Martin Lewis of MoneySavingExpert: 12 furloughing need-to-knows for employees and firms
- Credit: Gettyy/Money Saving Expert
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 aim of the Coronavirus Job Retention scheme is to protect economic victims of coronavirus, and leave them ready to return straight to work, to kick start the economy once this is over.
While it is an employer’s choice whether to furlough, my hope is this quick briefing, or cheat sheet if you like, will give enough information to hopefully to give employers confidence to furlough staff (and former staff) when appropriate.
MORE: Green grocer inundated with orders following online shop launch1. Furloughing means an employee’s job is put on standby.
The Coronavirus Job Retention Scheme allows firms to put employees 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 March 1.
2. Any staff on the payroll up to March 19 can be furloughed.
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When the furlough scheme was first announced it only applied to those on their employers payroll on February 28. That left those who’d shifted jobs in between times, taking advantage of our flexible labour market, left out, with no support, simply by a misfortune of timing.
Last week the government extended the cut-off date to include anyone employed and on payrolls by March 19, bringing more into the fold, though still not everyone.
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3. It is a grant not a loan.
The money firms receive to cover furloughing does not need repaying.
4. 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 employers national insurance contribution and minimum pension contribution.
The only liability for employers is any holiday entitlement that accrues.
5. 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.
6. Not all employees need to be furloughed.
Some staff can be furloughed, while others keep working.
7. Furloughing can be for as little as three weeks.
Furloughing can be from 3 weeks to four months (the scheme was extended at the end of last week from three months to four months – so now you can get paid till the end of June - and it may be extended again if necessary).
So, if a firm’s work is variable, furloughing can be used to help the firm get through tough periods, then go back to work, then furlough staff again if needed.
MORE: ‘Let down in our time of need’: Staff distraught after roles terminated instead of furloughed8. Employees who can’t work due to school closures can be furloughed.
The treasury has confirmed to me, those unable to work as schools are closed and they need to be home to look after children, may be furloughed.
9. Firms can furlough those shielding in line with public health guidelines.
If people are in the vulnerable category, so have to stay at home, and can’t work from home, they can be furloughed.
10. Furloughing is better for employees than redundancy or unpaid leave.
Employers aren’t doing wrong by furloughing, they’re doing right.
The government’s aim is to ‘protect financial victims of coronavirus’ and ‘enable firms and employees to quickly pick up where they were, once this all ends’. So, if employees need furloughing, employers should try to furlough them.
To help, www.acas.org.uk has produced templates employers can use to furlough staff.
11. Furloughing is better for most staff than cutting hours.
If only limited work hours are needed then it may be better to furlough some staff, and keep the others on full time, rather than having everyone’s hours.
12. If staff left after February 28 for redundancy or a new job, they can be rehired and furloughed.
Employees on the payroll on February 28 who were made redundant 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 job offer/made them redundant).