COVID-19 The Furlough Scheme
The Government has various plans to help businesses that are facing financial hardship due to the impact of COVID-19. This is designed to support businesses and help them continue to pay their employees who are unable to work due to self-isolation or lockdown conditions. We answer some of the most frequently asked questions our employment teams have been answering.
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What is Furlough?
This is another way of referring to the “Coronavirus Job Retention Scheme (CJRS).” With many workplaces forced to close due to COVID-19, the Government have put in place grants from HMRC to cover your income if you’re temporarily sent home because there’s no work, or a lack of work or your workplace has closed or reduced its operations due to COVID-19.
This scheme is intended to keep people in their jobs for those who cannot carry out their normal operations due to the coronavirus. It applies to every single employer in the UK, including but not limited to limited companies, sole traders, charities. This is a temporary scheme that was initially put in place for three months starting from 1 March 2020. It is currently expected to finish at the end of October.
On the 12 May 2020, the Chancellor, Rishi Sunak, announced that the Coronavirus Job Retention Scheme would be extended to continue to support jobs and business whilst allowing people to begin returning to work.
The government has announced that, from the 1 July 2020, the Coronavirus Job Retention Scheme is changing so that your employer will be able to start bringing back to work employees that have been furloughed to date, for any period of time or by changing your hours or shift pattern, whilst still being able to claim the difference for the normal hours that you would have worked had it not been for the business disruption caused by coronavirus.
To use the scheme, employers will need to report and claim for a minimum period of a week. If you were not put on furlough at any time before 10 June 2020, it will be too late for your employer to put you on furlough for the first time.
In order to be put on furlough now, you have to have been previously placed on furlough for at least 3 consecutive weeks between 1 March 2020 and 30 June 2020. It is likely that you will now only be able to be furloughed if you are already on furlough or if you have previously been on furlough. If this is the case, you will remain eligible for furloughing until the scheme closes on 31 October 2020. From 1 August 2020, employers will be asked to contribute to the cost of the furlough scheme.
How long is the Coronavirus Job Retention Scheme going to last?
From August 2020, the amount of grant available to employers under the scheme will be slowly reduced as it is anticipated that people will slowly be returning to work. The government has produced guidance as to how this is expected to change monthly.
For June and July 2020, the current amount granted under the scheme will remain the same; the government will continue to pay 80% of wages up to a cap of £2,500 as well as remaining responsible for the employees’ National Insurance and pension.
In August 2020, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will become responsible for paying employees’ National Insurance and pension.
On average, the amount that the employers will be required to pay represents only 5% of what they would have to pay (gross) had the employee not been furloughed.
By September 2020, the government will reduce what employers are entitled to recover under the scheme to 70% of their employees’ wages up to a reduced cap of £2,187.50. Employers will continue to have to pay National Insurance and pension contributions and will also be expected to pay the 10% that they will no longer be receiving under the scheme. On average, this represents around 14% of what they would have to pay (gross) had the employee not been furloughed.
By October 2020, the government will reduce what employers are entitled to recover under the scheme to 60% of their employee’s wages up to a cap of £1,875. Employers will continue to have to pay National Insurance and pension contributions and will also be expected to pay the 20% that they will no longer be receiving under the scheme. On average, this represents around 23% of what they would have to pay (gross) had the employee not been furloughed.
Your employer will have to submit data reflective of the usual hours that you would be expected to work over a set time compared with the actual hours you have been able to work. Payments will be made every three weeks. This is because three weeks is the shortest period a furlough can last. The scheme is currently expected to close on 31 October 2020.
If you are concerned that your employer is recovering 80% of your wage but you are not receiving it, you are able to report this, or any other concerns, to HMRC’s dedicated fraud hotline.
HMRC may decide to investigate anyone who suspected to be abusing the scheme. If you have concerns about this, and the implications in reporting any fraud, then you should seek legal advice.
Am I eligible for furlough?
You’ll be eligible if you’re working on a full-time, part-time, casual, flexible, agency or zero-hours contract, were on the PAYE payroll as of 19 March 2020, have a UK bank account and you were furloughed for at least three consecutive weeks between 1 March and 30 June 2020.
To qualify you must have been on your employer’s PAYE payroll before or on 19 March 2020 and your employer has to have submitted a Real Time Information (“RTI”) on or before 19 March 2020.
If you’ve just started work and you’ve not been paid yet (for example, you were due to be paid at the end of March), it may be that your employer has not yet submitted an RTI to HMRC on your behalf and this may affect your eligibility for furlough.
If you meet the criteria above, your employer can only claim furlough for the maximum number of employees that had been furloughed at any one time. This is to ensure that employers are not furloughing a large number of staff at this time in a fraudulent manner thereby taking advantage of the scheme.
If you were employed as of 28 February 2020 and on the payroll and were made redundant or stopped working for your employer after that and prior to 19 March 2020, you could try to appeal against your dismissal and ask your employer to re-employ you and furlough you, but they are not obliged to do so.
Foreign nationals are eligible for the scheme as grants under the scheme are not counted as ‘access to public funds’ and so it does not depend on which visa category you are in.
The scheme only applies if you’re being furloughed for a minimum of three weeks and doesn’t apply to situations where you continue to work or are put on reduced hours or reduced pay.
To be eligible you cannot continue working for your employer during a period of furlough. You and your employer must agree to you being placed on furlough and your employer has to confirm, in writing, that you’ve been furloughed for you to be eligible.
If you do not receive written confirmation you should ask for it. If you do receive written confirmation, it’s advisable to acknowledge this, in writing, by replying to your employer.
- Other workers who are eligible include:
- Office holders
- Company directors
- Salaried members of LLP’s
- Limb workers
- Contingent workers in the public sector
- Contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35)
- Employee transfers under TUPE and on a change in ownership
What if I am working reduced hours or reduced pay?
If you are working, but on reduced hours or for reduced pay, your employer will not be eligible to claim money back for you under the CJRS. This is because you are still able to work and the scheme is intended for those who are unable to work.
How will my monthly wages be calculated?
For full-time or part-time employees who are on a salary, the amount you’re entitled to receive will be based upon your salary figure. For further clarification, you should speak to your employer about how they are calculating this.
If the amount you are paid fluctuates (e.g. agency workers) and you have been employed for a full year, you’ll be entitled to claim for the higher of either:
• The amount you earned in the same month last year;
• Your average monthly earnings for the last year.
If the amount you are paid varies but you have not been employed for a year, your entitlement will be based upon an average of your monthly incomes from the date that you commenced employment.
For those that have been working for less than one month, your entitlement will use that month’s earnings as a guide and then make a pro-rata calculation (i.e. estimate your likely earnings based on the information they have).
If you would normally be receiving compulsory commission and consistent overtime, the grant that your employer receives will take this into account. However, the calculation will not take into account discretionary commission, payments or bonuses, benefits in kind and non-cash payments.
Who is responsible for paying me and what do I do if I am not receiving pay?
If you’re furloughed and not being paid what you believe you’re entitled to, you may wish to consider raising this with your employer in the first instance and keep a good note of any and all discussions you have with them on this.
You should seek legal advice immediately as you may have a potential legal claim, and the deadline for this is likely to be within 3 months of when the payment was due.
What happens if I was made redundant or stopped working after 28 February 2020?
If you have been made redundant or stopped working on or after the 28 February 2020, your employer can re-employ you, put you on furlough and claim for your wages under the scheme. This applies even if you are now re-employed after the 19 March 2020, provided you were on the 28 February 2020 PAYE payroll. If you’ve been made redundant during this time, we suggest asking that your employer re-employ you and place you on furlough in line with government guidance.
Can my employer automatically put me on the furlough scheme?
No. Your employer should discuss this with you first. Furlough is a change to your terms and conditions of employment, and you should both be in agreement before it comes into effect.
You should review any document you’re being asked to sign or agree to in relation to furlough and ensure you understand what you’ll be paid, when the furlough technically starts/started, when and how often it will be reviewed and details of who you can contact during this time to keep in touch during your furlough.
If you are unable to reach an agreement with your employer about furlough, then you should consider taking legal advice at an early stage, as ultimately your employer may then take steps to dismiss you.
What happens if I am an apprentice?
If you’re an apprentice, your employer can furlough you in the same way as they do other employees. This doesn’t mean that your training has to cease, you’ll be able to continue to train whilst furloughed if the circumstances allow for it.
If you’re furloughed as an apprentice, your employer must pay you at least the Apprenticeship Minimum Wage/ National Minimum Wage/ National Living Wage depending on which is appropriate for the amount of time that you’re able to spend in training. You employer has a duty to cover any difference between the amount they’re able to claim through this scheme and the appropriate minimum wage to ensure that you’re not getting less than this.
Can individuals use the furlough scheme?
Yes, if you’re for example a nanny, your employer (as an individual) can use the furlough scheme provided that they’ve been paying you through PAYE and you were on the payroll on or before the 19 March 2020, have a UK bank account and you were furloughed for at least three consecutive weeks between 1 March and 30 June 2020.
What happens if I am pregnant and due to start maternity leave?
In this instance, you’ll start your maternity leave as you would have done, however, if you’ve been placed on furlough or were off sick before this time, it’s possible that this may impact what you’ll receive on maternity leave and your Statutory Maternity Pay. You should discuss this with your employer as soon as practically possible.
What if I am returning from family related statutory leave (e.g. maternity, paternity, shared parental leave etc.)?
The normal rules for maternity and other forms of parental leave and pay apply. However, if you were furloughed and started leave on or after 25 April 2020, your employer may need to calculate your average weekly earnings differently for maternity pay, adoption pay, paternity pay, shared parental pay, parental bereavement pay. If you are entitled to enhanced contractual maternity pay, your employer can claim for enhanced earnings under the scheme.
If you get maternity allowance and you are on maternity leave, you will not be eligible to get furlough pay at the same time. If you have agreed to be put on furlough, you will have to contact Jobcentre Plus and ask that they stop your maternity allowance payments.
Should you wish, you can agree to be put on furlough and end your maternity leave early but in you will need to give 8 weeks’ notice to be able to do so and you will not be eligible for the furlough payment until the end of the 8 weeks.
I work in the public sector, can my employer furlough me?
As most public sectors are continuing to work and provide essential services in the wake of the COVID-19 outbreak, the government does not anticipate that this scheme will be used by a lot of public sector organisations. Where employers, public sector or otherwise, receive public funding for staff costs, that funding will continue and employers are expected to continue to pay their staff in the usual way, so any organisation receiving public funding should not need to furlough staff in the same way. However, some situations may arise where the staff cannot be re-deployed to assist with the coronavirus response and in this instance the scheme may be appropriate for some staff.
I have more than one job, can I still be furloughed?
Yes. You can be furloughed from each job you have. Each will be treated separately, and the payment cap applies to the individual employer.
If contractually allowed, you are permitted to work for another employer whilst on furlough. You should check your employment contract before working for another employer and you should consider discussing this with your employer first to avoid any possible disrepute arising with them on this.
If you have had multiple employers over the past year and are being furloughed by your current employer and you have only worked for one of them at any one time, you will not be eligible for furlough from a previous employer. If you worked for more than one employer at any one time you can be furloughed by one job and receive a furlough payment but continue to work for another employer and receive your normal wage.
Can I take holiday if I am furloughed?
If you are furloughed, you will continue to accrue annual leave in the normal way, how this is calculated, is normally found in your employment contract. You are able to vary your holiday entitlement as part of the scheme but you will not be able to vary it to below 5.6 weeks paid annual leave because this is the statutory minimum.
You can request and take your holiday in the usual way but whether this leave is granted will be at the discretion of your employer. You must get your usual pay in full, for any holiday you take.
Working Time Regulations stipulate that your holiday pay should be paid at your normal rate of pay. In the event that your pay varied (e.g. agency workers), your normal rate will be calculated as an average of what you’ve received over the last year.
If you do take holiday leave whilst on furlough, it will be for your employer to make up the difference between what you are receiving through the furlough scheme and what your normal pay is.
This includes bank holidays so for those who are furloughed who normally take the bank holiday as leave, your employer will either have to top up pay to your normal rate or give you a day of holiday leave in lieu. If you usually work bank holiday days then your employer can agree that any pay you would receive for these days is considered when calculating your wage for the purposes of the grant.
If you’re a furloughed employee, you’ll still maintain your holiday pay entitlement and you’ll continue to accrue any untaken leave as per your employment contract. There’s nothing to stop you from asking your employer to vary your holiday pay entitlement as part of your furlough agreement but most workers are entitled to 5.6 weeks’ statutory paid annual leave which they cannot vary to go below.
I am self-employed: can I be furloughed?
Self-employed workers may be eligible to receive financial support through the ‘Self-Employed Income Support Scheme’. If eligible, self-employed workers may receive a taxable grant of 80% of their average monthly income, up to a maximum of £2,500 per month. HMRC will contact self-employed workers directly if they’re eligible for the scheme.
On 29 May 2020, the Chancellor extended the Self-Employment Support Scheme in order to give more security to individuals who are self-employed over the coming months with those eligible being able to claim a second and final grant capped at £6,570. This money is intended to be representative of your average monthly trading profits paid out in a single instalment covering three months’ worth of profits.
If you are self-employed, you can continue to apply for the Self-Employed Income Support Scheme until 13 July 2020. Under the first grant, you will be able to claim a taxable grant worth 80% of your average monthly trading profit. This will be paid out in a single instalment covering three months’ worth of profit but capped at £7,500.
If you are self-employed and have already applied for the first grant, or if you have not, you will still be able to claim the second taxable grant worth 70% of your average monthly trading profit paid out in a single instalment covering three months’ worth of profits and capped at £6,570 in total.
To be successful in your application for a grant, you will need to show that your business has been adversely affected by the coronavirus. You do not need to have applied for the first grant to receive the second grant, for example, if you can show that your business has only been adversely affected now.
What if my employer needs to close the business or reduce my contracted hours?
In some situations, an employer might need to close their business for a short time or ask staff to reduce their contracted hours. If your employer needs to do this, they should talk to you as soon as possible and update you throughout any period of closure.
If you’re still working but either your hours or pay has been reduced, you will not be eligible for the furloughing scheme.
What if my employer has put me on unpaid leave?
If you have been put on unpaid leave since 28 February 2020, your employer is able to put you onto the furlough scheme instead. Like other furlough employees, you would be entitled to at least 80% of your normal salary, up to the monthly cap of £2,500.
If you were put on unpaid leave before 28 February 2020 you can only be put on the furlough scheme if a return date has been agreed. Your entitlement to pay under the furlough scheme will begin on the date you were due to return.
Can I be furloughed if I am self-isolating or on sick leave?
The Coronavirus Job Retention Scheme is not intended for short term-absences caused by sickness and so this should not be a factor in your employer’s decision to furlough you.
However, you can be furloughed as your employer is still entitled to furlough you, even if you’re unwell, if this is for business reasons. In this instance, you would be classed as a furloughed employee and you would no longer receive sick pay.
If you are a vulnerable person being shielded or absent from work due to long-term sick leave, your employer is entitled to furlough you but it’s at their discretion to do so.
If you are returning from time off for sick leave, you will be eligible to be furloughed. Your entitlement should be calculated against your gross salary that you received before going on sick leave and not what you were receiving whilst on sick leave.
If you are not on a fixed salary and your pay is variable, your employer will calculate how much you’ll be entitled to using either:
• The amount you earned in the same month last year; or
• Your average monthly earnings for the last tax year.
What happens if I become sick whilst I am furloughed?
If you become ill when you are furloughed, you’re entitled to be paid at least statutory sick pay plus any contractual sick pay you may be entitled to through your contract. Whether you remain on your furloughed rate or receive statutory sick pay will be up to your employer. If your employer decides to no longer have you on the furlough scheme, and instead moves you onto the statutory sick pay scheme, the employer will be responsible for paying you but it may be entitled to a two week statutory sick pay rebate.
What if I am shielding or have caring responsibilities?
If you are unable to work because you are shielding or need to stay at home to protect someone who is shielding, you can be furloughed.
Similarly, if you cannot work because you are caring for someone directly affected by COVID-19, you can be furloughed. This includes those employees who need to stay at home to look after their children.
What if I do not want to go on furlough?
You may not want to go on furlough as you feel that there is work for you to do and you want to carry on receiving your full salary. This will be particularly desirable if your average monthly wage is higher than the £2,500 cap.
If this has been suggested, we recommend expressing your concerns with your employer in the first instance and seeing if there is any other work you can take on so as to avoid being furloughed. Ultimately, this will be a decision for your employer based on the businesses needs and if you refuse to be put on furlough you may be at risk of termination of your employment or redundancy, depending on the circumstances.
If you do not feel that your employer is being fair, it would be worth seeking legal advice.
What if I am on a fixed term contract?
You can still be furloughed if you are on a fixed term contract. In the event that your contract has expired, you will still be entitled to be furloughed under scheme if:
• Your contract expired on or after 28 February 2020 provided that an RTI payment submission for you for you was made to HMRC prior to the 28 February 2020; and/or
• Your contract expired on or after the 19 March 2020 provided that an RTI payment submission for you was made to HMRC prior to or on the 19 March 2020.
In the event that your contract has not already expired, it can be extended or renewed but your employer will only be able to do so if HMRC had received an RTI payment submission on or before the 19 March 2020.
In the event that your employer does not renew or extend your contract, they will not be able to furlough you. If you know that your fixed-term contract is coming to an end, you should speak to your employer about renewing and extending this as soon as practically possible.
What if I am an agency worker?
If you’re an agency worker and paid via PAYE, you can be furloughed and receive support, even in the event that you’re employed by as separate umbrella company.
In this instance, the agency as the deemed employer and the agency worker should agree to the furlough scheme. As is the case with employees, you would not be able to carry out work for or on behalf of the agency that has furloughed you, nor, should you carry out work for any of the clients of the agency.
If it is the separate umbrella company that oversees PAYE, it will be for them to act as the employer and decide whether they want to furlough the worker or not.
Can I undertake volunteer work if furloughed?
Yes, you can do volunteer work while you are furloughed as long as it does not generate revenue or provide services for your employer or linked to your employer in any way.
Will I still be liable for tax if I am furloughed?
Yes. You will still pay taxes in the normal way and this will come out of your salary as it normally does. You will continue to make pension contributions (both employer and employee) unless your employer has opted out of this.
Will I still retain my legal rights as an employee when furloughed?
Yes. You will still have the same rights as you would if you were in your normal line of employment. For example, you would still be able to bring a claim for unfair dismissal, you would still be entitled to a redundancy payment and statutory sick pay, as well as maintaining your maternity rights. These are a few examples and you should seek legal advice as soon as possible if you have any concerns about your employer’s behaviour towards you.
PLEASE NOTE: this information was correct at 30/6/2020
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