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Furlough – What does this mean for you?

With the uncertainty that is currently surrounding Covid-19, businesses having to close and workers concerned and worried what this means for their job, you have probably heard the word Furlough be used more often than usual and might wonder what it means for you. 

We have set out a few common questions below and a quick guide to what Furlough is and what it means.

What is Furlough and what does it mean? 

Furlough is essentially a leave of absence given to staff who may temporarily are not working for their employer but still remain on their books. Historically this has been done in cases were businesses may have a slow period and therefore furlough staff, this saves the business money during this short period and to help cut costs during a difficult time within a business without having the make staff redundant. 

Due to the impact of the coronavirus and the impact this has had on businesses the Government has introduced the Coronavirus Job Retention Scheme as a temporary measure to support businesses and employees during this difficult time.

The Job Retention Scheme allows businesses to furlough staff and claim 80% of wages back through a job retention portal, allowing businesses to Furlough staff with temporary leave and limit job losses as well as given some financial support to employees by paying 80% of their wages.  

Are you Eligible?

The Job Retention Scheme covers all employees who are paid via PAYE and have a UK bank account. All employees must have been active on the employers payroll on the 28th of February. 

Any employees who started employment after the 28th of February unfortunately will not be able to qualify for the job retention scheme. 

If you were made redundant after the 28th of February 2020 you may still be eligible for the scheme.

 Your employer can agree to re-employ you and place you on furlough instead. They’ll still be able to claim a grant to cover 80% of your monthly earnings, up to a monthly cap of £2,500.

Check the Government website to see if you are eligible or for further advice on what to do if you don’t qualify for the scheme, such as claiming universal credit.

How much will I Get? 

The Employer will be able to obtain a grant to cover 80% of your monthly earnings, up to a maximum of £2,500 per month. 

Employers will also be able to claim the cost of National insurance and Pension contributions which are paid by the employer up to a total of £300 per month. 

You will still need to pay tax and national insurance contributions and any other deductions necessary on the wages you receive even while on the grant.

Your employer can choose to top up your pay by 20% so you receive full pay however this is not compulsory and is down to the individual employer. 

If you are furloughed you are still covered by your usual employment rights that includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

How are your monthly earnings calculated?

If you’ve been employed (or engaged by an employment business in the case of agency workers) for a full year, employers will claim for the higher of either:

  • the amount you earned in the same month last year
  • an average of your monthly earnings from the last year

If you’ve been employed for less than a year, employers will claim for an average of your monthly earnings since you started work. The same arrangements apply if your monthly pay varies such as if you are on a zero-hour contract.

If you started work in February 2020, your employer will pro-rata your earnings from that month.

How long can I be on the scheme? 

As a furloughed employee you will need to be on the scheme for a minimum of 3 weeks up to a 3 month period, however this could be extended by the government. 

Can I still work for my employer if I am 7ofurloughed? 

No, you cannot work for your employer or carry out any work for them if they have out you on Furlough. 

You can keep in touch with colleagues, managers and HR to keep updated on regular updates but you should not be carrying out any duties. 

Don’t be tempted to log in and check your emails or give a client a quick call as this won’t help you or your employer and could result in your employer not being able to claim the grant on your behalf if you continue to do work them.

If you would like to find out more about being furloughed or what you may be able to claim to help you in these difficult and unchartered times then pleas take a look at the Government website for all the latest advice.