Furlough – What you need to know

1. What does furlough mean?

The Government has introduced a new scheme called the Jobs Retention Scheme to help struggling companies pay their staff during the coronavirus crisis.

It’s part of wider plans to help keep the economy stable – as a rise in unemployment coupled with businesses going bust, can spark a recession.

Employers can apply to join the initiative, and, if successful, the Government will pay up to 80% of their wages for up to three months.

In short, if your work is forced to close (or work dries up) temporarily due to coronavirus, your boss can ask the Treasury for an 80% grant to help cover the salaries of those who have been furloughed.

This can be up to £2,500 a month, equivalent to the average UK salary of £30,000.

The employer can then top up the remaining 20% – though many have chosen not to.

2. How long is the scheme running for?

This scheme started on March 1, 2020 and is open to all UK employers until June this year – though the Chancellor has said it could be extended.

The minimum amount of time you can be furloughed for is three weeks. This can be broken up over the course of the next three months

3. Who is entitled to furlough pay?

This scheme is available to all employees that joined a PAYE scheme on or before February 28, 2020. It’s open to a variety of industries from charities, to airlines, shops and restaurants and it includes zero hour workers.

It’s not available to the self-employed. If you’re freelance and work is drying up, you should apply for universal credit instead.


4. What happens if I have been recently made redundant?

All businesses can access the scheme, whether the virus has severely impacted the company or not.

It’s also available to those on zero-hour or temporary contracts and those who have recently lost a new job.

The Government says workers who were made redundant prior to 28 February can be re-employed and placed on furlough instead.

The grant will still cover their wages for this period – meaning they won’t be left without an income.

5. Will my boss definitely cover the extra 20%?

No. This is at your employer’s discretion and an increasing number of firms are now saying they won’t fund the top-up.

This means employees could find their wages sliced by 10 to 20% – though the good news is that this should only be temporary.

6. What if I refuse to accept a pay cut?

Many business are choosing this method because they don’t have the money to pay their staff during this period.

For many, the only alternative would be to let go of workers as they simply cannot afford to pay them.

There is a  full guide on furlough and redundancy, here.

7. How do I claim furlough wages?

You don’t need to do anything. It’s your employer’s responsibility to apply for the scheme and ensure that 80% of your wages are paid to you.

Legally they must inform you that you’re being placed on furlough, then they must inform HMRC through a new online portal.

HMRC will pay your employer the grant to pay staff costs.

8. When will furlough staff be paid?

The portal your employer will use to register your furloughed status will not be up and running until the end of April.

As a result, you will not be paid until then.

In some cases, your employer can choose to pay you as normal – and then claim the money back from the Government at a later date.

However, this is at their discretion and subject to whether they can afford it.

If you’re unable to cover your bills in the meantime, the Government says you should apply for universal credit, which has been given a £1,000 boost due to coronavirus.

9. Will my annual leave be affected by furlough?

Employees who haven’t taken all of their statutory annual leave entitlement due to coronavirus will be able to carry over up to four weeks of unused leave over into the next two years of annual leave.

Full time employees working a five-day week must receive 28 days – or 5.6 weeks – paid annual leave a year.

Part-time staff are also entitled to 5.6 weeks of paid annual leave, but this will be fewer than 28 days.

For example, if you work three days a week then you are entitled to 16.8 days leave a year (3×5.6) because that’s how long your working week is.

10. Can I be furloughed if I have more than one job?

If you have more than one employer then you can be furloughed for both your jobs.

Consequently, if you are furloughed by two employers, you are eligible for government support amounting to up to £5,000 per month.

Each job is separate and the £2,500 cap applies to each employer specifically.

You can also continue working one job while being furloughed on another.

11. Can I work for another company if I’ve been furloughed?

Being on furlough means that legally, you are still employed. Accepting another job may therefore be a breach of your contract with your employer.

If you want to take on some temporary work, you should contact your boss or the HR department at work to check your contract. It may be open to negotiation.

12. Can I be furloughed if I am on maternity leave?

Employees on Statutory Maternity Pay (SMP) will still have to be paid by their employer.

This covers six weeks paid at 90% of weekly earnings, followed by £148.68 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks.

Anything your company pays you on top of this amount can be covered by the government furlough scheme up to £2,500 per month.

13. Can I still be made redundant if I’m on furlough?

Unfortunately, yes.

“The scheme is intended to keep people in employment,” Slater and Gordon employment lawyer, Danielle Parsons explains.

“However, there is nothing in current government guidance preventing employers from making staff redundant during any period of furlough. Employers should be aware HMRC can audit their claims.” However, it won’t affect your redundancy pay rights.

“If you are made redundant while on furlough then your rights to redundancy pay should remain unaffected.

“Your employer should still inform and consult with you about any redundancy of your role and should carry out a fair redundancy process.

“If you are an employee with over two complete continuous years of service then you may have a claim for unfair dismissal if your employment is terminated unfairly for an unfair reason and/or with no fair procedure. If this happens you must take action within three months.”

14. Will furlough affect my working tax credits?

Working Tax Credits will increase by £20, up to £86.67 a week for one year from April 6 to help struggling households during the pandemic.

“Due to the current Coronavirus crisis, HM Revenue & Customs has confirmed they will treat you as continuing to work your normal hours, meaning those before you were furloughed, for at least 8 weeks,” Jennie Brown, Tax Partner at Streets Chartered Accountants, explains.

“There will, therefore, be no change to your working tax credit entitlement during that period and we are waiting for further guidance to understand what would happen after 8 weeks.”

15. What happens if I started a job after February 28?

People who started jobs in March have been left worried that they may not qualify for furlough because they started their job after February 28.

The Government has now revised this to March 19th 2020 so any one employed upto that date will now qualify.

Very good news for many!

For employers looking for full details you can visit gov.uk here

(credit goes to The Mirror original article can be seen here)