Glossary · UK
What is Coronavirus Job Retention Scheme (Furlough)?
The UK government wage subsidy scheme (March 2020 to September 2021) that paid up to 80% of a furloughed employee's wages, up to GBP 2,500 a month, to keep them employed during the pandemic.
Full Definition
The Coronavirus Job Retention Scheme, universally known as furlough, was introduced by the UK government in March 2020 as an emergency response to the Covid-19 pandemic, allowing employers to place employees on temporary leave (furlough) while HMRC reimbursed a large share of their wages directly to the employer. At its most generous, the scheme covered 80% of an employee's usual wages up to a cap of GBP 2,500 a month, with employers required to pay employer National Insurance and minimum pension contributions on top; from July 2021 the government contribution tapered down to 70% and then 60% of wages as the scheme wound down, with employers topping up the difference to maintain the 80% floor for staff, before it closed on 30 September 2021. Although the scheme itself is now historical, it remains a widely searched term because it shaped statutory redundancy calculations, holiday pay accrual rules and average weekly earnings figures for employees who were furloughed at some point during 2020 or 2021, and because HMRC continued compliance checks and clawback of overclaimed grants for several years after the scheme ended. Furlough is sometimes confused with unpaid leave or a lay-off, but unlike those, a furloughed employee remained employed on their normal contract throughout, simply not working (or working reduced hours under "flexible furlough" from July 2020).