Extended furlough arrangements will allow more than 200,000 additional workers to benefit from the scheme.
Initially, the scheme was only aimed at those actively employed by a UK company on 28 February 2020. However, eligibility has now been extended by a further 3 weeks so that anyone who was on a company payroll on 19 March can also be furloughed.
Furlough is a temporary paid leave of absence and is one of many financial measures announced by the chancellor, Rishi Sunak, as part of the Job Retention scheme.
Applications for the scheme can be made from Monday 20 April 2020. This will allow a business to furlough employees while the government guarantees to pay 80% of their wages, up to £2,500 per month per person, per job.
Following criticism that the scheme was going to leave thousands of recently employed workers at risk of redundancy, the government carried out a review and has now extended furlough arrangements.
In addition to the monthly salary, the government will also cover both pension contributions and National Insurance contributions.
The ultimate aim of the scheme is to support businesses whose operations have been severely affected by the coronavirus lockdown. It enables employees to continue earning and safeguards their jobs so they can return to work when lockdown has ended.
Companies applying for support under the scheme must prove that their employees are no longer able to perform their jobs because of the lockdown. They must then submit details of furloughed staff to HMRC before they set up the reimbursement scheme.
The furlough scheme will run from 1 March until 1 June and those claiming should see their first payment this month.
Working while on furlough
Employees are not allowed to work for their employer in any capacity while on furlough. However, they are able to work for other employers, subject to restrictions in their employment contract, where it is to help businesses or organisations that rely on staff to be able to survive the crisis, or to replace staff taking leave to care for relatives. This is particularly helpful to retail distribution, agriculture and care sectors.
Any UK employer with a UK bank account can take advantage of the scheme, regardless of the nature of their business. Eligible employers include charities, public bodies, businesses and agencies.
Employers can claim the higher of either the salary paid in the same month the previous year or an average of the monthly salary before tax.
- The employee must remain on the employer’s payroll
- Employees must remain on furlough for at least three weeks
- Employers can place employees on furlough more than once
- Those self-isolating due to coronavirus cannot be put on furlough, but will be entitled to Statutory Sick Pay (SSP) of £98 instead
- Those shielding because of chronic illness or age, can go on furlough at any time
- Annual leave continues to accrue during the lay-off or furlough period
- SSP, maternity and paternity rights also remain as do unfair dismissal rights and rights to redundancy pay
- Those on fixed-term contracts can be furloughed with the possibility of contracts being renewed or extended during the furlough period
- Apprentices can be furloughed and continue to undertake their training throughout the furlough period
- Employees on annual leave can be furloughed, so long as the leave period started after 28 February
Additional support from employers
Employers are able to top up the 80% if they wish to, but are under no legal obligation to do so. Some employers may choose to pay employees and reclaim the amount later; again there is no legal obligation to do this.
Employees made redundant between 28 February and 1 April can be rehired and placed on furlough. However, the employer is under no legal obligation to do this and much will depend on the long-term viability of the company.
The Treasury has said that the furlough scheme could potentially run for longer. However, there is an urgent need for government to clarify whether the scheme will be extended or not. Otherwise businesses may be forced to start redundancy procedures on Saturday 18 April so that they do not fall foul of the minimum 45-day consultation period.
See the Gov.uk website for more details on the government furlough scheme
If you would like advice on any aspect of employment law, either on an ad-hoc basis or on a more permanent basis, contact us today. We are able to offer bespoke solutions for any business. Call 01302 320621 or email firstname.lastname@example.org