What does ‘furloughed worker’ mean? How do employers access the Job Retention Scheme during the Coronavirus shutdown

What does ‘furloughed worker’ mean? How do employers access the Job Retention Scheme during coronavirus

If your employer wants to access the Job Retention Scheme announced by the Chancellor Rishi Sunak last week to help save jobs during the Coronavirus pandemic, this guide will help them do that. If you are an employee you might want to share this guide with your employer to help them, to help you.

Chancellor Rishi Sunak announced a series of emergency measures in the fight against Coronavirus. One of those measure is that for the first time in history, the UK Government will pay up to 80% of employees salaries, capped at a maximum £2,500 per month. All employers are able to apply to HMRC for this help.

What are furloughed workers?

Under the Coronavirus Job Retention Scheme, all employers in the UK will be able to access support to continue paying part of employees’ salaries who would otherwise have been laid off during the ongoing health crisis.

Furloughed workers are those whose employers cannot cover staff costs due to coronavirus, and as such they have been asked to stop working, but have not been made redundant.

These employers are now able to get support to continue paying part of their staff’s wages, to avoid redundancies. If you are an employee worried for your job, tell your employer about this scheme. It could save your job and also help your employer through these tough times.

How does the scheme work?

If your employer intends to access the job retention scheme, they should first discuss with you becoming classified as a furloughed worker. This means that you are being kept on your employer’s payroll, rather than being laid off. However; you would not be attending the workplace or carrying out all your usual duties.

To qualify for this scheme, you should not undertake work for your employer while you are furloughed, according to gov.uk.

By doing so, this allows your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month, per employee. The employer is not under a duty to pay you the remaining balance of 20%, although if they do so, it will not affect your entitlement. That part is up to your employer. During this time you, the employee, would remain employed.

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

The scheme will initially run for at least three months, from 1 March 2020, with all UK businesses eligible. The Chancellor has said that this scheme will be extended if necessary.

What should employers do to access the scheme?

To access the Coronavirus Job Retention Scheme, employers will need to take the following steps:

1. Designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law.

2. Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required). Once this portal is set up we will update this blog post with a link and further information on how to apply.

If an employer’s business needs short term cash flow support, they may be eligible for a Coronavirus Business Interruption Loan.

Are employees still covered by the Employment Laws when furloughed?

The answer is ‘yes’. As long as an employee complies with the rules they remain protected by the employment laws. However; this does not mean that employees can do anything that breaches their employment contract whilst they are furloughed. So for example, an employee cannot take a second job whilst furloughed and they cannot set up a new business of their own either.

The scheme is designed to help employees survive through the economic hardships of the Coronavirus pandemic.

If you need further information or advice, contact us at info@solicitorsfirm.com