The new work vocabulary

What we know about “furlough”

In exceptional times, we need to take exceptional measures. The economy is taking a massive hit due to the impact of the coronavirus COVID-19. How this is impacting work, especially those running a small business or start-up, with paid employees is a changing situation.

Here’s what we know about Furlough* and the Coronavirus Job Retention Scheme.

Even though the full policy hasn’t been published, we are already working with businesses who are looking to furlough staff. This is so they can access a grant to cover wages and avoid redundancies, lay-offs and other measures to reduce costs during this period of uncertainty.

According to the Chancellor of the Exchequer, Rishi Sunak’s statement on 23rd March 2020:

• If furloughed, members of staff cannot work for the employer during the period of furlough.

• Furlough is available from 1st March 2020, so can be backdated, for at least 3 months. It will be extended if necessary.

• It is available to employees on the payroll at 28th February 2020.

•  All UK businesses are eligible.

•  The scheme pays a grant and not a loan to the employer.

•  The grant will be paid to the employer through a new online system, which is currently being built.

•  The employer will pay the employee through payroll, using the Real Time Information (RTI) system as usual.

• The Scheme will be administered by HMRC:

  o  Relevant employees must be designated as furloughed employees.

o  Employers will submit information to HMRC through a new online portal.

o  As this will take time to build, businesses might also want to look to the Coronavirus Business Interruption Loan Scheme to help them cover the costs or try to delay the payment to the employee until the grant is received.

• A maximum grant will be calculated per employee and is the lower of:

o  80% of ‘wages’ (includes employers’ NIC and pension contributions), this is determined by reference to a defined period (yet to be announced).

o  To a maximum of £2,500 per month.

There are still lots of things we don’t currently know, including:

• Can you furlough employees part-time?

• Can you have a break in the furlough? E.g. If you need an employee back for a short period, can you furlough them again?

• Is furlough available for employees who have already been made redundant?

• Is it available to employees who have needed to take leave, e.g. to take care of children as a result of the closure of schools and nurseries?

Like everyone, we are eagerly awaiting the full details to be published and will update everyone when we have more information. Until then, if you need help understanding how to furlough staff, please get in touch and we can share a template letter (free of charge).

Now, more than ever, let’s keep HR human. 

*Furlough is a leave of absence; it’s not a lay-off as it’s designed to be a temporary measure, with workers hopefully returning to work after a period of time.