Furlough Leave / Coronavirus Job Retention Scheme Explained
What is Furlough Leave?
As part of the UK Government’s response to Coronavirus, they’ve announced a range of measures to support business and their workers. One of these measures, announced by the Chancellor on Friday 20 March, includes the Coronavirus Job Retention Scheme for workers, known as Furlough Leave.
Furlough Leave is a measure introduced to protect employees who otherwise would have been made redundant or laid off because of the financial pressures of the Coronavirus outbreak.
Where an employer has no option but to make redundancies because of Coronavirus, there’s an alternative to put the worker on Furlough Leave for a period of time. This just means that the employee won’t need to work for this time period but will stay employed with no break in their continuous employment and will remain on the payroll.
HMRC will reimburse the employer 80% of the furloughed workers wage costs, up to a cap of £2,500 a month. The employer can decide if they want to top up the additional 20% of pay, but there’s no legal obligation to do this.
From 25 March 2020, HMRC are working urgently to set up the reimbursement system so they can make payments to employers.
Who Can Claim?
All UK businesses can apply to the scheme, including charitable organisations.
How Long Can an Employee be on Furlough Leave?
Currently the Government is offering the scheme for three months, running from 1 March 2020. They will review the situation and extend if necessary.
Can an Employer Impose Furlough on a Worker?
No, if the employer is suggesting a reduction in salary, the employee should agree to this change in salary, but if the other options are being laid off, made redundant or reduced hours with reduced pay, a period of furlough is probably more attractive.
How to Put an Employee on Furlough Leave
To use the Government’s Furlough Leave, employers must:
- Designate affected employees as ‘furloughed workers’ and notify your employees of this change
- Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal which is currently being created
How to Reclaim Wages for Furloughed individuals
Employers will reclaim wages through the HMRC’s online portal. HMRC are in the process of setting this up to deal specifically with the Coronavirus Job Retention Scheme. We’re waiting for more details of when this will be up and running.
- Employees should only be placed on Furlough Leave if there is a genuine redundancy or lay off situation
- Staff who are still needed to work or those not in redundancy or lay off situations should not be placed on Furlough Leave
- An employee cannot carry out any work whilst on Furlough Leave
The Government is due to provide more details about the Job Retention Scheme and Furlough Leave and some things are yet to be completely clarified. We’ll update this article once we have more information.
If you are an employer or employee and have any queries in relation to Furlough Leave, then please do not hesitate to contact one of our Employment Solicitors.
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