What Are Furloughed Workers and What Does This Mean For Me As An Employee?

As an employee you may be trying to get to grips with the Government’s new job retention scheme announced by the Chancellor recently. Here’s what we know so far:

WHAT ARE FURLOUGHED WORKERS?

Under the newly announced Coronavirus Job Retention Scheme, all employers in the UK with be able to able to access financial support, with the aim of paying part of their employees’ salaries. This is vital to employers who would otherwise have to lay off their employees during the ongoing health crisis.

The term ‘Furloughed workers’ is given to describe the employees whose salaries are, at least partly, being paid by the government scheme. They are not currently working for their employer, but they have not been made redundant either.

HOW DOES THE SCHEME WORK?

The scheme is currently planned to run for an initial three-month period, starting from 1st March 2020, although extension will be possible if necessary.

All UK employers are eligible to apply for the scheme, allowing them to apply for a grant of up to 80% of each employee’s salary, up to a cap of £2,500 per month. The government will also pay the associated employer national insurance contributions and minimum automatic enrollment employer pension contributions on top.

It is up to the discretion of the employer to whether or not they wish to fund the difference between this payment and each employee’s usual salary. Those who have their salary reduced as a result of these changes may still be eligible for support through the welfare system, including Universal Credit.

WHAT IF I HAVE RECENTLY STARTED A NEW JOB?

It’s available to all employers that started a PAYE payroll scheme on or before February 28, 2020.

The advice from the government is that those who are either between jobs, have started at a new place of work or were made redundant after February 28 are eligible to apply for the scheme through their previous employer. However, this is at their discretion and they are not legally obliged to rehire someone.

WHEN WILL I RECEIVE MY WAGES?

Although the furlough scheme can be backdated to March 1, the portal that your employer will use to register your furloughed status will not be up and running until the end of April. This can lead to two situations occurring:

Employers can choose to pay you 80 per cent of your salary on time like you normally would and then claim it back when the portal opens at the end of the month. However, for those that are not financially able or willing to do this, it is within their power to not pay any salary until the money is received from the scheme first.

WHAT IS INCLUDED IN THE 80% AND WHAT ABOUT COMMISSION?

For employees whose pay does not vary, this is their actual salary before tax including fees, compulsory commission payments and past overtime as at 28 February 2020 but excluding discretionary bonuses (including tips), commission and non-cash payments.

For those whose pay varies it is the earnings in the same pay period in the previous year; or the average earnings in the 2019-20 tax year (or fewer if they have worked for less time than this, including a part-month calculation if they were taken in February) whichever is the higher. This will be subject to deductions for income tax and employee NICs in the usual way.

CAN I BE FURLOUGHED FOR MORE THAN ONE JOB AT A TIME?

Under the scheme, each job you work is consider a separate entity, meaning that if you have more than one employer then you can be furloughed from more than one employer at a time.

Consequently, if you are furloughed by two employers you are eligible for government support amounting to up to £5,000 per month. You can also continue working one job while being furloughed on another.

WHAT ABOUT VOLUNTEERING OR TRAINING?

A furloughed worker can take part in volunteer work provided it does not generate revenue for their employer.

If a furloughed worker is required to complete, for example, an online training course then their employer will be required to pay them for the hours spent training

We know that it is a vastly uncertain time for all industries at the moment, with many small businesses struggling to survive. Developments and updates in government policy are happening at an unprecedented speed. We are all hoping that taking the tough decision to Furlough employees will aid the survival of many who are going to need it at this current time.

Here at Copeland we help employees progress their careers in the automotive industry every day. If you’re ready for your next career move start by registering with us here.

Kick-start your next career move

Sign up for our salary guide, advice, jobs & more Sign up now