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Furlough scheme extended to October

Soar Recruitment

The Coronavirus Job Retention Scheme will be extended, for four months, until the end of October

Rishi Sunak

Chancellor of the Exchequer at HM Treasury says "By that point, we will have provided eight months of support to British people and businesses. Until the end of July, there will be no changes to the scheme whatsoever.

From August to October the scheme will continue, for all sectors and regions of the UK, but with greater flexibility to support the transition back to work. Employers currently using the scheme will be able to bring employees back part-time.

To change their incentives, we will ask employers to start sharing, with the government, the costs of paying people’s salaries.

Further detail will follow by the end of May but I want to assure people one thing won’t change: Workers will, through the combined efforts of government and employers, continue to receive the same level of support as they do now, at 80% of their salary, up to £2,500"

What does the furlough scheme mean?

To furlough means to “lay off or suspend temporarily”, usually without pay. It's not a recognised term in UK employment law, although it is commonly used in the US, which is why it left many puzzled when the Chancellor used the term in his radical employment plan. Government guidelines says someone is furloughed if they remain employed but are not undertaking work.

How does the Uk's furlough scheme work?

Under new rules from March 1 and running until September, companies can now furlough employees rather than fire them. Through this scheme, the government will pay up to 80 per cent of people’s wages, up to a maximum of £2,500 per month. Anyone working in a full time job (or on a PAYE basis) on March 19 can be furloughed. This includes people on zero hours contracts or those working flexibly. Unfortunately, it does not apply to people that might have switched jobs between the end of February and the government announcement.

Being placed on furlough is similar to gardening leave. You would still be paid by your employer and will still pay taxes from your income – but you would not be able to continue working for your employer for the duration of the furlough. In this case, you would effectively be paid not to work until the end of June.

The grant, which will not start paying out until April, can be backdated to March 1, according to government guidelines. The minimum time that an employee can be furloughed is three weeks, and companies cannot rotate furloughed workers – which is problematic if someone still working becomes ill, according to a blog by employment law firm Farrer & Co. Lawyers said that those already self-isolating cannot be furloughed (and must be paid statutory sick pay) until they return to work. Once they return, they can be furloughed. And people who are “shielding” and vulnerable to severe illness caused by coronavirus can still be placed on furlough.

There is no guarantee that your employer will keep you on after the scheme ends. And if you are furloughed, you will not qualify for 80 per cent of your salary if you earn more than £2,500 per month. In that case, an employer could choose to “top up” your salary, or you could be eligible for support through the welfare system, including Universal Credit.

If you receive a regular salary, the 80 per cent should be calculated based on an employee’s actual salary before tax (their gross salary), as of March 19.

If your pay varies (because you are on a zero hours contract or flexible working contract, for example), the 80 per cent limit will be applied to the same month’s earnings from a previous year, the average monthly earnings for the 2019/20 tax year or an average of their monthly earnings since they started work – whichever is highest.

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