What is Furlough and can Furloughed employees work?
9th Apr 2020
As coronavirus disrupts the marketplace across the UK, business owners are forced to make some hard decisions to ensure their business remain intact. The government recognises this and has stepped in to offer support where businesses can continue to employee their staff via Coronavirus Job Retention Scheme. All UK employers with a PAYE scheme that was created and started on or before 28th February 2020 will be eligible to access this initiative.
A COVID-19 Business Impact Tracker report produced in early April 2020 by the Northern Ireland Chamber of Commerce & Industry found that 3 in 10 of their members intend to furlough all of their employees. 80% of members intend to furlough some or all over the next week. Although, 17% don’t intend to furlough any employees. In addition, we produced a survey on 'How the Covid-19 pandemic has affected the tech industry in Northern Ireland - April 2020' which found 88% of participants were working remotely and 63% felt they have job security for the remainder of the lock-down.
What does this mean for employees?
All employees who have been on payroll on or before 28th February 2020 and have agreed with their employer that they should be put ‘on furlough’. Ensure your employer confirms this in writing. If you are currently on furlough and have not received confirmation, contact your employer.
Furloughed employees will be entitled to 80% of their usual wage costs, up to £2,500 a month. This also includes the minimum automatic enrolment employer pension contributions on the subsidised wage. It’s at your employer’s discretion on whether to top up your employee’s salary to meet your usual salary payment.
The Coronavirus Job Retention Scheme will cover the cost of wages from the date that the employee finishes work and start furlough, not when the decision is made. Currently this support is available for 3 months, although, could be extended if necessary as we know the situation is changing daily.
Overall, this means you will still get paid if you’re on payroll, but you must not work for your employer during this period. During this period, ensure your out of office message has contact details of your colleague who’s looking after your work. You should return to work after this period, this is different from redundancy or being laid off.
What employers are eligible?
Any business in the country, including private or public. Employers will be able to access this via a portal being set up by HMRC which is due to go live at the end of April. Please see the links at the end of this blog for more information.
I was made redundant
If you were made redundant or stopped working for your employer after 28 February, you can be re-employed and put on furlough and claim for their wages through the scheme.
I have more than one job
You can be furloughed for each job. Each job is separate, and the cap applies to each employer individually. You can continue to work for another employer and receive your normal wages if you are furloughed in your other job.
Can I start work in another job?
This completely depends on your contractual obligations with your current employer. Although there are reports that UK employees can undertake extra work in certain sectors such as care homes. See here.
I’m a Director, can I be furloughed?
Salaried directors are eligible to be furloughed and receive support. This should be formally adopted as a decision of the company, noted in company records and communicated in writing to the director(s). If there are necessary duties that need to be fulfilled due to obligations to the company, they can do so.
What if I’m self-employed?
If you’re not on the PAYE system, the job retention scheme does not apply to you. There is an equivalent self-employed scheme providing income support to self-employed. You can apply if you’re a self-employed individual or a member of a partnership. If your trading profits have been less than £50,000 and more than half of your income comes from being self-employed.
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. You can learn more about the self employed support scheme here.
Can I volunteer while on furlough?
Furlough workers can part take in volunteer work, as long as it does not provide a service to or generate revenue on behalf of your employer.
Can I undertake training while on furlough?
Yes, as long as it does not provide a service to or generate revenue on behalf of your employer. A furloughed employee should be encouraged to undertake training. It could be a great time to complete professional development programmes.
In conclusion, furlough has many rules, it’s important to keep up to date on what’s happening via official government websites. Get written confirmation from your employer that you’re furloughed and enjoy your time off during this pandemic. Spend time with your family, if you live with them, and pick up on the things you didn’t have time for when you were working.
Helpful support websites for more information:
Am I covered by the job retention scheme?
Claiming for wage costs
Business Interruption Loan Scheme
A UK Furlough HMRC Claim Calculator
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