We only use cookies for website functionality and security.


Find all the latest news, stories, insights and tips from Paragon Bank.

Guidance for businesses on furloughing staff 


‘Furloughing’ isn’t a new term, it has been around since as early as 1908 as a military term for soldiers who left their duty for a period of time. It has now been at the forefront of business news due to Covid-19. The term is currently used by the Government as part of its Coronavirus Job Retention Scheme, as businesses can currently place their staff on temporary leave whilst the government pays 80% of their salaries. 

What does furloughing mean for businesses? 

  • Employers who cannot maintain their current workforce due to the impact of coronavirus (COVID-19), can furlough employees
  • The government will pay for 80% of staff salaries, up to £2,500 a month per employee
  • To be eligible for the grant, employers should discuss the decision with employees impacted and must then confirm in writing to them that they have been furloughed.
  • Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020, who are enrolled on PAYE online and who have a UK bank account
  • The minimum furlough period is three weeks. The scheme is set to run until the end of June (unless extended by the government)
  • Employers can “unfurlough” and “refurlough” staff members but each separate instance must be for a minimum of 3 weeks
  • If contractually allowed, employees are permitted to work for another employer whilst on furlough 

How do you claim?

The new HMRC online portal became available for business to begin applying for the grant in mid-April. 

It’s important to note that you can only claims can only be made once every 3 weeks and it is up to the employer to calculate how much of a grant is needed. Records must be kept as this could be audited at a future date. 

What about employee holiday?

Furloughed employees continue to accrue leave as per their employment contract. The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below. 

Employees can take holiday whilst on furlough. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

Where can I get further information?

This is our understanding of how the scheme operates but you should visit the Government’s Coronavirus Job Retention Scheme for further information.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551