What does furloughing mean and who is eligible?

The UK government’s scheme to help employers retain staff during the coronavirus pandemic comes into effect today.

Under the Coronavirus Job Retention Scheme, the government will pay 80% of furloughed workers’ wages, up to £2,500 a month, if they are put on leave as a result of the outbreak.

Chancellor Rishi Sunak said: “We promised support would be available by the end of April - today, we deliver our promise.”

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The new system can process up to 450,000 applications an hour, and eligible employers should then receive the money within six days, reports the BBC.

Adam Marshall, director general of the British Chambers of Commerce, said: “With April's payday approaching, it is essential that the application process is smooth and that payments are made as soon as possible.

“Any delay would exacerbate the cash crisis many companies are facing and could threaten jobs and businesses.”

Sunak announced last week that the scheme would be extended by a further month, to the end of June. The extension comes amid signs that the government plans to keep the country in lockdown late into that month.

What is furloughing?

Furloughing is granting – or mandating – a leave of absence for a worker. A furloughed worker is someone who remains employed in their regular job, but has been told to stop working.

The government has announced special arrangements for employees furloughed because of the coronavirus crisis.

What has the government made available?

Under the new Coronavirus Job Retention Scheme, every employer in the UK is encouraged to keep their workers on with access to government support.

All UK employers can get support to continue paying 80% of the salaries of employees’ who would otherwise have been laid off during the coronavirus outbreak because employers could not cover staff costs.

If your employer makes you a furloughed worker, they can claim a grant of up to 80% of your wages up to a cap of £2,500 per month. Your employer can choose to top your salary up to its normal amount out of their own funds.

For full-time and part-time salaried employees, the employee’s actual salary before tax, as of 28 February 2020, should be used to calculate the 80%.

Who can claim?

Any UK organisation with employees can apply, including:

• businesses
• charities
• recruitment agencies (agency workers paid through PAYE)
• public authorities

The scheme will also cover employees who were made redundant since 28 February 2020, but have been re-hired by their employer after the government’s announcement of support.

Employees who are “shielding” in line with public health guidance – for instance, those over 75 or with underlying health conditions – can be placed on furlough.

Employees cannot work for their employer while they are furloughed, even on a part-time or reduced-hours basis.

Who will miss out?

New employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme, says the government website.

This apparent loophole has been blamed for the sacking of a number of full-time staff who had recently changed jobs. Sky News last month reported speaking to “dozens of workers who started new roles in the days and weeks after the cut-off point” and were subsequently laid off.

However, the government has now changed the scheme so that “people who were furloughed after starting a new job after this date can ask their previous employer to re-employ them in order for them to receive 80% of their former salary”, says Personnel Today.

“It has also been clarified that employees can start a new job for another employer while on furlough, but only if contractually allowed by the organisation that has put them on furlough,” adds the free-access HR website.

Diane Gilhooley, global head of employment, labour and pensions at law firm Eversheds Sutherland, said the scheme was now closer to an employee income protection scheme, rather than a redundancy avoidance scheme.

“The Job Retention Scheme was originally announced with the aim of helping employers severely affected by the pandemic to preserve jobs and avoid redundancies.

“The updated guidance restates the original purpose, but then extends the scheme to situations falling outside this purpose,” she said.

How can employers make the claim?

To access the Coronavirus Job Retention Scheme, employers must designate specific employees as “furloughed workers” and notify them of their status.

They will then have to apply through an online HMRC portal.

Employers can submit only one claim at least every three weeks, which is the minimum length an employee can be furloughed for.

Claims can be backdated until 1 March if applicable.

Once HMRC has received your claim and you are eligible for the grant, it will make a BACS payment to a UK bank account.

Employers must then pay the employee all the grant that is received.