ARC is acutely aware of the impact that COVID-19 is having on all businesses. Members with access to our legal helpline service can seek advice on issues such as furloughing, SSP, home working etc. Just email us on

Latest advice from ARC

Working with our legal partners Lawspeed, we have put together some advice. However see Lawspeed website for more comprehensive advice and download.

In the context of Covid-19, furlough means laid off due to termination of an assignment because of government restrictions relate to the pandemic. It does not apply to assignments that naturally came to an end, only to those ended prematurely.

What is the scheme?

This enables you to lay off and pay employees and agency workers up to a maximum amount whilst they are laid off, and recover 80% of payments made up to a limit of £2500 per month as a grant from the government. Payment is subject to the usual PAYE rules. The intention is that payment should help the workers through this difficult time and encourage retention of resource. For employees if the amount paid is lower than normal salary you will need an agreement with the employee. For agency workers not entitled to payment between assignments you should also ideally set up agreement to address the payment.

The scheme is intended to run until 31st October 2020, with adjustments as follows:

  • 1st July 2020 – scheme closed to most new entrants
  • 1st July 2020 – ‘flexible furlough’ permitted, employees and agency worker can undertake some work for their employer, with the level of grant claimable reduced in proportion to the hours worked as compared with usual working hours
  • 1st August 2020 – the grant will no longer include employers pension and  national insurance contributions
  • 1st September 2020 – the grant will reduce to 70%, with the additional 10% funded by the employer
  • 1st October 2020 – the grant will reduce to 60%, with the additional 20% funded by the employer

Can agency workers be placed on furlough?

Yes but subject to conditions. HM Revenue and Customs (HMRC) guidance on the Coronavirus Job Retention Scheme, published on 26 March 2020 and updated on the 4 April, confirms that agency workers paid through PAYE are eligible to be furloughed. Agency workers will usually be on the payroll of the agency or umbrella, rather than the organisation they have been working for. Therefore, it is the agency or umbrella which engages the agency worker that will put them on furlough. This can be done only if the agency worker has been laid off due to the coronavirus, is not doing any work for the agency or umbrella and was on the agency or umbrella’s payroll on 28 February 2020, or 19 March 2020.

As agency workers are not normally paid during periods of lay off, any payment should be subject to an additional agreement with the agency worker reflecting that work is not being done and specifying the payment amount. Read more here>>

Is there a minimum period of furlough?

Yes, you will only be entitled to receive a grant for workers who have been ‘furloughed’ for a minimum period of three weeks. There is currently no maximum amount of time that you can furlough workers for, although the scheme is due to end on 31st October 2020. You can back date ‘furloughing’ to any date from 1st March onwards if the furlough has already occurred. You should always check with the client that the assignment was ended because of Covid-19 restrictions before you furlough the agency worker.

Can agency workers work for anyone else whilst furloughed?

Yes, the current guidance indicates that whilst the individual cannot undertake any work for their “employer” during the period they are furloughed, the individual can work for third parties to the extent permitted by the contract. Most employment contracts will include restrictions on working for third parties, however in an agency worker contract such a restriction would fall foul of R.6 of the Conduct of Employment Agencies and Employment Businesses Regulations 2003, as threatening to subject a work seeker to detriment on the grounds of taking up alternative employment.  From 1st July 2020, an employer can bring back furloughed staff on a part time basis with the employer responsible for payment for the hours worked and the grant reduced in proportion.   However work cannot be undertaken for the employer for any hours in which the individual remains furloughed.

Am I obliged to furlough agency workers?

No. The job retention scheme is available for use by organisations, but is not mandatory. An employment business can decide not to use the scheme, or to use it to furlough only selected agency workers provided the selection process is non-discriminatory. Changes to the scheme with effect from 1st August 2020, will increase the costs for an employer or agency in furloughing staff.  For some this adjustment may mean that furlough is no longer commercially viable.

Can payment to an agency worker be deferred until the grant is received from government?

Unless the agency contract specifies otherwise, which in most cases it won’t, an agency worker who is not working and is not entitled by contract to any minimum level of work or payment. A separate agreement with the agency worker is therefore recommended

Will the grant cover the costs of employment as well as wages, for example, NICs and holiday pay?

The grant will cover the payment that is made to the individual (up to a maximum of the lower of 80% or £2500), and until 31st July 2020 the employers NICs and minimum employers pension contributions on these amounts.  From 1st August 2020, employers NICs and pension contributions will no longer be claimable and therefore be a costs to be met by the furloughing employer. Holiday pay is not included within the grant and so care has to be taken to extract any holiday pay included in the normal payment (a rolled up payment) In an employment context holiday will continue to accrue, however in relation to a PAYE agency worker, the position is less certain but there is an argument that the individual is not a worker during this period and therefore does not accrue holidays. Government guidance is silent as to this point.

How can we undertake Right to Work Checks whilst our offices are closed?

The Home Office has provided guidance to businesses on how to carry out Right to Work Checks during the current restrictions. Carrying out a Right to Work check continues to be a mandatory requirement for employers despite the Coronavirus pandemic. However, as of 30 March, the following temporary measures will now be permitted:

  • Checks can now be carried out via video call.
  • Job applicants and existing workers (for follow-up checks) can send scanned documents or a photo of documents for checks using email or a mobile app, rather than sending the original document.
  • Employers should use the Employer Checking Service if a prospective or existing employee cannot provide any List A or List B acceptable documents.

Is it true that DBS checks have been suspended?

No, but due to current measures that have been put in place, the government is aware that organisations are having difficulty following the DBS ID checking guidance. As a result temporary changes to ID checking guidelines came into effect from the 24th March. Read more here>>

Lawspeed assistance

These FAQs do not amount to legal advice and do not replace the need to take specific advice. You should not therefore rely upon it. We recommend you contact our legal advisers and sector specialists Lawspeed (email to for specific advice on coronavirus related agreements with agency workers and employees and other specific advice areas.

Government updates

In a rapidly changing environment we also advise members to keep up to date by visiting the government’s Guidance for Employers, employees and businesses website here>>

In addition, you can subscribe to the Department for Business, Energy and Industrial Strategy’s Coronavirus (COVID-19) Business Readiness Bulletin