Although it is not yet entirely clear how the government’s new coronavirus (COVID-19) retention scheme will work in practice, Thompsons will be producing a Q & A briefing to help unions and their members navigate their way through it. This briefing will be posted on the website shortly. 

The scheme applies to all employers who started a payroll scheme on 28 February 2020 and includes charities, recruitment agencies and public authorities. However, the government expects public sector employers to pay their staff in the usual way and correspondingly not furlough them.

Thompsons advises that:

  • Where possible, recognised unions should agree to the scheme in the form of a collective agreement so that the right to furlough employees is incorporated into individual contracts.
  • The collective agreement should contain agreed selection criteria. In some instances, it might make more sense to ask for volunteers in the first place depending on the specific circumstances.
  • Any selection criteria should not be discriminatory.
  • If there is no recognised trade union, employers should consult with their employees in order to vary their contracts so that it contains a right to furlough them and the basis upon which selection will ensue.
  • If the contract allows the employer to lay off an employee without pay, unions should negotiate with employers to encourage them to use the scheme instead. It is ultimately logical for them to do so.


There are, however, some shortcomings associated with the scheme:

  • It does not apply to employees who had already agreed to reduce their hours or pay in response to the crisis.
  • It does not apply to those who are off sick or self-isolating, although they can be furloughed once they are fit and no longer have to self-isolate (see Thompsons briefing on sick pay here).
  • It does not cover the self-employed (but see article on the self-employed in this LELR).
  • Government guidance suggests that it only applies to employees on PAYE irrespective of the type of contract they are on, so agency and zero hours employees are covered if on this arrangement, but not workers who are engaged through non-PAYE arrangements. This is the case even if a tribunal might find they are not genuinely self-employed. Earnings are calculated on the employee’s actual gross salary (before tax) as at 28 February 2020 but does not include fees, commission and bonuses. Where pay varies, earnings are based on the higher of either the same month’s earnings from the previous year or average monthly earnings from the 2019-20 tax year. Where an employee has been employed for less than a year the average monthly earnings are used.
  • The scheme does not apply to anyone employed after 28 February 2020.
  • The scheme covers those who were dismissed for redundancy after 28 February 2020 provided they are re-employed by their employer in the period in which the scheme runs.


Given that the scheme is not compulsory, employers may still choose to make employees redundant. If unions are struggling to persuade employers to utilise the scheme as a result of urgent cash flow problems, they should remind businesses that a Coronavirus Business Interruption Loan may be available to them.

If the employer insists on going ahead with making employees redundant, the usual rules apply and consultation should ensue as required by statute.

Articles shared by Thompsons relating to coronavirus (COVID-19) are correct on the time of publication. You should check the government's guidelines for the latest information and advice at