Pay when on furlough
Pay during furlough could be less than usual, if agreed between the employer and employee or worker.
The employer may be able to get financial support from HMRC's Coronavirus Job Retention Scheme. Employers can use this scheme to claim a percentage of each furloughed employee or worker's usual wages.
Pay during furlough is taxable in the same way as someone's usual pay would be.
Flexible furlough must last for at least 7 days in a calendar month for an employer to make a claim.
Furlough scheme changes
The furlough scheme has been extended until 30 September 2021.
Employers will continue to pay furloughed staff 80% of their usual wages up to £2,500 per month – or more if that's been agreed with the employee or worker.
How much employers can claim
From 1 November 2020 to 30 June 2021, employers can claim 80% of wages, capped at £2,500 each month.
From 1 July 2021:
- the government will pay 70% of wages, capped at £2,187.50 each month
- the employer will need to pay 10% (up to £312.50)
From 1 August to 30 September 2021:
- the government will pay 60% of wages, capped at £1,875 each month
- the employer will need to pay 20% (up to £625)
Employers cannot include in their claim to HMRC any:
- employer contributions to the employee's pension
- employer National Insurance (NI) or tax contributions
Topping up wages to 100%
The employer should decide whether they'll top up employees' or workers' wages to 100% when they're on furlough, but they do not have to. If the employer decides not to top up the wages, they should explain why.
Redundancy pay and notice pay
When calculating statutory redundancy pay or statutory notice pay for staff on furlough, the employer must use the employee's full normal pay, not their reduced furlough rate.
Find out more about:
Minimum wage during furlough
If staff on furlough are paid 80% of their wages, this might mean they get less than the minimum wage. This is allowed as long as they're not working or doing work-related training.
If someone does work-related training while on furlough
The employer must top up their furlough pay for any hours spent in training if it amounts to less than the National Minimum Wage or the National Living Wage.