The second UK-wide lockdown begins tomorrow, bringing with it a fresh wave of anxiety. A large part of peoples worry will be based on their employment and how the new rules will affect their income. The furlough scheme kept many heads above water during the first lockdown back in March 2020 and with the scheme now being extended until March 2021, we thought we would clarify who is actually entitled to go back on the scheme and how they might find it different this time around.
Furlough scheme in a nutshell
As you will remember, the scheme was brought in to prevent massive amounts of redundancies and to ensure people were still getting financial income during lockdown, which has not changed. Employees placed on the scheme receive 80% of their wages, with the maximum amount one person able to receive being £2,500 per month.
The Coronavirus Job Retention Scheme (the official name of the furlough scheme), was due to end from November and be replaced by a slightly different one known as the Job Support Scheme, but this has been postponed in line with the second lockdown. The furlough scheme will now run until March 2021, giving people some extra breathing space through these tough times.
What employers are allowed to put staff on furlough?
Most employers are eligible for the scheme, even if the business they run is small. Charities can also put employers on furlough, as can recruitment agencies. The main concern is that the employer must have a PAYE payroll scheme and a UK bank account.
It does not matter if employers have been on the furlough scheme before or not, they are entitled to be put back on it if the employer meets the requirements.
Employers can claim for employees on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are also eligible to be furloughed.
How will it be different?
As far as employees go, they should not find any differences between this second furlough and the first one. They should still see 80% of their pay going into their accounts each month. For employers the situation is also looking familiar. During the first lockdown, the government paid 80% of the salary amounting to a maximum of £2,500 per month, plus any associated NI contributions and employers had choice to decide whether to top up the remaining 20% or not, ultimately giving the employee their full wage. The only difference is that employers will be asked to cover National Insurance and employer pension contributions – which averagely accounts for just 5% of total employment costs during the second lockdown.
Keeping employee rights
Employees still have the same rights at work, including:
- Statutory Sick Pay
- annual leave
- maternity and other parental rights
- rights against unfair dismissal
- redundancy payments
Employers can continue to claim for a furloughed employee who is serving a statutory notice period, however grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.
What employees can and cannot do while on furlough
During working hours furloughed employees cannot be asked to do any work for the employer that:
- makes money for the organisation or any organisation linked or associated with the employers’ organisation
- provides services for the employers’ organisation or any organisation linked or associated with the organisation
The employee is allowed to:
- take part in training
- volunteer for another employer or organisation
- work for another employer (if contractually allowed)
Other support available for businesses
As well as the furlough scheme, certain businesses may also qualify for the below:
- Up to £3,000 per month could be given under the Local Restrictions Support Grant if their workplace is forced to close
- £1,000 awarded for every furloughed employee that retains their job until at least the end of January
- £1,500 for every unemployed young person (16-24 year-old) given certain six-month work placements
What do we think?
As a business ourselves, we understand that employee well-being is absolutely key. We support the furlough scheme and believe that if employers are happy to put their workers on it, they should go right ahead. It is a safety net that should not be taken for granted, and while the money paid out will certainly have a detrimental effect on the economy, the alternative of people going without any money is far worse.
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