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BUSINESSES can start to claim government cash to keep staff on the payroll from today.
The portal to register furloughed workers is now open meaning millions of workers will have 80 per cent of workers’ wages, up to £2,500 a month, paid for by the state.
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The scheme is part of the Chancellor’s Coronavirus Jobs Retention Scheme, announced last month shortly after Prime Minister Boris Johnson ordered all non-essential shops, pubs and theatres to close.
This is to stop the spread of COVID-19 to ease the pressure on the NHS.
The Treasury says that the system can process up to 450,000 applications an hour and that employers should receive the cash within six working days.
Chancellor Rishi Sunak said: “We promised support would be available by the end of April – today, we deliver our promise.”
To register staff as furloughed, employers must log on to the Government Gateway system here. You’ll need your user ID and password.
But despite the rescue package, many firms are struggling to stay afloat during the lockdown, even though they’re still allowed to operate.
Here, we take you through the key questions you may have about being furloughed from when you’ll be paid to whether you’re allowed to work a second job while on the scheme.
1. What does furlough mean?
The aim of the government’s jobs retention scheme is to save one million workers from becoming unemployed due to the lockdown.
Under the scheme, the government will pay 80 per cent – up to £2,500 a month – of wages of an employee who can’t work because of the impact of coronavirus.
Workers will be kept on the payroll rather than being laid off.
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The government will pay the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on top.
The scheme has been extended to run until the end of June and can be backdated to March 1 2020.
It’s available to all employees that started a PAYE payroll scheme on or before March 1, 2020.
If you’re between jobs, have started at a new place of work or were made redundant after this date then you can ask your former employer to rehire you to be eligible for the scheme.
Employers can choose to top up furloughed workers’ salaries by the remaining 20 per cent but they don’t have to.
Firms who want to access the scheme will need to speak to their employees before putting them on furlough.
While on furlough, staff should not undertake any work for their employer during the scheme.
2. When will the money be paid?
The government pays your wages through a grant to your employers.
Although the furlough scheme can be backdated to March 1, the portal that your employer will use to register your furloughed status will not be up and running until the end of April.
Employers can choose to pay you 80 per cent of your salary on time like you normally would and then claim it back when the portal opens (today, April 20), but they don’t have to.
If your employer can’t afford to pay you now or is refusing to then you will have to wait until your employer can register you.
Households who are struggling with the sudden drop in income may be able to get help through the state’s welfare system.
You can find out more information on Universal Credit here, including how to apply, when to apply and how much help you can get.
You can also ask your bank for a three month mortgage holiday, or breathing space from your credit card or loan provider if you can’t make the repayments due to coronavirus.
Another alternative to consider is applying for one of the 70,000 new jobs that have been created because of the impact of COVID-19.
3. How does furlough affect annual leave?
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.
Many employers adopt a “use it or lose it” policy and won’t let staff carry it over.
They also have a legal obligation to make sure employees take their statutory entitlement in any one year or face a financial penalty.
But the new regulations override this to allow key workers to continue working in the face of the coronavirus lockdown without losing their annual leave.
It also eases the pressure on key businesses who could be left short-staffed during the fight against COVID-19, such as in the food and healthcare industries.
Bosses must give staff the opportunity to take their annual leave at a later date though, and can’t replace it with payment in lieu unless the worker is leaving employment.
4. 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.
Who can be furloughed?
ANY UK employer can apply for the furlough scheme, including business, charities, recruitment agencies and public authorities.
Employers as varied as easyJet and Premier League clubs Newcastle and Tottenham have already furloughed some of their workers.
However the government does not envisage making significant payouts to public sector employees as they believe most will continue offering essential services.
Where employers are receiving public funding for staff costs, they will be expected to continue using these funds to pay staff rather than applying for the furlough scheme.
If you are working at reduced hours and pay, you will not be eligible for furlough and it will be up to your employer to pay you as normal.
You must have created and started a PAYE payroll scheme on or before March 1, 2020 and have a UK bank account.
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.
5. Can you work elsewhere if you’ve been furloughed?
The government hasn’t specified that you can’t take on another job while on furlough.
But you should speak to your employer first as you are technically still working for them.
Some contracts may prohibit employees from taking up other work but it maybe subject to negotiation.
You should also be aware that earning a second salary may affect the amount of tax that you pay which will have an impact on your take home pay.
6. Can I do volunteer work or training while I am on furlough?
A furloughed worker can take part in volunteer work or training provided it does not generate revenue for their employer.
If a furloughed worker is required to complete, for example, an online training course then their employer will be required to pay them for the hours spent training.
But you can sign up to the army of thousands of NHS volunteers to help the health service with tasks such as delivering medicines from pharmacies, driving patients to appointments and making regular phone calls to check on people isolating at home.
7. Can I be furloughed if I am on maternity leave?
Employees on the government-mandated 39 weeks of Statutory Maternity Pay (SMP) will still have to be paid by their employer.
This covers six weeks paid at 90 per cent of weekly earnings, followed by £148.68 or 90 per cent 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.
8. What about if I am on sick leave or unpaid leave?
Any sick days you take must still be covered by your employer.
But, if you are restricted from working by the government coronavirus restrictions then they will be paid for like normal under the furlough scheme.
9. Can I be put on furlough if I’m between jobs?
If you’ve recently left one job and started, or you’re about to start, a new one you can still be put onto the scheme.
But in order to get furlough, the company who you were working for on February 28 will need to be the one that rolls you onto it.
That means if you’re currently not on a payroll at all, or you’ve already been hired by a new employer, then you’ll need to ask the old company to rehire you.
Unfortunately, companies can’t be forced to rehire you so it isn’t an option for everyone.
10. Can I still be made redundant if I’m on furlough?
Even though furlough is designed to keep workers employed, unfortunately it doesn’t protect you from redundancy.
But it doesn’t affect your redundancy pay rights if you are let go from your job.
Your employer should still carry out a fair redundancy process.
If you’ve been working somewhere for at least two years, you will be entitled to be consulted on the redundancy lay-off first and to receive a statutory redundancy payment.
How much you’re entitled to depends on your age and length of service, although this is capped at 20 years. You’ll get:
- Half a week’s pay for each full year you were under 22,
- One week’s pay for each full year you were 22 or older, but under 41,
- One and half week’s pay for each full year you were 41 or older.
There should be a period of collective consultation as well as time for individual ones if your employer wants to make 20 or more employees redundant within 90 days or each other.
You are also entitled to appeal the decision by claiming unfair dismissal within three months of being let go.
11. Do you still have to pay income tax and NICs?
The main point of furlough is to make sure that staff aren’t laid off if a business sees a significant drop or zero revenue during the crisis, so it’s treated like a normal pay check.
This means you will have to pay income tax and national insurance contributions on the amount that you’re paid.
If your company chooses not to top up your salary so your income drops to 80 per cent, then the amount of income tax you pay will also decrease proportionately.
“If you have been furloughed your pay will be subject to the usual income tax and national insurance,” explained Maree Firmin, Director of accountancy firm Firmin and Associates Ltd.
“Usually, for salaried workers paid through PAYE, your personal allowance and tax thresholds are divided by 12 which means your take home pay during the tax year is the same each month, providing your circumstances, like your tax code or benefits in kind, don’t change.
“Therefore, if your furlough income is less than your normal monthly salary you would expect to pay less tax.”
12. What about my pension?
The government grants will also cover an employer’s auto-enrolment pension contributions so staff don’t miss out.
The state will pay minimum contributions of 3 per cent based on the furloughed salary, as long as you continue to pay the minimum 5 per cent.
13. Can my employer “rotate” members of staff on furlough?
Employers can chose to rotate which staff members are put on the furlough scheme.
This gives staff equal opportunities to earn 100 per cent of their salary at alternating times.
But you must be furloughed for a minimum of three weeks and employers must decide who goes on and is take off the furlough scheme based on business reasons and not discriminatory decisions.
Staff will also need to agreed to being rolled onto the scheme.
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