CV19 – Furlough leave explained

Furlough leave and the 80% wage recovery scheme

The scheme will enable businesses to recover 80% of wage costs (or a maximum of £2,500 per month) for employees on ‘furlough leave’ – This is new in the wake of CV19 and the government will reimburse companies. This is for employers who might have otherwise implemented redundancies, lay-off, unpaid leave or other measures for their employees.

UK businesses are eligible to claim under the scheme. Employees will be covered, but not other workers ie Freelancers or the self-employed. (The government is working on this and is looking to announce something in the w/c 23rd March)

This will be available from March 1st for 3 months but how this is to be accessed is still in the works. It will be reviewed and could be extended depending how the situation develops.

Do employers have to make up the extra 20%?

No, they do not. Some employers may voluntarily bridge this gap, while others may not be able to. This just needs to be made clear to all employees concerned. Bear in mind that if you do this for one employee you ahve to do it for the rest on grounds of potential accusations of discrimination or favouritism.

Will employee’s benefits continue? 

Yes, the person will continue to accrue holiday during this time and will be entitled to all other benefits such as pension.  It is unclear what the 80% will include but it is likely that it will include for essential costly benefits such as pension.  

Can my employees work even from home and still be classed as a furlough worker?

No.  The only way you can access this assistance is if your employee is doing no work whatsoever and has agreed to go on furlough leave.  

How do I access the scheme?  

You must get permission from the employee – this is not something you can force upon them, a letter needs to be sent.  Once signed by them, you can then submit information to HMRC but details are unavailable just yet.  

Even with the furlough situation, you may not start to receive funding just yet.  Therefore, you may need to ask for this initial couple of weeks for people to use holiday and maybe take unpaid leave.