The government’s furlough programme means it is now paying the wages for more than a quarter of UK jobs.
The scheme is designed to help people put on leave due to the coronavirus outbreak, and to prevent employers having to make mass redundancies.
About 7.5 million workers have been furloughed since March, with the government paying up to 80% of their salaries.
The scheme has been extended and will now run until the end of October. Employers will be able to bring back furloughed employees part-time from August – although they will be expected to share the cost of paying people’s salaries.
What is furlough?
Furlough supports firms hit by coronavirus by temporarily helping to pay the wages of people who can’t do their jobs.
It allows employees to stay on the payroll, even though they aren’t working.
The company can top up this pay if it chooses and must let employees know they have been furloughed.
The scheme – backdated to 1 March – opened to applications on 20 April.
How can my business apply?
You can claim 80% of your employee’s wages – up to a maximum of £2,500 per employee, per month before tax, or £576.92 a week.
If employees are not paid set amounts each month – for example if they have returned from maternity leave, or receive top-up pay – you will need to calculate your claim manually, or seek professional advice.
Furlough covers overtime and commission payments built in to an employee’s salary, but not discretionary payments such as tips or optional bonuses.
Employers must still pay national insurance and pension contributions payments for furloughed employees. The statutory minimum for these can also be claimed back.
All the money claimed must be paid to your workers, or to cover their national insurance and pension payments, even if a firm is in administration.
HMRC will check your claim, and pay you through a UK bank account, if you are eligible. Claims take about six working days to process.
Which companies are furloughing workers?
Coronavirus restrictions mean the work of many firms has come to a standstill. Pubs, restaurants, cafes, travel firms and estate agents are among those hit.
The Government says almost a million employers have reported furloughing workers since 20 April, when the programme started.
Clothing chains Oasis and Warehouse have furloughed staff after going into administration, while Topshop owner Arcadia has also used the scheme.
- Greggs, McDonald’s and KFC are among food chains that have furloughed staff.
- British Airways has furloughed more than 30,000 staff, while TUI has furloughed 11,000 and EasyJet has furloughed about half its workforce.
- Three Premier League football clubs – Bournemouth, Liverpool and Tottenham – have made a U-turn on their decision to furlough non-playing staff. Newcastle United and Norwich City have announced their intention to use the scheme.
Can I be put on furlough?
Potentially yes, if your company can’t give you work to do because of the coronavirus outbreak.
The scheme covers those who were on an employer’s PAYE payroll on 19 March 2020.
This includes full-time and part-time workers, and employees on flexible, zero-hour or agency contracts.
You must be furloughed for at least three weeks, and you can be furloughed more than once.
If you have been made redundant since 19 March, your former employer can re-hire you under the scheme. But newly hired employees are not eligible.
Any UK organisation with employees can apply, but it will mainly be private sector businesses and charities making a claim.
Apprentices can also be furloughed and continue their training. An individual can furlough an employee, such as a nanny, if they are paid through PAYE.
Will I still get sick pay and a bonus?
Anyone placed on furlough has the same employment rights as before. If you are ill you are eligible for statutory sick pay or can be placed on furlough.
If you are on unpaid leave, shielding for health reasons or have caring responsibilities, you are also eligible. Staff on maternity, paternity, adoption or shared parental leave will still receive statutory pay from the government.
Employers do not have to top up salaries that no longer reach the minimum wage.
Can I work or volunteer if I’ve been furloughed?
If you are placed on furlough you can’t do any work for your employer. This will change from August onwards when the government says furloughed workers can return on a part-time basis.
You can volunteer in the community or even for your company as long as you aren’t creating revenue or providing a service. Employers can give employees additional training, but must top up furlough payments if they do not reach minimum wage.
From August to October, you may be able to work part time, and be furloughed for the remainder of your hours.
If you work for more than one firm, you can receive furlough from any of them, up to £2,500 a month per employer.
You can continue working for any that still need you or for a new employer, provided you are not breaching any existing contracts.
Is my job guaranteed when furlough ends?
Companies don’t have to keep on any employees when furlough ends, and cannot use these payments to subsidise redundancy packages.
The hope is that by the time the scheme ends, restrictions will have lifted and businesses can start paying full salaries again.