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.
Overview of the Furlough agreement letter to employees
When should I use a furlough letter to employees?
Use this furlough letter to employees:
- 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'
What’s included in a furlough letter to employees?
This furlough letter to employees covers:
- the reason for wanting to change the employee's status to 'furloughed worker'
- 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
- methods for communication
- reassurance for the employee that the measure is temporary
What’s a furlough letter to employees?
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.
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 they they have been placed of furlough leave for a minimum of 5 years.
For further information read Furlough, workforce reduction and managing employees.
Do I need a furlough letter to employees?
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.
Do I need to keep a copy of the furlough letter to employees?
Yes. Employers need to keep a copy of this written communication for five years.
Can I defer employee salary payments until I receive reimbursement from HMRC?
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.
What are the eligibility requirements for the Coronavirus Job Retention Scheme?
All UK businesses are eligible with employees on a PAYE system.
How do I access the Coronavirus Job Retention Scheme?
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.
Are furloughed workers still employed?
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.
Can employees continue to work once they have been furloughed?
No, the Government has instructed workers who are furloughed not to work.
Do I need to cover the other 20% of the employee's salary?
You don't have to cover the other 20% of the employee's salary. Until the end of July 2020 the Government will cover 80% of furloughed employee's pay, up to £2,500 per month.
Between August and October 2020, the costs will be shared between the Scheme and participating employers. These costs will be split in the following ways:
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from August 2020, employers will be asked to pay National Insurance and pension contributions
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from September 2020, the Government will cover 70% of wages (up to £2,187.50 per month) and employers will be to make a 10% contribution to the furlough pay, in addition to National Insurance and pension contributions
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from October 2020 the Government will cover 60% of wages (up to £1,875 per month) 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.
Do I need the employee's permission to furlough them?
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.
Further advice
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.