10 Things You Need to Know About the Furlough Scheme

Shop sign closed temporarily coronavirus

Furloughing can be a difficult concept for both employees and employers to grasp, which may lead to some people being reluctant to implement the government’s new Coronavirus Job Retention Scheme.

In truth, the new scheme is a valuable financial lifeline for both employees (who may otherwise be laid off) and employers (who would otherwise have to pay full wages or let their workers go).

Whether you’re a staff member or an employer, there are some things that you need to know about furloughing before making use of the scheme.

1. Furloughing basically means being put on stand-by

The Coronavirus Job Retention Scheme enables businesses to put employees on furlough, which essentially means that they are paid by the government, rather than their employer, and their job is on stand-by until further notice.

It can be backdated to the 1st of March and the employees going on furlough must have been on the company’s payroll on the 28th of February 2020.

2. Employees will be paid 80% of their wage

The government will pay furloughed staff 80% of their usual wages up to £2,500 a month.

The idea is that employees will return to work immediately after the Coronavirus crisis has come to an end, with the financial impact of COVID-19 being minimal for both the business and its staff.

3. Employers can top the furlough pay up

Under the government’s current scheme, employees are only eligible for 80% of their wages up to a maximum of £2,500 per month. But, if the employer wishes to, they can decide to top-up its employees’ payments to reach 100% of their usual salary.

This ultimately depends on the employer, their finances and how they have been impacted by the Coronavirus outbreak.

4. Furloughing can last between three weeks and three months

As things stand, furloughing can last as little as three weeks and as long as three months.

It’s important to note that, at this stage, the scheme could be extended, especially if the Coronavirus outbreak is still not under control by the time the three months has come to an end.

It will undoubtedly be under review consistently by government officials, so be sure to check their guidance to employees every so often if it applies to you.

Coronavirus furlough scheme update: The government's furlough scheme will now run until October, at least, with Mr Sunak confirming that employees will continue to earn 80% of their wages up to £2,500 per month.

5. You can be furloughed if you need to look after your children

Employees who are not able to work because they need to stay at home to take care of their children due to school closures are able to be furloughed.

It’s also worth noting that employees have the legal right to take time off work to support dependants during unexpected events, but it is not guaranteed that it will be paid. Depending on the situation, it is usually down to the employer and its policies.

6. Vulnerable people can be put on furlough

Businesses are able to protect their vulnerable and elderly employees by placing them on furlough to self-isolate (if they are not able to work from home).

Public Health guidelines mean that anyone who is considered high-risk should stay at home, so if they are unable to complete work from home (if their role relies on machinery, for example) then they can be furloughed.

7. Employers aren’t doing wrong by furloughing

It’s worth remembering that furloughing is a far better option for employees than redundancy or unpaid leave, and offers a useful helping hand to those who may have otherwise lost their job.

The government set up the scheme to ‘protect financial victims of Coronavirus’ and allow businesses to get back to work immediately once this is all over.

Martin Lewis’ MoneySavingExpert recently stated that, if only limited working hours are needed, then furloughing some staff and keeping others on full-time would be a more efficient solution than reducing all employees’ hours.

Furloughing is not the same as losing your job as an employee or laying someone off as an employer; it is simply putting someone’s role on stand-by until the pandemic comes to an end.

8. Previous employers can furlough employees that have left the company

If an employee left a workplace after the 28th of February (either due to redundancy or for a new job), they are able to be rehired and furloughed by their previous employer.

To be eligible, the employee must have been on the payroll on February 28th, and the reason for their lack of income now must be a result of the Coronavirus outbreak.

For example, if an employee was between jobs but their new employer retracted their job offer due to a lack of work during the COVID-19 crisis, their previous employer could rehire and furlough them to receive the government’s 80% grant.

9. The employer determines who goes on furlough

The employer determines which employees will be furloughed, will work from home or continue working as normal.

Not all employees need to be furloughed, particularly if they can work from the safety of their own home. This means that employers can choose to put some of their staff on furlough and ask some to continue working as they usually would, if it is possible and safe to do so.

10. Payments will be issued before the end of April

Employees on furlough will receive the government grant “before the end of April 2020”, according to government officials, but the payments will be backdated to the 1st of March.

Employers may offer to pay employees until then if they have cashflow problems, but it is not compulsory for them to do so.

Coronavirus updates and financial advice at Compare UK Quotes

The COVID-19 crisis has caused distress and uncertainty in all walks of life and for all people, including employees, employers and self-employed workers.

It’s important that you do your research, understand your rights and make the most of the support that you are eligible to receive during this difficult time.

To help, we have created two complete guides to help people keep their finances as stable as possible amid the Coronavirus fallout, which you can read here:

You might also like:

advice money saving tips save money