What happens to terms and conditions during furlough?

Apr 23, 2020 | Good Management

Because the whole concept of being on ‘furlough’ is brand new, many employers aren’t sure about how the terms and conditions of staff on furlough are affected.

It’s helpful to remember that furlough leave is not like other types of leave such as maternity leave or other family leave, where there is a legal framework, statutory entitlements and we have legislation and case law establishing what terms and conditions do and don’t apply.

Furlough is in fact two things – it is an arrangement between an employer and HMRC whereby HMRC will fund a proportion of wages under certain conditions, and in an employment law sense, it is simply a contractual agreement between the employer and the employee that for a period of time, no work will be carried out, and the employee will receive (usually) a reduced amount of pay. It is not a statutory leave entitlement.

Because it is only a contractual agreement, terms and conditions continue as normal, except where these are specifically varied by the agreement between employer and employee, which is usually just removal of work and reduction of pay. Everything else stays the same contractually, and everything else stays the same in terms of an employee’s statutory entitlements and an employer’s legal obligations.

So holiday continues to accrue as normal, and family leave rights, pension rights, sick pay rights, contractual benefits and everything else.

It is possible to vary terms and conditions by more than just removal of work and reduction of salary, and some employers are doing this. Options could include withdrawing contractual benefits if these are not affordable and as they cannot be reclaimed through furlough, and some employers are also considering taking the opportunity to add a lay off clause into the contract in anticipation of future use.

Remember that consent is needed for a change to terms and conditions, or at least full consultation and then only forcing through a change if there is a clear business need for doing so and every other option for achieving the business objective has been fully explored, a fair process used and notice given.

Although employees are agreeing to a variation for furlough purposes, this is not an opportunity to ‘sneak’ through other changes that aren’t strictly necessary. If you do for business reasons need to make other changes, you need to make sure you consult fully and do this lawfully and fairly in order to avoid problems later.


If you’d like some advice on terms and conditions during furlough or on safe ways to change conditions as a result of coronavirus, do get in touch.