What to do and what not to do when you've been furloughed
Paul Lewis explains what you can – and can’t – do if you’ve been furloughed due to the coronavirus
More than seven million workers are on furlough. The current rules will apply until the end of July, and details of changes from August to October are expected soon.
Firms can ask some or all of their staff who were recorded with HMRC as on the payroll by 19 March to go on furlough, which means they stay at home and do not do their job for at least three weeks. Employers can rotate staff on and off furlough. Workers are paid 80% of their gross pay, subject to a £2,500 limit for anyone earning £37,500 a year or more. Income tax and National Insurance will be deducted as normal, as will pension contributions, unless the employee leaves the scheme or opts out of auto-enrolment.
Student loan contributions are deducted based on the lower amount of pay. If that is below the relevant threshold, then no contributions will be taken.
The employer is paid a grant from the Treasury to cover 80% of wages plus any employer’s NI contributions and pension contributions up to the nominal 3% set for auto-enrolment. While on furlough, workers cannot do any work for their employer. That means they cannot make phone calls, have online meetings, or do anything that will contribute to the firm’s business, including working voluntarily for them. Employers cannot ask furloughed staff to do some work, and employers who do risk losing their grant. This rule may be changed from August. Furloughed workers are free to take work with other employers, unless their contract bans that.
Some employers are telling furloughed individuals to take some annual leave. They can do that, but every day of leave taken must be paid at 100% of wages not 80%, and no HMRC grant will be given for those days of leave. The Government wants firms to consider a slow return to work where it’s possible to do so safely. A worker on furlough can be recalled to work as normal. The terms of that recall should’ve been set out in the letter that put them on furlough. Firms can only impose a pay cut with the employee’s agreement.
Paul Lewis presents Money Box on R4