Overview of Furlough and Employee Retention Scheme

Furlough and Employee Retention Scheme

Following the announcement of the Government's Coronavirus Job Retention Scheme on Friday 20th March 2020, Rishi Sunak introduced many of us for the first time to the new F word, Furlough and, as a HR consultant, it's dominated our lives for the past 2 weeks. It's also likely to do so for the foreseeable future.

Furlough

Furlough is not a term that is used in UK employment law, but it has a similar meaning to “lay-off”.  The employee is retained on the employer’s payroll but the employer has no work to provide them.

Effectively, your employees haven’t been made redundant, however have been asked to stop working. This means that employers can access funding through the Job Retention Scheme to pay them a percentage of their wage (up to 80%, maximum £2,500), in order to avoid redundancies.

The Job Retention Scheme

The Job Retention Scheme will be backdated to 1 March 2020, it’s to run for 3 months initially and will be reviewed at the end of the first 3 months. Employers can claim for up to 80% of the amount of your employee’s wage and it’s capped at £2,500 per person per month.

Your employees will not be able to carry out any paid work whilst classed as Furlough, their pay will still be subject to the usual tax and any other deductions. You cannot claim for any employees who started with your business after 28th February 2020.

You can find a full list of conditions here.

Necessary Steps in order to Furlough Workers & Access the Coronavirus Job Retention Scheme

Firstly, you must assess which of your employees will be “Furloughed Workers” and advise them of the change in writing. Remember! This is subject to current Employment Law and, contract dependent, may be negotiated.

Access the HMRC online portal to submit details of those employees that have been Furloughed (you will have information sent from HMRC imminently).

The system for reimbursement is not yet accessible, HMRC are aiming to have it working by the end of April.

You can submit 1 claim every three weeks, which is the minimum amount of time an employee can be furloughed for.

If your business needs short term cashflow support you maybe eligible for a Coronavirus Business Interruption Loan.

Can Employees Volunteer Whilst Furloughed?

A question we have been asked a lot is if employees are still able to carry out volunteer work whilst on Furlough, this comes off the back of the government request for volunteers in order to support the NHS and other key workers. The Government guidance states that "employees can take part in volunteer work or training as long as it doesn’t generate revenue for or on behalf of your organisation".

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You can find a more comprehensive list of queries answered here.

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If you are looking for more tailored advice, please do not hesitate to get in touch with our specialist HR advisors in Birmingham at Lunar HR.‍‍

Please do remember that the current Government guidelines on fighting the spread of Covid-19, you can find them here Gov.uk website.