Before March this year, many people hadn’t ever head of the furlough scheme. With the onset of the coronavirus pandemic it has become something that we are all now familiar with. Whether you have been furloughed by your employer or want to know more about it, here’s our brief guide.
If your company cannot give you work due to the coronavirus outbreak, you are likely to have been furloughed and your employer would have written to you explaining the situation. If you were made redundant after February 28th, your employer can choose to rehire you under the scheme.
Over the next few months, millions will rely on the furlough scheme although it doesn’t apply to employees who had already signed a contract or switched jobs after the cut-off date 28th February.
What is furlough?
Furlough supports businesses that have been hit by the effects of the Coronovirus (COVID-19) crisis. These include companies within industries that have come to a standstill including pubs, restaurants, cafes, travel firms, hotels, airlines, estate agents, retailers, several service providers and more. Only essential businesses are currently still open. A recent poll by YouGov suggested that 14% of workers had already lost their job due to Coronovirus. The treasury expected 10% of private firms to use the scheme but 44% of those polled have indicated that they will place at least half of their staff on furlough.
Furlough provides temporary help to pay 80% of the average annual wage of those who cannot do their jobs. The aim is to help companies retain employees and keep them on the payroll rather than make them redundant, even if they aren’t working.
How much will you receive?
The amount that companies can claim back from the government is 80% of an employees salary, up to £2,500 per month before tax per employee. The company can choose to top this up to the full monthly amount. You are required to have been on the payroll of the company since at least 28 February 2020 and can be full time, part time, or on a flexible, zero-hour or agency contract. The minimum amount of time you can be furloughed for is three weeks. The scheme operates for three months from March 1st although most people won’t receive furlough until the end of April in the first instance.
If your wages vary each month, your salary will be based on either your average monthly wage from the previous tax year or the same salary as the previous year for that particular month – whichever is higher.
Does it include bonuses?
You will receive up to 80% of your core salary and it doesn’t include any bonus or commission payments you were due to receive. It will also cover the minimum automatic enrolment pension contributions made by your employer, along with their National Insurance contributions.
If you are on furlough you will have the same employment rights. If you become unwell, you will be placed on statutory sick pay and placed on furlough when you recover. If you are shielding, you are also eligible.
If you have been furloughed, you cannot do any work for your employer. If you have more than one employer, you can receive furlough from any of them up to £2,500. You can also continue working for any employer that still requires your services and you can still volunteer for your company as long as you aren’t creating revenue or providing a service.
You can’t do any work for your employer if you have been furloughed.
When furlough ends
When furlough ends your company is under no obligation to keep on employees, but the government has indicated that the scheme will be extended beyond the end of May if required. However, the hope is that when furlough ends, restrictions will have been lifted and businesses can operate as normal enabling companies to pay their employees as before.
We are still here and on-hand to help you to navigate this difficult time. Whether you want to find out more about taking a mortgage break, proceeding with a mortgage offer or remortgaging, talk to our team today.