Ackroyd Legal

By Carlin Peton

Everything you Need to Know About Furlough as 9 Million People Join Scheme

A vast amount of employers from retail and hospitality to football clubs have put their employees on furlough – but what does furlough mean and how can this be used to protect you during the pandemic? Here is everything you need to know.

More than nine million employees will be furloughed through the government’s jobs retention scheme (JRS), new figures show. This is expected to cost the taxpayer more than £40billion – with everyone from EasyJet to Wetherspoons and Philip Green’s Arcadia calling on the government to help them during the covid-19 crisis.

What does Furlough Mean?

Employees can be put on furlough – a job retention scheme (JRS), where the government will pay 80% of the employees’ wages and the employer can choose whether to top up the remaining 20%. This has been introduced to help struggling companies’ pay their staff during the coronavirus crisis.

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

Who is Entitled to Furlough?

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. However, it is not available to those who are self-employed, therefore, if you’re a freelancer and work is drying up, you can apply for universal credit.

How Long is the Scheme Running for?

This scheme started on March 1, 2020 and is open to all UK employers until June 2020, although the Chancellor has stated that 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.

What Happens if I have Been Recently Made Redundant?

All businesses can access the scheme, whether the virus has negatively impacted them 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 28th February can be re-employed and placed on furlough instead. The grant will still cover their wages for this period so they won’t be left without an income.

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 20% – though this should only be temporary.

What if I Refuse to Accept a Pay Cut?

Many businesses are choosing this method because they don’t have the funds to pay their staff during the pandemic. For many, the only alternative would be to let go of employees, as they simply cannot afford to pay their wages.

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, and then they must inform HMRC through a new online portal. HMRC will pay your employer the grant to pay staff costs.

“Our Coronavirus Job Retention Scheme is protecting thousands of jobs up and down the UK – with the government covering 80% of the salary of furloughed workers.” – Treasury spokesman.

 

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. This means you will not be paid until then.

Alternatively, 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.

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 five days a week must receive 28 days or 5.6 weeks paid annual leave a year. Part-time staff is also entitled to 5.6 weeks of paid annual leave but this will be fewer than 28 days.

Can I be Furloughed if I Have More Than One Job?

If you are working for more than one employer then you can be furloughed for both your jobs. Consequently, if two employers furlough you, 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.

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.

“Firms can re-employ staff made redundant after 1 March and those who do not qualify will be able to access a range of other support – including an increase in the universal credit allowance, income tax deferrals, £1bn more support for renters and access to three-month mortgage holidays.” – Treasury spokesman.

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.

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.”

What Happens if I Started a Job after February 28th?

People who started a new job in March have been left confused and worried that they may not qualify for furlough because they started their job after February 28th. The Government says you can re-apply to your previous employer if your new boss cannot help; however this will mean quitting your job. Alternatively, you can apply for universal credit or a mortgage holiday to help boost your income between now and June.