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Coronavirus furlough scheme goes live: what you need to know

Joanna Faith
Written By:
Joanna Faith
Posted:
Updated:
20/04/2020

The government’s Coronavirus Job Retention Scheme has gone live today, with thousands of firms expected to apply for funding to cover their staff’s wages during the Covid-19 crisis.

Under the scheme, bosses can apply for a government grant to cover 80% of an employee’s pay, up to a monthly maximum of £2,500. These workers are furloughed, which means they remain on their company’s payroll but must not undertake any work for the business.

Millions of workers have already been furloughed because there is less work for them to do during the lockdown.  It’s hoped the government pay scheme will prevent mass job losses.

Chancellor Rishi Sunak said: “Our unprecedented job retention scheme will protect millions of jobs across the country and is now up and running.

“It’s vital that our economy gets up and running again as soon as it’s safe – and this scheme will allow that to happen.”

The system to claim went live at 8am this morning and HMRC said money should be employers’ bank accounts within six working days.

The scheme was originally set to last until 1 June, but the government last week extended it for another month until the end of June.

Adam Marshall, director general of the British Chambers of Commerce, said: “The opening of the Job Retention scheme is an important milestone for businesses, who can now begin to access the cash they need to pay their staff and protect livelihoods.

“With April’s payday approaching, it is essential that the application process is smooth and that payments are made as soon as possible. Any delay would exacerbate the cash crisis many companies are facing and could threaten jobs and businesses.”

How does the scheme work?

Under the government’s Coronavirus Job Retention Scheme, employers can keep you on their payroll even if you can’t work because of coronavirus. This is called furloughing. The government will pay 80% of your pay, up to a monthly maximum of £2,500.

The government will also cover your national insurance contributions and minimum pension contributions.

Employers can top up the remaining 20% of your salary but they are not obligated to.

Workers who have been furloughed do not have to claim for the grant as this is done by companies. If you have been furloughed, you should receive your pay as normal from your employer.

Anyone who works for an employer with a UK payroll and a UK bank account can be furloughed, as long as they were on their employer’s payroll on or before 19 March.

If you left your job after this date, either because you were made redundant or for a new job, you can be rehired by your old firm and furloughed.

You can be on any type of contract, including a zero-hour contract or a temporary contract and you can be furloughed if you are a foreign national.

Employers can claim here.