16/04/2020

What does it mean if you’ve been furloughed by work?

16/04/2020

What does it mean if you’ve been furloughed by work?

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Life has changed immeasurably since the outbreak of the coronavirus.

As the country continues its battle against the invisible enemy people across Scotland are adjusting to a new way of living.

Pubs, restaurants, and stores deemed ‘non-essential’ have been forced to close their doors and as they out of business research from YouGov suggests one in 20 workers have already lost a job because of the virus.

For many of those in employment, COVID-19 has had an impact on the ability to work with thousands of Scots and across the UK now furloughed by their employers.

But just what exactly does this mean?

The world furlough wasn’t one many were familiar with until recently, however, as the pandemic continues to have an effect on the economy millions of workers are now relying on the scheme.

 

What is furlough?

Furloughing staff is a way to help companies struggling during the coronavirus outbreak and help prevent mass unemployment.

Put simply, being furloughed means employees are kept on the payroll but aren’t required to work.

The Coronavirus Job Retention Scheme was announced by the Chancellor Rishi Sunak on March 20 and allows employers affected by the pandemic to apply for a government grant that covers 80% of each of their employee’s wages up to £2,500 per month.

For those who receive a varied wage each month, the company should base their salary on what they earned in the same month the year before or on the average monthly earnings from the last tax year.

Initially to qualify employees had to be on the payroll on February 28 this year, however, the Treasury has now announced the eligibility date has been extended to March 19.

Following the change, the Treasury expects 200,000 employees will now benefit from the scheme whilst also reducing the risk of fraud.

Staff must have been placed on the payroll by this date – the day before the scheme was announced – and will not cover those who weren’t put on the PAYE system until later in the month.

 

Can I be furloughed?

UK businesses with employees, including foreign national workers, can make use of the financial lifeline offered by the government.

Regardless of the contract type you’re on, if you have been on a company payroll by March 19 you could be furloughed if your company is unable to operate during the pandemic.

Apprentices can also be furloughed in the same way as other employees and continue their training while individuals who employ staff, such as a nanny, can furlough an employee if they are paid through PAYE.

The minimum amount of time you can be placed on temporary leave is three weeks and it’s important to be aware that you may be furloughed more than once.

You should also note that if your employer has only reduced your working hours you can’t be placed on furlough and your employer will be required to cover the cost of your salary entirely.

Have you been made redundant recently? If this happened since March 19 your former employer can choose to rehire you under the scheme, however, employees hired for the first time after that date are not eligible.

 

Will I still pay tax on furlough?

You will still be required to pay income tax on furlough payments which will be calculated from your before tax salary.

If you’re unsure about what this means for your new monthly wage, you can check online using a tax calculator on the HMRC website.

The government will cover the cost of your automatic pension contribution typically paid by your employer as well as National Insurance contributions.

 

What if I’m sick during furlough, will I get paid?

Your employment rights won’t change if you are placed on furlough.

This means that if you fall ill whilst you aren’t working you are still eligible for statutory sick pay and will be furloughed again once you return to health.

The same rules also apply to those who are taking additional safety measures during the outbreak to shield their own health.

However, you should note if you are on maternity or paternity leave or adoption or shared paternal leave you won’t be furloughed and instead will continue to receive statutory pay from the government at this time.

 

Will I still receive a bonus?

If you receive a bonus or commission through your work this will not be included in your furloughed payments.

This is because the government scheme only covers 80% of your core salary along with the minimum automatic pension contribution and National Insurance contributions made by your employer.

 

I have two jobs; can I be furloughed twice?

If you work for more than one company, and are on the payroll, you can be furloughed by either employer.

What’s more, the same rules apply for each employer which means that you can receive up to 80% of your salary from each up to a maximum of £2,500 per month.

However, you should be aware that if you are placed on furlough you are not permitted to carry out any work for an employer.

 

Will I lose my job after furlough?

The scheme is currently expected to run until the end of May; however, the Chancellor has said he will extend the scheme if necessary.

Whilst the government scheme is designed to help prevent job loss, companies are not obliged to continue employment when they stop receiving furlough funding. Although, employers aren’t permitted these payments to subsidise redundancy packages.

If you’re concerned about job security during this difficult time it’s important to ensure you budget your salary during the furlough period as much as possible in order to save anything you can whilst keeping an eye out for new career prospects.

 

If you’ve been furloughed and are worried about covering the cost of debt, talk to Carrington Dean. Our expert advisors are on hand to offer free advice to people during this difficult time. Call 0808 253 3466.

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