MAKE YOUR FREE Furlough agreement letter to employees

Update: The Coronavirus Job Retention Scheme came to an end on 30 September 2021. Staff can no longer be placed on furlough. The deadline for claims under the scheme was 14 October 2021, or 28 October 2021 for amendments. 

The information below should, therefore, be regarded as outlining the situation before 30 September 2021. This furlough agreement letter template should be regarded as appropriate for use before this date. 

This letter should be used where you are furloughing an employee for the first time.

Notify your employees of your intention to change their status to furloughed using this furlough letter to employees. In order to access the Government's Coronavirus Job Retention Scheme, employers will need to designate affected employees as ‘furloughed workers’ and notify them of this change. Changing the status of employees remains subject to existing employment law and may require the employee's permission.

A furlough letter to employees is a letter notifying employees of the employer's intention to change their employment status to a 'furloughed worker' in order to access the Government's Coronavirus Job Retention Scheme. You can use this letter to place an employee on full-time or part-time (also known as ‘flexible’) furlough

This letter is stage 1 in the furlough process. Ensure you have completed the Furlough leave confirmation letter after sending this letter. You must keep records of both the employee's agreement to be placed on furlough leave and confirmation that they have been placed of furlough, for a minimum of 5 years.

For further information, read Furlough, workforce reduction and managing employees.

Use this furlough agreement letter:

• when you have a downturn in business or a closure of business and can't afford to keep paying your staff
• when you want access the Government's Coronavirus Job Retention Scheme
• when you need to notify staff or get their permission to become designated as a 'furloughed worker'
• when you want to place staff on full-time or part-time (flexible) furlough

This furlough letter to employees covers:

• whether the employee will be placed on full-time or part-time furlough

• the days and times of work for part-time furlough

• the reason for wanting to furlough the employee
• whether you will top up the remaining 20% of the employee's salary
• whether you will only be applying for the Government's help for up to 80% of the salary
• the effective date when their status will be changed
• annual leave entitlement
• methods for communication
• reassurance for the employee that the measure is temporary

If your business has been affected by Covid-19 (Coronavirus), then you may want to furlough your staff instead of making them redundant. The Government intends to cover up to 80% of the employee's salary to help businesses. In order to access the scheme, the employer will need to notify the employee and get their permission to become furloughed and send the proof to HMRC that the employee has been furloughed.

Part-time or flexible furlough allows employees to be furloughed on a part-time basis. Employees will be paid their usual salary in full for the days they work. For the days they do not work (ie the days the employees are furloughed) they will be covered by the Scheme.

The amount of time an employee works each week can be varied over the month, with employers varying it week by week. This means that employers can furlough employees for any amount of time and on any pattern of work they agree on, while claiming support from the Scheme for the hours not worked by the employee.

Yes. Employers need to keep a copy of this written communication for five years.

Yes, you can defer payments of your employees’ salary until you have received reimbursement from HMRC under the Coronavirus Job Retention Scheme. You should speak to your employees about this and come to an agreement with them.

All UK businesses are eligible with employees on a PAYE system.

You will need to:

• designate affected employees as ‘furloughed workers’ and notify your employees of this change which you can use this letter for
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. The portal can be accessed here from the 20 April 2020.

Yes, employees who have been furloughed are still considered to be employed by their employer and the employee's continuity of employment will still run.

The Government has instructed workers who are fully furloughed not to work for their employer.

Those who are flexibly furloughed work on the days they are not furloughed for, for the days they are furloughed, they should not work.

You don't have to cover the other 20% of the employee's salary.

Between November 2020 and June 2021, the Government will cover 80% of furloughed employee's pay, up to £2,500 per month. Employers will need to pay National Insurance and pension contributions pension contributions. Between July and September the costs will be split in the following ways:

• from July 2021, the government will cover 70% of wages (up to a maximum of £2,187.50) and employers will be to make a 10% contribution to the furlough pay, in addition to National Insurance and pension contributions

• from August 2021 the government will cover 60% of wages (up to a maximum of £1,875) and employers will be to make a 20% contribution to the furlough pay, in addition to the National Insurance and pension contributions

Employers can voluntarily make up the rest of the salary. This letter allows you to decide whether you will make up the rest of the employee's salary.

The Government's guidance on support for businesses states that employers that wish to designate employees as 'furlough workers' must notify them of this change and the change in status may be subject to negotiation or contract.

Unless the employer has a contractual right to lay off workers which is usually rare in UK employment contracts, the employer will need the employee's agreement to be placed on furlough leave. Similarly, the employee's agreement is needed to make a reduction in pay. However, it is highly likely that employees will agree, if the only alternatives are redundancy or unpaid leave. It's important that if the employee agrees, you get this in writing or recorded in using this document.

Ask a lawyer for:

• advice if you're unsure of the process
• advice if the document doesn't meet your needs or cover what you want
• advice if the employee does not agree to be furloughed

This letter to furlough employees is governed by the laws of England and Wales.