There's a growing worry amongst employees about being furloughed. Being furloughed is a positive step that could help the country to recover as quickly as possible once the lockdown is lifted. Knowing what it means and how it might affect you is a great way of reducing any fears you may have about it. If you've heard the phrase but don't know what it might mean for you as an employee, read on:
The ability to furlough employees through the Coronavirus Job Retention Scheme is how the government hopes to help businesses avoid redundancies. To be eligible, the employer has to have a PAYE scheme; so if you're an employee on PAYE then you could be furloughed by your employer.
Where employees are furloughed, employers can claim a grant of up to "80% of your wage for all employment costs, up to a cap of £2,500 per month". Claims for the grant can be backdated to 1 March, and whilst the scheme is set to run for only 3 months, there is provision for it to be extended if necessary.
UPDATE 15 April - the new date for furlough eligibility is 19 March. Given that many people start new jobs on the first Monday of the month, the previous date of 28 Feb was always going to cause problems. Thankfully HMRC have now changed the date, which will help many new hires who had previously been ineligible. Great news indeed!
Your employer must designate affected employees in order to claim the 80% grant through the HMRC portal (UPDATE 8 April - this will be open on 20 April, reimbursements will be made on 30 April).
UPDATE 8 April - TUPEd employees who are TUPEd after 28 February will be eligible for furlough.
Whilst your employer is required to inform you, a change to your employment status is still subject to employment law. Therefore, you will have to agree to be furloughed if there is no contractual provision for a change or alteration to your employment contract. Any agreement must be in writing and records should be kept for 5 years.
UPDATE 4 April: Apprentices can be furloughed. Individuals can furlough employees (eg a cleaner or nanny so long as they have been paid through PAYE). Employees that were made redundant after the 28 February can be rehired and put on furlough.
If you are currently getting SSP you cannot be furloughed. Once you stop receiving SSP you can be furloughed.
Furloughed employees cannot work
One of the key points to note, is that employees must not do any work for their employer whilst furloughed. Work includes anything that makes your employer money or provides a service for them. You can undertake training or do voluntary work. Your employer can assist you in securing training or voluntary opportunities.
UPDATE 4 April: if you have been furloughed, you can go and work for another employer and get 100% salary for that role. The rationale for this might be to allow for redistribution of labour e.g. to enable people to take jobs in agricultural picking, the NHS or care professions.
UPDATE 4 April: For employees employed by two employers at 28 February, each employment is subject to the same £2,500 cap.
Furloughed employees remain employed by their employer throughout the time they are furloughed. This is important for continuity of employment purposes. It also means that you continue to accrue holiday and any other entitlements while furloughed.
Employers will have discretion to fund the 20% not covered by the government grant, but they do not have to if they can get your agreement. This means that if you are furloughed you will likely have to adjust to an income 20% lower than normal. As many people live to their maximum earnings, it can be worrying to see a sudden reduction in income.
UPDATE 8 April -
Holidays and annual leave can be taken while on furlough but they must be paid at 100% not 80%.
Can you refuse to be furloughed?
If your employer has to get your agreement, does this mean that you can refuse to be furloughed? Yes, but considering that the alternative might be redundancy it could be prudent to agree to be furloughed.
While furloughed, your employer is still liable to pay 100% of your salary (80% of which the government will fund through the Coronavirus Job Retention Scheme). Your employer may be telling you that you are only going to get 80% of your salary. Again, this will require a change to your terms and conditions of employment which cannot be done without your agreement. Therefore, your employer will have to get your agreement to a 20% reduction in salary while you are furloughed. Considering the alternatives (see below) a 20% reduction in income could rightly be considered preferable to lay-off without pay or redundancy.
Adjusting to a reduction in income
It's important at this time to do a thorough cashflow projection. Look at your outgoings, what can you cancel or reduce? Consider the fact that you won't be commuting or buying lunches whilst at work so you may be better off or at "break even". If you're struggling to pay bills, speak to your creditors as early as possible. Check out supermarket websites and online cooking forums for tasty, healthy recipes on a budget. Try ASDA who impressed me this week with their store-cupboard recipe ideas!
Given the dire situation that many businesses may be facing, it's likely that many employees will face one of three scenarios:
- Laid off without pay
- Agree to be furloughed (at either 100% salary or 80% salary by agreement)
Looking After Your Mental Wellbeing
If you've been furloughed, and you're missing the social aspects of work then it's essential to take steps to help you cope with the effects of isolation. Being asked not to go into work and to stop working altogether can lead to a multitude of emotions. It may feel like grief, as you come to terms with the temporary loss of your role and/or identity. You might suffer from mood swings. Your sleep patterns may be interrupted either because you're doing less physical activity or because you're worried about your future. Staying happy and healthy will help you to get through the lockdown and back to work.
Here are some ideas to help you stay mentally and physically well:
- eat a balanced diet and drink more water
- take daily exercise
- open the windows to let fresh air in
- embrace a new indoor hobby
- read a book that you've always wanted to read but never found the time
- learn a new skill (Coursera, FutureLearn, Teachable)
- join an online group with likeminded people
- keep in touch with your colleagues
- ask your employer to stay in touch with regular updates
- learn to meditate (check out Insight Timer)
The government has produced an excellent resource for guidance on social distancing, it can be viewed HERE.
It's important to keep the wheels of industry turning in order to emerge from the lockdown in as strong a position as possible. We can do that by helping employers to protect as many jobs as possible.
I hope this article has allayed any fears you had about furlough.
UPDATED 15 April
UPDATED 9 April
UPDATED 5 April
This article does not constitute legal advice, it is meant for information only. If you are in any doubt about your rights as an employee consult either a solicitor, the Citizens Advice Bureau, your local Law Centre and / or your company HR department.