Everything You Need to Know About the Furlough Scheme
With more than a quarter of UK workers now furloughed, it is safe to say that this government scheme has played a vital part in the business world during this pandemic.
In this article, we will explain everything you need to know about the Furlough Scheme including statistics, FAQs and the most recent update.
A Guide to Furlough
What is the Government Furlough Scheme?
Due to the coronavirus outbreak, many employees’ jobs have been put at risk. The Government Furlough Scheme has therefore been created to help employers put staff on leave without having to make mass redundancies.
By paying up to 80% of individual employee salaries up to £2,500, the workers are able to go on leave whilst still remaining on the payroll. The scheme is backdated to 1st March and opened to applications on 20th April; it will be running until the end of October.
Fact & Figures
• £15bn of claims had been made by the end of May.
• £80bn is the expected cost of the Furlough Scheme by the end of October.
• 8.7 million workers have been furloughed since the start of the coronavirus crisis.
Frequently Asked Questions About Furlough
What options are there for self-employed individuals?
There are taxable government grants available which around 200,000 people have applied for. They make up 80% of average monthly profits but only if you have been self-employed since April 2019 and earn an average of less than £50,000 per tax year. Loans are also available for businesses to help survive the crisis and possible economic downfall.
What are the terms for Furlough?
Employees have to be on an employer’s PAYE payroll from at least the 19th March; this includes full-time, part-time, flexible, zero-hour and agency contracts. Furlough must last at least 3 weeks and you can be furloughed more than once; you can also be furloughed if you have been made redundant since 19th March.
How can my business apply for the Furlough Scheme?
Check eligibility by using the government’s online calculator. If employees are not paid set amounts monthly, returned from maternity leave or receive top-up pay, this will have to be calculated manually. The scheme doesn’t cover overtime and commission payments unless it’s built into an employee’s salary. Make a claim through the government’s website and it will take about 6 working days to process.
Is sick pay still applicable and are bonuses still able to be given out?
The same employment rights still apply as before when placed on Furlough. This includes if you are:
• On unpaid leave
• On maternity leave
• On paternity leave
• On adoption leave
• On shared parental leave
• Shielding for health reasons
• Have caring responsibilities
Are employees allowed to work or volunteer if they have been furloughed?
No work can be undertaken for employers while employees are on furlough; furloughed workers will be able to return on a part-time basis and be furloughed for the remainder hours from July.
Volunteer work can be undertaken as long as no revenue is created, and no services are being provided. Additional training courses can be completed as long as top up furlough payments are made if they do not reach minimum wage.
Are jobs guaranteed when the Furlough Scheme ends?
Simply put, no they are not. The hope is that businesses will be able to start paying full wages again by the end of October, but the future cannot be predicted. It is not guaranteed that employees will be kept on when Furlough ends, but these payments cannot be used to subsidise redundancy packages.
Furlough Scheme Updates: Beginning of June 2020
The scheme has officially been extended to the end of October by Chancellor Rishi Sunak, however employer contribution will have increased by then.
In July, workers will be able to return to work part-time, but employers will have to page 100% of wages and the remainder hours will be furloughed. From August, employers must pay National Insurance and pension contributions, then 10% of pay from September, rising to 20% in October.