What is furlough?

What is furlough?

Furlough was introduced in March 2020 in response to the Covid-19 pandemic – it’s referred to as the ‘Coronavirus Job Retention Scheme’.

Furlough is a temporary leave of employment granted by the government, which is typically exhausted due to economic conditions.

The scheme was introduced to protect people’s income and keep them from being let go permanently.

What you need to know about furlough?

  • Employees can ask for it, but it’s at the discretion of an employer
  • The involuntary furlough can be short term of long term
  • Employees will still remain on the books of the company, but will be unable to undertake any work for said company
  • Employees (who otherwise wouldn’t be allowed) are able to seek other temporary employment during the ‘furloughed’ period
  • Since July 2020, furloughed workers could return to work part-time. Employers have to pay 10% of the wages of furloughed workers, plus their National Insurance and pension contributions, rising to 20% in October
  • Your company can then top up your salary to 100%, but they aren’t obliged to
  • Employees can still be made redundant whilst on furlough (redundancy packages should be based on pre-furlough wages)

*update as of November 2020: Rishi Sunak has confirmed the government’s furlough scheme will be extended until the end of March 2021. The chancellor has said the jobs support scheme will continue to pay 80% of people’s wages up to £2,500 a month, with a review of the policy scheduled in January.

Those that are self-employed will now be able to access an income support grant for November to January at 80% of their average trading profits up to £7,500.

How it’s changing, and what that Job Support Scheme is…

Rishi Sunak announced a Job Support Scheme. The new scheme, however, will only support those who are in ‘viable’ jobs, this means workers that are necessary to restart the economy but can also only work a third of their hours if required (so jobs such as waiters, needed for restaurants opening back up for takeaway)

  • The scheme will run from 1st November, for six months
  • It will top up the salaries of ‘viable’ employees whose salaries otherwise cannot be paid by the company
  • Employees must only work 1/3 of their hours to be eligible
  • The government will pay a remaining 1/3 of their wages (employees would receive total 77% of their pre-Corona salary)
  • The government contribution is capped at £697.92 per month, per person
  • Employees must have been on the firm’s payroll since at least 23 September
  • Workers on the Job Support Scheme cannot be made redundant or put on notice

More information here