As an employee, if you’re ‘being furloughed’ it means that your job is being put on hold. The current national emergency has pressed pause on your work. You are still employed, you are still being paid most of your salary and you will have a job to go back to when lockdown ends.
You are in a much better positon than many people right now. Not that the restrictions aren’t difficult to live with. But you do have a regular amount of money coming in and you can keep yourself and your family safe at home.
Coronavirus Job Retention Scheme – some basics
The official name of the government furloughing scheme is the ‘Coronavirus Job Retention Scheme’. It is help for employers to keep paying their employees, even if they are not able to work right now, because of the national health emergency. It is designed to be a temporary measure and has restrictions.
Essentially, the government pays your employer your furloughed salary in order to keep people in employment while work cannot take place.
This is a decision for your employer to make. You cannot apply to be furloughed as an individual worker. It is a scheme that your employer can choose to apply to, if they feel that is the best way to look after you while you can’t be at work. They must let you know that you are being furloughed, by email or letter. This is part of their evidence for HMRC.
Who is allowed to be furloughed?
You can be furloughed as a PAYE employee, as long as you were on the payroll by March 19th 2020.
It includes, apprentices, agency and casual workers, people on zero hours, part time and full time contracts.
How much will I get paid if I’m a furloughed worker?
You will get paid 80% of your usual monthly salary, up to a maximum of £2,500. This can be backdated to March 1st 2020, if you were sent home at this time.
You may have a fluctuating monthly salary. In this case, your ‘usual monthly salary’ is worked out at either your average monthly wage in the 2019-20 tax year, or how much you earned in the same month last year. Your employer should claim for the higher of these two amounts. If you’ve only worked in your job for under one year, they will take an average monthly amount from when you first started.
This calculation of 80% of your salary does not take bonuses or commission into account. Even if your normal monthly wages always contain a commission or bonus amount.
Your employer is allowed to pay you the other 20%, if they can. But they are not obliged to by the regulations of the scheme.
What about other financial stuff, like NICs and maternity pay?
Good question. Here’s a quick round up of your basic financial admin as a furloughed worker:
- National Insurance Contributions and income tax: your employer deducts income tax and NICs from your furloughed pay, as usual.
- Pension payments: 3% of your earnings as pension contribution is paid to your employer as part of the Coronavirus Job Retention Scheme. Any extra they were paying on top may be suspended while the crisis continues. Your pension contribution will come out of the furloughed pay you receive, as normal.
- Holiday Entitlement: Under the Coronavirus Job Retention scheme rules, you are still accruing holiday entitlement when you are furloughed. You and your employer sort out when everyone can take their holiday using their normal procedures. If necessary, you are allowed to take forward four weeks of paid holiday, with two years in which to use it up.
- Other rights: Maternity pay, sick pay and all other employment rights are the same during furloughing.
Is being furloughed the same as being laid off?
No, there are three different terms that are often confused, but mean different things:
- Furloughed: You are still employed on 80% of your salary, but not able to be in work.
- Laid off: You are still employed, but are suspended without pay because you are not able to be in work.
- Redundant: You are not employed because there is no work for you.
Make sure you fully understand what your employer has told you about your work status.
Does being furloughed protect me from redundancy?
No, you can still be made redundant when you are furloughed. Any redundancy package will be based on your earnings from before you were furloughed.
I’ve got two jobs, can they both furlough me?
Yes, you can be furloughed from more than one job. For example, if you have two part time jobs and both employers decide to use the Coronavirus Job Retention Scheme, then you will get two furlough payments of 80% of each salary.
This may take your total to over £2,500 when you add them both together. This is fine, because the rule refers to a £2,500 maximum claim per employee made by the employer. Not the amount received by employees.
Can I get work elsewhere while I am furloughed?
Obviously, 80% of your salary is better than none, but it still leaves a shortfall. If you are in the fortunate position to be able to get other work to bridge that gap, you aren’t breaking any rules. You just need to check that you remain free to return to your original employer that is paying your furloughed wages. And that you get a ‘Starter Checklist Form’ from your new job, it is important that you fill in statement C.
It is very important to note that you cannot be furloughed and continue working for that same employer. If you are being paid through the Coronavirus Job Retention Scheme, then you must stay at home and not be doing any work for that employer.
Is this the same as working from home?
No, if you are able to work from home, then your employer will not be able to use the Coronavirus Job Retention Scheme. You should be paid your salary as normal by your employer, if they expect you to work from home.
Does being furloughed guarantee my job?
Unfortunately not. There is no guarantee implied by your employer using the Coronavirus Job Retention Scheme. It means that they consider this the best option to look after their employees now, while no work can be done. Once businesses reopen, they will each have to assess the situation and see if they can continue as they were before.