Furlough Q & A

At the end of last week, the Government published more details of how the furlough scheme will work in the next few months until the end of October, when the scheme finishes.

Here we highlight what the changes mean.

Question: How does furlough work?

Answer: The furlough scheme – also known as the Coronavirus Job Retention Scheme – aims to stop people who might not have been able to work because of the coronavirus pandemic from losing their jobs. It is an agreement between employer and employee and must be for a minimum of three weeks. The employer should outline the agreement in writing. Under the scheme the Government agreed to pay 80% of workers’ earnings up to a cap of 2.5K pounds a month. Employers can top up the extra 20%. This will change in August [see below].

Q: Is it just for people whose workplace is closed?

A: Generally, furlough is for people who cannot work due to the impact of the coronavirus. This mainly means people whose workplace is closed, for instance, bars and restaurants or whose jobs would have been made redundant due to lost sales, earnings, etc, as a result of the pandemic. It also includes parents who cannot work due to their caring responsibilities, for instance, because their child’s nursery is closed.

Q: How is the scheme changing?

A: The scheme is now closed to new joiners. From August, employers will have to start contributed towards the scheme. In August they will need to pay National Insurance and pension contributions for the hours the employee is on furlough. From September the Government will pay 70% of wages up to a cap of £2,187.50. Employers will pay NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500. From October the Government will pay 60% of wages up to a cap of £1,875. Employers will pay NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500 for the time they are furloughed.

Q: Can I still be furloughed?

A: You will need to have been furloughed before 10th June to qualify for being furloughed again – unless you are returning from extended parental leave, such as maternity leave. To qualify for this other colleagues in your company must have been furloughed in the past.

Q: How does flexible furlough work?

A: The flexible furlough scheme starts on 1st July and allows people to come back to work on different working patterns with employers paying for the hours worked and the Government topping up to their normal weekly salary as of 19th March so, for example, if they work half their normal hours, the Government would pay 80%, 70% or 60% [depending on the month] of half of their normal wages, with the cap mentioned above being pro rata’d accordingly.

If they work variable hours, their pay would be calculated based on the higher of the average number of hours the individual has worked in the tax year 2019/20 or the corresponding calendar period in the tax year 2019/20.

A flexible furlough agreement can last any time from a minimum of seven days to the end of October when the scheme ends. Employers could take people on and off flexible furlough over the next months.

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