UK Government to Underwrite 80% of Suspended Employee Wages

The UK government has just announced sweeping fiscal measures to support businesses and employees during the COVID-19 pandemic.

In brief, the UK government will pay 80% of an employee’s wages if the employee is temporarily suspended without work due to COVID-19 (which the government is referring to as “furlough”), up to a maximum of £2,500 per month. The employer can choose to top-up the extra 20% in their own discretion. Employers are being encouraged to consider this instead of making redundancies if they are experiencing a business downturn. Current indications are that this will apply to any employees on the PAYE system.

As this has just been announced, we do not yet have any further details as to how this will work legally. One word of caution: in the UK, there is usually no automatic right to “furlough” or to suspend employees without pay, so before doing so it would be wise to take legal advice on the issue (of course, in the real world, if an employee is faced with losing their job or being suspended with 80% pay for a period of time, suspension at 80% pay will be the lesser of two evils).


Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.