • The Guidance also covers the application of the National Minimum Wage (NMW) to furloughed employees.  It states that, since employees are only entitled to the NMW while doing work, furloughed employees, who are not working, must be paid at respective rates and caps even if, based on their usual working hours, this would be below the applicable rate of NMW. This article details the latest National Minimum and National Living wage rates from 6th April 2021. Be aware that from 1st April 2021, 23 and 24 yr olds are to be included in, and paid, the National Living Wage.
  • However, the Guidance goes on to state that if employees are required to, for example, complete online training courses while they are furloughed, then they must be paid at least the NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

What happens if an employee’s health has been affected by Covid-19?

Employees who are on sick leave should receive statutory sick pay but can be furloughed during this time. We therefore think that an employee on contractual sick pay could also be placed on furlough leave. However we think employees receiving any other statutory payment, such as statutory maternity pay, paternity pay, adoption pay cannot be also placed on furlough.

An employee who is currently on furlough leave may move to be on another statutory leave, e.g Maternity leave.

Employees who are self isolating in line with Public Health Guidance or at home looking after children can be placed in the Coronavirus Job Retention Scheme.

What should I say to employees and what should I ask them to sign?

It is still best to adopt the best HR and employment law practice of explaining to an employee the changes and writing to them to confirm they are on furlough leave / any new flexible furlough arrangements, and asking them to countersign the new agreement. Please contact us if you need help with any of your furlough agreements.

If the you are planning to reduce the salary and any benefits related to salary (eg pension) to the 80% level, then under employment law this is an unlawful deduction from wages for the 20% of salary and benefits, and could be constructive (unfair dismissal). This is why it is important to get the workers agreement.

It is important to maintain good communication with employees and be available to speak as needed. 

You should expect ongoing questions from your teams about furlough arrangements, returning from furlough leave, or going onto flexible furlough. We advise using these to produce your own Q&A to help them. Please contact us if you need a return from furlough leave letter.

Are employers obliged to top up the remaining 20%?

No, but employers can choose to do so.

What happens to pension, holiday and other benefits?

Each employer will have different arrangements, so explain the changes clearly to your staff. Employers will have to pay NICs and the workplace pension contribution. When paying their staff, employers will deduct the worker’s workplace pension contribution and pay the contributions into the relevant pension scheme as normal.

Employees will continue to accrue the basic 20 days and 8 public holidays (5.6 weeks) Working Time Regulations statutory holiday over the furlough leave period and any additional contractual holiday, and employers will need to pay this at 100% salary (because it is a benefit accrued when the employee was receiving full salary, calculated over the last 52 weeks average pay) even if employers are only planning to pay 80% salary.

Can a furloughed employee request to remain on furlough leave or switch to flexible furlough leave?

Yes, an employee can request, but it’s the employer’s decision. Discussion with the employee themselves to find what suits them and the business will of course smooth the path.

Potentially redundant employees do not have a right to require their employer to place them on furlough leave as an alternative to redundancy. However, it is hoped that many employers will continue to use the scheme instead of making redundancies and / or closing the business.

How do I choose which employees to put on furlough and which remain working?

Employers will make a commercial judgment about which critical business functions will need to carry on (e.g. Board or senior management oversight, IT support teams, finance teams, HR, legal, facilities management/security etc). Choosing who needs to be placed on furlough leave, to return on flexible furlough leave, or to return to work full time, may prove a challenging task for some employers. 

This is especially difficult if you intend to pay staff on furlough leave their full pay, while other staff are being asked to work as normal for their pay. Staff who were delivering services on-site are likely to be natural candidates for furlough leave.

The starting point is to consider business needs as stated above. Keep records of why that decision was made showing which roles were critical to the business functioning.  As the minimum period of furlough leave can now be as short as one week, there is more flexibility for employers to bring back staff from / place staff on furlough leave as necessary, depending on the demand in the business.

You can also keep staff on flexible furlough leave where they work part-time some days in the business.

The HMRC guidance states that equality and discrimination laws continue to apply to the selection process for employees to go on furlough leave. Take care to avoid direct or indirect discrimination in the selection process. Make contact if you need help or have queries on this.

Where an employer must select between staff doing identical business critical roles, the first step is to ask for volunteers to remain working, or use a random selection policy for large teams. 

Where possible, employers who have employees who are no longer needed to deliver a service on site (e.g restaurants, leisure facilities, bars) as the site is shut, have asked for volunteers to be placed into the Coronavirus Job Retention Scheme and when return to work is possible. They have received very positive response and large numbers of workers accepting the re-designation in order to preserve their employment. It is vital to find out an employee’s and family situation, e.g caring responsiblities, so you know if the employee can return or not and if so whether working from home or onsite is more appropriate.

For the functions which are critical for the business (referred to above) employers could consider having enough staff available if a team member should go sick or have access to temporary worker support from home where possible so that critical functions can continue as the business re-opens in a Covid-19 secure way.

What happens if the employer has furloughed 20 or more staff and is changing terms and conditions?

This template letter has been written for situations where less than 20 staff are being called back from furlough leave. (If you recalling more than 20 staff from furlough, and you are planning to change their terms of employment on return, then collective consultation may be required. Please get in touch in this case.

If there are more than 20 staff and the employer would have to consider redundancies if the employees do not accept the new contract changes on return from furlough leave e.g a reduction to 80% or less salary, then a collective consultation process will need to be undertaken.

The Guidance makes specific reference to these risks and the need to take overall legal advice.

What is the minimum time that an employee can be furloughed?

Furlough leave runs for a minimum of 7 days. Employees can cycle on and off the scheme while it lasts. This allows employers flexibility, so they can bring workers back from furlough leave and if necessary put them back onto flexible furlough leave.

Can an employee volunteer or do training work during furlough leave?

A furloughed employee can volunteer as long as he/she does not provide services or generate revenue for the organisation.

If an employee is required to complete online training courses whilst they are on furlough leave then they must be paid their 100% salary (which must be of course at least National Living Wage/National Minimum Wage) for the day/s spent training.

What happens to an employee who is on maternity leave, contractual adoption pay, maternity pay or shared parental pay?

The normal rules apply and they are entitled to claim the usual statutory pay or allowances.

For example an employee who qualifies for statutory maternity pay will still be eligible for 90% of their average weekly earnings in the first six weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is £151.20 a week from April 2020.

If the employer offers enhanced (earnings -related) contractual pay to women on maternity leave this is included as wage costs and can be claimed through CJRS.

The same principle applies to contractual adoption, paternity or shared parental pay or parental bereavement pay.

Can I still make employees redundant whilst they are on furlough or afterwards?

Yes, and your employees have their normal rights to redundancy protection and payments in this situation. The Government has confirmed that payments should be at the 100% salary level for statutory redundancy and the statutory notice period if that notice period applies instead of the notice period and salary in the employment agreement (as varied by any agreed flexible furlough arrangement).

Can I change an employee to be back to work after they have completed the minimum 7 days furlough leave?

Yes, employers can place employees on furlough leave more than once, and one period can follow straight after an existing furlough period. The scheme is open until the second national lockdown ends.

What happens when CJRS ends?

Employees that have been on furlough leave have the same rights as they did previously. Returning employees will still have their usual rights to statutory sick pay, maternity rights, other parental rights and rights against unfair dismissal and suffering discrimination. Please contact us if you need a return from furlough leave letter.

What happens if the business can no longer receive back all employees when their furlough leave ends?

Employers will need to make a decision, depending on the business situation at that time, whether all employees can return to their duties.

If the business is not in a situation to receive employees back when their period of furlough leave ends, it will be necessary to consider termination of employment through a fair and reasonable redundancy process.

Please contact us by email or phone, number below, if you need advice or you want to discuss what to do next. We are here to help.

The information set out in this article is correct at date of publication. The effect of coronavirus on businesses means things change fast, and so it is important to obtain legal advice to ensure you are properly protected.

Contact us

For more information or queries about issues discussed in this article, please contact by email.

To speak directly with or any other of The Legal Partners team of specialist business and HR lawyers based at our Richmond UK office, or our partner lawyers in Singapore or Guanzhou, please call +44 203 755 5288

This article explains the main legal issues and common situations to consider. It is not a substitute for legal advice. Please get in contact to discuss your particular issue or queries.

Contact us

For more information or queries about issues discussed in this article, please contact by email.

To speak directly with Richard or any other of The Legal Partners team of specialist business and HR lawyers based at our Richmond UK office, or our partner lawyers in Singapore or Guanzhou, please call +44 203 755 5288

This article explains the main legal issues and common situations to consider. It is not a substitute for legal advice. Please get in contact to discuss your particular issue or queries.