Furlough meaning: What is furlough, how much is it and when will payments be made? | Personal Finance

Workers in Britain will receive a percentage of their wages as part of Chancellor of the Exchequer Rishi Sunak’s plan to save the UK economy, which has been badly hit by the coronavirus outbreak. Mr Sunak has offered up to £330 billion to help out struggling workers and business owners. The Chancellor pledged to cover 80 percent of salaries up to £2,500 per month, with all employers able to apply to HMRC to pay the wages of people who are furloughed.

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The Government’s website reads: “If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker.

“This would mean that you are kept on your employer’s payroll, rather than being laid off. To qualify for this scheme, you should not undertake work for them while you are furloughed.

“This will allow your employer to claim a grant of up to 80 percent of your wage for all employment costs, up to a cap of £2,500 per month.

“You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.”

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Furlough meaning: Workers will be able to claim furlough payments (Image: GETTY)Furlough: Chancellor Rishi Sunak and Prime Minister Boris Johnson announced the scheme (Image: GETTY)

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A furlough is a temporary leave of employees due to special needs of a company or employer.

In this case, furloughed workers are those unable to work due to the coronavirus pandemic because their place of work has been forced to close.

Employers are now able to access support to continue paying part of their staff’s wages, to avoid redundancies.

This is part of what the Government has called the Job Retention Scheme, and employees who wish to access this should speak with their employers to be classified as a furloughed worker.

Phil Crowe, Employment Law partner at Shoosmiths, said: “We are seeing a lot of businesses looking to go down the route of the Government’s Furlough Scheme (Coronavirus Job Retention Scheme), which will provide UK employers with support by paying 80 percent of the wages of staff who would have otherwise been laid off as a result of Coronavirus.

“While, the measure has been widely welcomed by employers, its success will rely on employees agreeing and embracing the rules set out by the new scheme.

“Employers and managers need to start anticipating possible job losses now and if they think they may need to use the scheme to help prevent redundancies, they need to start having these conversations with staff as soon as possible.

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Furlough meaning: Many workers have been forced to stay at home (Image: GETTY)

“Employees are understandably worried and the earlier these discussions can happen the easier it will be to reassure staff about the potential measures that can be put in place to protect them financially.

“The key is to have open, frank and honest communication with your team. Don’t make promises you can’t fulfil, but explain that the new programme should help businesses ride out the storm until the economy bounces back.

“Set out the situation and make it clear what the alternatives are – for example if affected staff don’t agree to be furloughed in the short term it could have a domino effect and lead to wider problems for the business, including whole teams being made redundant or even in the worst cases businesses going under.

“Now is the time for everyone to be working side by side. The Government’s new job retention scheme will only work if employers and employees work together and decide on a course of action which puts the business and its wider workforce first.”

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Furloughed workers can claim up to 80 percent of wages with a limit of £2,500 per month.

The Department for Business, Energy and Industrial Strategy said: “To qualify for this scheme, you should not undertake work for them while you are furloughed.

“This will allow your employer to claim a grant of up to 80 percent of your wage for all employment costs, up to a cap of £2,500 per month.

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“You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.

“If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.”

Employees that have been furloughed have the same rights as they did previously.

That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

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The online service to claim payments is not available yet, however, the Government experts it to be available by the end of April 2020. https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

You can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for.

Claims can be backdated until March 1 if applicable.

The Department for Business, Energy and Industrial Strategy said: “We intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.”

When the Government ends the scheme, business owners must make a decision as to whether employees can return to their duties.

If not, it may be necessary to consider termination of employment.

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