Furlough is now a business buzzword. Most professionals hadn’t heard of it before—now it’s everywhere and you can’t avoid it.
For businesses, it allows them to keep staff on during an international crisis. And for employees, it provides a financial lifeline.
So, it’s a very important piece of UK employment law the government introduced in March 2020.
You should take the time to fully understand it, before making a claim for your business.
You can read on for insights into what furloughing is all about. You can also consider our official furlough software, which makes the whole process much easier for you.
But don’t forget, we also have a coronavirus resource hub to help you during this crisis.
What is furlough leave?
It’s a temporary leave of absence for your employees for economic reasons. It’ll help to save jobs. As well as provide financial security for businesses during these difficult times.
Your business can claim furlough pay through an online form, with employees receiving 80% of their monthly wage.
The UK government announced the initiative on 20th March 2020. Furlough is part of the Job Retention Scheme and is one of the most important parts of the package.
Paying furloughed workers additional amounts isn’t necessary. 80% of their wage is covered by the UK government.
However, you can provide the final 20% if you want to. Although this isn’t a legal requirement.
If you think this is a forced furlough from the UK government, this isn’t the case. The Job Retention Scheme helps your business alleviate the financial pressures of the pandemic.
You have alternative options to furlough, though. It’s simply a good business option to keep your employees on your workforce—in other words, to avoid dismissals and redundancies.
It’s only mandatory furlough in the sense your employees must take the temporary leave.
However, as they’ll receive a large proportion of their wage (with additional top ups from your business, if you decide to do this), it’s unlikely to cause too many issues—as they’ll return to work for you on full pay once the pandemic crisis eases.
So, to clarify, what does furlough mean? It’s a leave of absence for your employees that provides them with monthly finances. While offering your business with economic support.
Furlough navigator tool
Okay, how can you manage your furloughing requirements during coronavirus? Well, our official software makes it a lot easier.
Our furlough navigator tool helps take the pressure off managing the process. Using it, you can take care of the following in no time:
- Make wage claims.
- Record employee details.
- Complying with the Job Retention Scheme.
So, you can quickly record all the details you need to in one place, reducing the time it takes to submit a furlough wage claim.
And to manage the subsequent documentation.
With our software, there’s no need for spreadsheets or filing cabinets. Simply use unlimited storage to maintain your records—for up to five years, as part of government guidelines.
Have a look at our furlough tool pricing to find the right package for your business. We offer fully operational accounts from as little as £2.70 per employee.
Ultimately, it helps you keep track of everything. You can record the employees you have on furlough. Those who aren’t. And store all confirmation letters in a secure system.
It takes the stress out of managing the furlough process, so you can return to running your business during these challenging times.
But there are other important parts of furloughing to learn about. If you’d like to learn more, you can read the rest of our guide.
Furlough vs lay off
Laying off employees may sound like furloughing, but there are important differences to keep in mind.
The pandemic has led to some businesses considering making redundancies, laying off employees, or reducing their hours (or pay).
To make it simple for you, here’s a quick explanation of the difference:
- Furlough: This is a temporary lay off from work. Furloughed workers get paid 80% of their monthly wages and return to their roles—in this case, when lockdown rules are lifted. They mustn’t complete any work during their temporary leave.
- Lay off: This is where an employee receives no work or pay from you over a period of time. You can lay staff off with no pay if there’s a specific term in their contract allowing this. In the absence of such a term, the lay off needs to be paid in full. This is why furloughing is the better option—it comes at no cost to you.
Choosing to furlough employees provides your staff with a financial lifeline. So it’s, obviously, much more preferable for your workforce during this time.
How to make a furlough claim
You can use the government’s official site to check if you can claim furlough. Okay, so what are the basics? We’ll break this down into bullet points for you:
- You must have a PAYE payroll scheme. And you should have had that up and running before 19th March 2020.
- You should have enrolled for PAYE online.
- And you’ll need a UK bank account.
So, to be clear, any business with a UK payroll can make a claim. That includes:
- Recruitment agencies.
- Public authorities.
Now, many businesses get confused with which employees can make a claim. As most small, medium, and large businesses have employees on different contracts of employment.
This part of furlough is pretty simple. You can claim for employees on any sort of employment contract. That includes:
- Agency workers.
- Flexible workers.
- Zero hour contract workers.
Remember, you can also put foreign nationals on furlough. It’s possible to make a claim for any employee on any category of visa.
But, crucially, furloughed employees must not undertake any work while they’re on furlough. Anything linked to providing a service to make money will mean they’re not eligible.
Of course, if you have tasks you’d like completing, you can allocate these over to employees who aren’t furloughed.
Important dates for furlough leave
Now, it’s important to remember that there’s a cut off date for employees. They must have started work with your business on or before 19th March 2020.
Otherwise you can’t make a claim for them, unfortunately.
The result of this is you’ll have to provide an RTI submission as part of any furlough from work application.
This is straightforward. You just submit payment notifications for each employee to HMRC.
Obviously, these must include details indicating the employee was did receive pay on or before 19th March 2020.
If you’re wondering if there’s a possibility of unpaid furlough, this isn’t possible. Employees on furlough will receive 80% of their wage from the UK government.
However, laying off staff will lead to an unpaid situation (if you’re contractually able to do so).
Bear in mind, laid-off staff who have worked in a company for over a month may have entitlement to statutory guarantee pay. That’s currently £30 per day for a maximum of five days.
If you had employees who were employed on 28th February 2020 (but not 19th March 2020), you can employ them again.
You can hire and temporary furlough previous employees if they fit the right criteria. This is also up to you as a business.
That’s if they left after 28th February 2020 and were on your payroll on 28th February 2020. And if there was a notification to HMRC on RTI submission—you should have sent that on, or before, 28th February 2020.
So, in summary, you must have sent an RTI submission notifying of payments about that employee on, or before, 28th February 2020.
You can also rehire staff who left on, or after, 19th March 2020.
However, to do this you’ll need to have had them on your payroll on 19th March 2020. And sent notification to HMRC and RTI—that’s on, or before, 19th March 2020.
So, again, an RTI submission to HMRC notifying it of payments is required to rehire the employee. For on, or before, 19th March 2020.
Voluntary furlough requests
You may have some employees actually request furlough from you.
After all, some members of staff may be looking for some time off work. However, you’re under no obligations to agree with any requests like that.
On a legal front, it’s entirely your decision as an employer.
Again, you can make redundancies if it’s absolutely essential. Or you can lay off staff or reduce their hours.
However, remember the Job Retention Scheme is there to take advantage of. It helps your business and your workforce.
In the long-term, it provides your staff with a positive message that you’ve got their back, on a financial front—that means a lot during this unprecedented crisis.
We can help you out
Get advice on any coronavirus business-related questions you have: 0800 783 2806.