The term furlough has been around for quite a while but has come to the fore more recently due to covid 19.
What is it?
The Coronavirus Job Retention Scheme allows all UK employers to access financial support to continue paying part of their employees salary that would otherwise have been laid off due to Covid-19. It prevents against layoffs and redundancies.
Who is eligible?
All UK companies are eligible: limited companies, sole traders who employee people, LLPs, partnerships, charities.
How does it work?
The employer must designate affected employees as furloughed workers.
They should notify the employee that they have been marked as Furlough. Agreement from the employee may be required.
HMRC must be notified of the employee designated as furloughed workers as well as details of their earnings. This is done through an online portal (not currently set up).
HMRC will reimburse 80% of furloughed workers wage costs, based on their February earnings, up to a cap of €2,500 per month.
Employees remain employed
Employer may choose to top-up the other 20% of salary. If they don’t top-up the 20% it will be a deduction in wages.
What are the employment issues?
Changing the status of employees to a furloughed worker remains subject to existing employment law. Generally, where an employee’s contract contains a layoff or short term clause employers should be able to place employees on furlough leave.
Where there is no such clause, it is best advised to get agreement from the employee.
If you need help and advice surrounding the furloughing of your employees get in touch with us here at People HQ.
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