According to a recent poll, nearly half of all employers will have furloughed staff by the end of this month. But what is the furlough scheme? And are you eligible to use it?
In this blog, we’re going to look at how you and your employer can take advantage of the Coronavirus Employee Retention Scheme to support your business.
How does the scheme work?
The employee furlough scheme is designed to support businesses through the coronavirus crisis. Over the past month, a number of businesses have been forced to close their doors indefinitely, and many more will lose revenue as a result of the disruption.
If a business has been “severely affected”, the employee and employer can agree to join the scheme. This means the worker will be kept on payroll and be paid, even though they cannot work.
Under the scheme, the Government will pay up to 80 per cent of employee wages for up to three months (and possibly longer), up to a monthly cap of £2,500, as well as the employer’s National Insurance and minimum pension contributions. The employer can optionally pay the remaining 20 per cent wages.
The grant will start on the day the worker was placed on furlough and this can be backdated to 1 March 2020.
Who is eligible?
Any employer with a UK payroll and a UK bank account will be able to claim, but the worker must have been on the employer’s PAYE payroll before or on 28 February 2020.
This includes zero hours, variable hours and part-time workers and employees on any type of contract. Variable hours workers’ wages are calculated using the same month’s earning from a previous year, or their average monthly pay during the 2019/20 tax year, whichever is highest.
If the worker has two jobs, they may be furloughed from one but kept on at the other, or furloughed from both. The upper £2,500 limit applies across both roles. Foreign nationals can also be furloughed.
If the worker was made redundant or stopped working for the employer after 28 February 2020, the business can agree to re-employ them and place them on furlough.
Do I need permission to furlough a worker?
Yes, you and the worker must agree to join the scheme. The Government says the employer “must confirm in writing that you have been furloughed to be eligible to claim”.
Can employees continue to work while furloughed?
Yes, providing they are not working for the company they have been furloughed from.
Need more information about the employee furlough scheme? For help and advice, get in touch with our expert employment support team today.