11 furloughing need-to-knows for employees and small firms
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Little more than a month ago few had heard of the word furlough, now it’s on millions of lips, as it has become a crucial lifeline. The Coronavirus Job Retention scheme, which allows firms to furlough staff who don’t have or can’t work is now open. The aim is to protect economic victims of the coronavirus, and leave them ready to return straight to work, to kick-start the economy once this is over.
Yet for some employees and small employers, especially those without HR functions, furloughing can seem complex. This in itself may be stopping some from agreeing to implement this important financial lifeline.
While it is an employer’s choice whether to furlough, my hope is that this quick briefing, or cheat sheet if you like, will offer enough information to hopefully give employers confidence to furlough staff (and former staff ) when appropriate. There’s information and explanations at mse.me/employeefurloughhelpandgov.uk coronavirus guides for employers and employees.
1
FURLOUGHING MEANS AN EMPLOYEE’S JOB IS PUT ON STANDBY. The scheme allows firms to put employees whose payroll data had been submitted to HMRC by 19 March on furlough (a bit like a job ‘standby’ mode), meaning they don’t work but get paid by the employer with money provided by the state. Furloughing can be backdated to 1 March 2020.
2
IT IS A GRANT NOT A LOAN. The money firms receive for furloughing does NOT need repaying.
3
ALL CORE STAFF COSTS ARE COVERED. The state will pay for 80% of a furloughed employee’s salary, up to a maximum payout of £2,500 a month – plus the employer’s national insurance contribution and minimum pension contribution. The only liability for employers is any holiday that accrues.
4
EMPLOYERS CAN TOP THE FURLOUGH UP TO 100% OF SALARY, BUT DON’T NEED TO. The scheme allows employers to pay employees just the furlough amount, if its finances mean it can’t pay more, though employees have to agree to this.
5
NOT ALL EMPLOYEES MUST BE FURLOUGHED. Some staff can be furloughed, while others keep working.
6
FURLOUGHING CAN BE FOR AS LITTLE AS THREE WEEKS. Furloughing can be from 3 weeks to 4 months (though the scheme could be lengthened). If a firm’s work is variable, furloughing can be used to help the firm get through tough periods.
7
EMPLOYEES WHO CAN’T WORK DUE TO SCHOOL CLOSURES CAN BE FURLOUGHED. The Treasury has confirmed to me that those unable to work as schools are closed and they need to be home to look after children, may be furloughed.
8
FIRMS CAN FURLOUGH THOSE SHIELDING IN LINE WITH PUBLIC HEALTH GUIDELINES. If people are in the vulnerable category, and can’t work from home, they can be furloughed.
9
FURLOUGHING IS BETTER THAN REDUNDANCY OR UNPAID LEAVE. Employers aren’t doing anything wrong by furloughing – they’re doing right. The government’s aim is to ‘protect financial victims of the coronavirus’ and ‘enable firms and employees to quickly pick up where they were’. So, if employees need furloughing, employers should try to furlough them. To help, acas.org.uk has produced templates.
10
FURLOUGHING IS BETTER THAN CUTTING HOURS. If only limited work hours are needed then it may be better to furlough some staff, and keep others on full time.
11
IF STAFF LEFT AFTER 28 FEB (OR 19 MARCH) FOR REDUNDANCY OR A NEW JOB, THEY CAN BE REHIRED AND FURLOUGHED. Oddly, there’s two dates this applies to, as the furlough cut off was moved forward. So, employees on the payroll by 28 February or 19 March can be rehired to be furloughed, providing the reason they don’t have income now is an economic knock-on effect of coronavirus (eg their new employer retracted their job offer or made them redundant).