The travel industry and businesses across the country have fallen on hard times as the Government first ordered people to avoid social venues like restaurants, pubs and theatres, then firming up its stance by ordering a nationwide lockdown. With many facing the prospect of losing their jobs, Rishi Sunak announced a series of emergency measures.
What does furlough mean?
The Government has pledged to cover 80 percent of salaries up to £2,500 per month, with all employers able to apply to HMRC to pay the wages of people who are furloughed.
This does not include fees, commission and bonuses, however.
An employee furlough is when bosses require their staff to take unpaid leaves of absence.
In other words, they’ll still technically be employed but won’t work or get paid.
The Gov.UK website states: “If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.
“To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
“You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.”
Furlough meaning: What does furlough mean? How do I claim my pay from the Government?
Furlough meaning: Shops have been forced to close amid the coronavirus pandemic putting jobs at risk
Under the Government’s Coronavirus Job Retention Scheme, all UK employers can access financial support to continue paying part of workers’ salaries who would have been laid off as a result of the coronavirus pandemic.
If your boss intends to use take advantage of the job retention scheme, they should talk to you about being classified as a furloughed worker.
Once considered a furloughed employee, you will remain on the payroll and not lose your job.
The Department for Business, Energy and Industrial Strategy says: “To qualify for this scheme, you should not undertake work for them while you are furloughed.
“This will allow your employer to claim a grant of up to 80 percent of your wage for all employment costs, up to a cap of £2,500 per month.
“You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.
“If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
“We intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.”
Furlough meaning: Boris Johnson imposed a nationwide lockdown meaning only certain types of shops and businesses can stay open
Who is eligible for furlough?
Furlough applies to everyone who is on PAYE. Employees hired after February 28 cannot be furloughed or claimed for in accordance with this scheme.
Employees can be on any type of contract, including:
- full-time employees
- part-time employees
- employees on agency contracts
The scheme also covers employees who were made redundant since February 28, if they are rehired by their employer.
Laura Kearsley, partner and solicitor specialising in employment law at East Midlands law firm Nelsons, said: “The scheme is backdated to March 1, 2020 and employers are urged by the government to take back anyone they had already dismissed and convert them to this leave instead.”
Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after February 28.
Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
Employees who are shielding in line with public health guidance can be placed on furlough.
If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.
A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
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Phil Crowe, Employment Law partner at Shoosmiths, said: “We are seeing a lot of businesses looking to go down the route of the Government’s Furlough Scheme (Coronavirus Job Retention Scheme), which will provide UK employers with support by paying 80% of the wages of staff who would have otherwise been laid off as a result of Coronavirus.
“While, the measure has been widely welcomed by employers, its success will rely on employees agreeing and embracing the rules set out by the new scheme.
“Employers and managers need to start anticipating possible job losses now and if they think they may need to use the scheme to help prevent redundancies, they need to start having these conversations with staff as soon as possible.
“Employees are understandably worried and the earlier these discussions can happen the easier it will be to reassure staff about the potential measures that can be put in place to protect them financially.
“The key is to have open, frank and honest communication with your team. Don’t make promises you can’t fulfil, but explain that the new programme should help businesses ride out the storm until the economy bounces back.
“Set out the situation and make it clear what the alternatives are – for example if affected staff don’t agree to be furloughed in the short term it could have a domino effect and lead to wider problems for the business, including whole teams being made redundant or even in the worst cases businesses going under.
“Now is the time for everyone to be working side by side. The Government’s new job retention scheme will only work if employers and employees work together and decide on a course of action which puts the business and its wider workforce first.”
Furlough meaning: All UK businesses are eligible and to access the scheme
How do I claim my pay from the Government?
All UK businesses are eligible and to access the scheme, but the changes to allow you to get the funds will have to be done by your employer.
First your employer will need to designate affected employees as furloughed workers.
They will then notify you of this change.
But changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
Employers then submit information to HMRC about the workers that have been furloughed and their earnings through a new online portal.
Unfortunately, the portal is not currently live – so employers will have to wait until then to submit.
What happens during the period of furlough leave?
Sarah Hayes at Paris Smith solicitors said: “The crucial point here is that the employee will not be able to undertake any work for their employer during the period in which they are on furlough.
For those who are employed, and show symptoms of COVID-19, your employer’s usual sick pay procedures should apply.
But if you are not showing symptoms yourself, and are self-isolating as a precaution, your pay will depend on certain factors.
For example, if you are able to work from home while self-isolating, your employer should continue to pay you your full salary.
But if you cannot work from home, the Government is asking businesses to support employees who are self-isolating. READ MORE…
“The aim of the scheme is to support workers who would otherwise be facing redundancy or unpaid layoff.
“This means that furloughed workers must stop working immediately.
“If an employer still wants an employee to perform certain aspects of their role or some of their duties, the scheme will not be suitable.”
What is the difference between a furloughed worker and a “laid off” worker?
Ms Hayes explained: “This is a good question and the terminology being used can be confusing. Many people assume that being “laid off” means that the employment has been terminated and the employee has lost their job permanently.
However, under UK employment law the term “lay off” actually indicates a temporary period of not working.
“This is generally unpaid (subject to the right to guarantee payments) and the employee remains employed throughout the period of lay off.
“In reality, lay off and being a “furloughed worker” appear to be the same concepts. In both cases the employee will not be undertaking any work for the employer for a period of time, but their employment will be continuing.
“The crucial difference is that, under the new government scheme a furloughed worker will remain paid during this period. Laid off workers are usually not paid.”
Other Government schemes for financial aid during the coronavirus pandemic include, among others, a delay in VAT and Income Tax payments.
The state is allowing small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.
A 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England is also available.
A grant of £10,000 for all business in receipt of small business rate relief or rural rate relief, and a £25,000 grant for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000.