The purpose of the Job Retention Scheme is to help those qualifying employers whose operations have been severely affected by coronavirus (COVID-19).

Those employers who are unable to maintain their current workforce are able to furlough employees on a flexible basis from 1 July 2020 if desired, and apply for a grant under the Scheme. 

For some employers considering ongoing staffing requirements and financial planning, thoughts have turned to the prospect of furloughing staff over pre-booked summer holidays. Until recently, the Scheme's guidance offered no comment on whether this would be an acceptable practice.

The Government has now updated its employer guidance to specifically address this point. The updated guidance states "employees should not be placed on furlough for a period simply because they are on holiday for that period". 

What Do Employers Need to Consider?

Where staff are already furloughed and the intention is to continue their furlough leave over a pre-booked holiday period, we consider that this remains permitted under the Scheme. However, the updated guidance makes it clear that the Government would consider it to be contrary to the spirit of the Scheme to allow an individual to work as normal, only to then furlough them for the duration of a pre-booked holiday period. There is a risk HMRC may seek to claw back grants and/or take other enforcement action against employers who have furloughed staff solely for a holiday period in this way.

Originally published 10 July 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.