COVID19 & Furlough Leave – What is it and who can claim it?

24-03-2020

Businesses all over the world are learning to cope and develop under new measures in a bid to manage the Coronavirus pandemic. Today many of us across the country are working from home as we enter an unprecedented lockdown period. With each phase of the UK’s response brings new challenges and new information to absorb which can feel overwhelming.

Many business owners will have paid particular interest to last weeks’ announcement regarding the Coronavirus Job Retention Scheme which promised to pay 80% of the salary of retained workers up to £2500 per month. Information about how to access this has trickled down over the weekend. However, many are left asking how they can access this support now. In the sea of Coronavirus information, here is our Furlough Factsheet to help you fish out the key things we know about the scheme.

What is it and who can claim it?

The purpose of the scheme is to help businesses retain staff and avoid redundancies by alleviating the financial pressures from the employer.

Any UK business can claim for support under the scheme but the workers need to be identified as “furloughed workers”. This is a new term to identify people who are currently on a temporary leave of absence because there is no work for them to do.

The workers must be paid through PAYE and they will remain employed by the Company during their period of furlough leave. They cannot do any work while they are “furloughed”.

How much can I claim?

80% of a workers salary up to £2500 per month.

However, the government state that it includes “all employment costs” which suggests this would also include tax and NI payable. Of course, this is something we will receive greater clarification on in the coming weeks.

How long is it for?

The information available suggests that employers can claim salaries retrospectively from 1st March 2020 for a period of 3 months, but it may be extended.

What’s the difference between furlough and lay off?

You must have a contractual right to lay off staff or reduce their hours but many contracts of employment do not have this clause. If employees are laid off they can claim a guarantee payment of up to £29 per day for a maximum of five days in a 3 month period.

There is no contractual right to furlough leave and whilst it brings an additional option where work has diminished, it is still important to ensure you have evidence to suggest that employees have agreed to it as a change to their terms of employment. At present, this is frequently met without resistance as it is an alternative to redundancy for many but as ever, a paper trail is still important.

Of course, in a practical sense being on furlough leave and laid off are the same thing – unpaid leave due to a lack of work.

It would appear that there is greater financial incentive to use furlough leave as opposed to a period of lay off at present. However, of course the devil will be in the detail when the scheme is up and running.

How can I access it?

You will be able to access this support via a portal on the HMRC website which is hurriedly being developed by the government.  It is expected to be set up in the coming weeks and you should then be able to make a claim via the website for this financial support.

The best thing to do is to keep checking the HMRC website for updates but if you would like to receive a notification when the HMRC portal is up and running, please let us know and we will contact you as soon as possible.

What else can I do?

This is a difficult time for business and individuals alike and the situation is changing daily. We have a team of commercial experts who can help you find a solution that’s right for you.


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