When the UK Chancellor Rishi Sunak first announced emergency measures to help those financially affected by coronavirus, he said the government was there "to support millions of Brits who have been furloughed." Now as the UK heads into another lockdown starting on November 5, companies and brands try to cope with the economic damage caused by the pandemic, again. But what does furlough mean and what are you entitled to if you have been furloughed in the second national lockdown?
The furlough scheme will now be extended until the end of March while tougher measurements are put in place across the UK.
What does furlough mean?
Furloughed workers are those who have been asked to stop working, but who have not been made redundant. Essentially, it is used by employers as an alternative to laying off staff; they remain on the payroll, but they are asked to take a leave of absence for a certain amount of time.
Previous to the coronavirus pandemic, it was very rare for a UK employer to furlough staff, and the process would vary company to company. Remuneration could take a number of different forms depending on the employer's financial circumstances.
Set out by the government to support employers whose operations have been severely affected by coronavirus (COVID-19), The Coronavirus Job Retention Scheme is open to all UK employers “small or large, charitable or non-profit, are eligible for the extended Job Retention Scheme”, the government says. When first introduced, the scheme was intended to be available until June 1, 2020, but on May 12, Sunak extended the job retention scheme until October 2020. Then on October 31, The prime minister extended The Coronavirus Job Retention Scheme for a month.
On November 5, the chancellor announced the furlough scheme has been extended until the end of March 2021. Speaking in Parliament, Sunak told MPs the extension aims “to give businesses security through the winter.” The scheme will apply throughout the UK and be reviewed in January 2021.
Employees will have the option to bring furloughed employees back to work part-time or furlough them full time.
Will I still be paid if I am furloughed?
Under The Coronavirus Job Retention Scheme, UK employers can claim 80% of furloughed employees’ usual monthly wages, up to £2,500 a month, plus the associated employer National Insurance contributions and minimum automatic enrolment pension contributions.For this furlough scheme the government says the 80% will be based on the current salary for hours not worked. “Under the extended scheme, the cost for employers of retaining workers will be reduced compared to the current scheme, which ends today.”
If you have been told you are on furlough, you do not have to contact the Treasury yourself: it is your employer’s responsibility to organise payment. Any UK organisation with employees can apply, including businesses, charities, recruitment agencies (agency workers paid through PAYE) and public authorities.
If you’ve been employed for over a year, employers will calculate your monthly earnings based on the higher of either the amount you earned in the same month last year, or an average of your monthly earnings from the last year.
What happens to the rest of my salary?
Your employer is not legally required to pay out the remaining 20% of your salary, though they can if they choose to.
Unfortunately, any bonuses, commissions and fees will not be taken into consideration as part of your monthly earnings.
How do I know if I’m on furlough?
Your employer will need to notify you before putting you on furlough and should discuss any changes to your employment contract with you and make them by written agreement. When employers are making these decisions, equality and discrimination laws will apply in the usual way and your rights as an employee will not be affected by being on furlough, including redundancy rights.
Once you are on furlough you will not be able to work for your employer, but you are able to take part in volunteer work or training, as long as you’re not making money for, or providing services to, your employer.
If workers are required to, for example, complete online training courses while they are furloughed, then they must be paid at least the National Living Wage/National Minimum Wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
If you have been placed on furlough, you will need to remain on furlough for a minimum of three weeks. You can also be placed on furlough more than once, and furlough periods can be successive from the previous without a break while the scheme is open.
Who is eligible for furlough?
Employees placed on furlough must have been on the company PAYE payroll on 30 October 2020, and can be on any type of contract, including full- and part-time employees, employees on agency contracts, and employees on flexible or zero-hour contracts.
Scotland’s first minister Nicola Sturgeon still wants clarity from the government on whether the furlough scheme will last beyond December 2 for Scotland. Currently, Scotland are following a separate 5 tier system.
Meanwhile Welsh First Minister Mark Drakeford said on November, 3 he will take Boris Johnson at his word that furlough-style support will be provided for devolved nations if required in the future.
Self-employed workers and contractors have also been offered an emergency support package, too. This has been extended until April 21, but instead of eligible freelancers receiving 80% of their profits as they did in the first two rounds of the scheme, this time only 55% of profits will be made available. The rate had previously been set at 40% but on November 1, it was confirmed that the rate would be increased to cover 80% of profits in November 2020 due to the government's month-long lockdown.
Per the government website, the amount the February-April round will cover will be determined in due course. You can find out if you're eligible for the SEISS here, if you were eligible for the initial two rounds of support you will remain eligible for the second two.
Do I have to go on furlough?
As The Coronavirus Job Retention Scheme is in place to limit redundancies during the COVID-19 pandemic, refusing to be furloughed may put you at risk of losing your job. However, employees must be consulted and agree to be furloughed as it is a change to the terms and conditions of their employment, and therefore still subject to existing employment law. Remember though, any terminations to employment contracts must be in line with normal redundancy rules and protections.
Contributions from Orla Pentelow, Sam Ramsden, and Niellah Arboine.
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