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Everything you need to know about being furloughed

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Written by: Emma Lunn
09/03/2021
Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of being furloughed firmly into the spotlight.

Under the government’s Coronavirus Jobs Retention Scheme (CJRS) employers can furlough employers who can’t work due to coronavirus restrictions.

Being furloughed may sound scary, but it’s not necessarily a bad thing as it means you should be able to go back to your job once the coronavirus pandemic is over and things return to normal.

Furlough in 2020

The furlough scheme was first introduced by chancellor Rishi Sunak in March, when the government paid 80% of furloughed workers’ wages up to a monthly maximum of £2,500.

The government also covered workers’ national insurance contributions and minimum pension contributions. Employers had the option, but no obligation, to top-up workers’ wages to 100% of their normal pay.

The furlough scheme started to wind down from late summer. In August employers started having to pay employees’ national insurance contributions and pension contributions.

September saw the government covering 70% of salaries and employers 10%. In October the figures changed to 60% and 20%.

The furlough scheme was due to end on 31 October 2020 and be replaced by the Job Support Scheme from 1 November. But the second national lockdown, which began on 5 November, caused these plans to be scrapped.

The current furlough scheme

On 5 November 2020 it was confirmed that the furlough scheme had been extended until the end of March 2021. It was then extended once again in the recent Budget until the end of September.

Under current rules employees receive 80% of their current salary for hours not worked, up to a maximum of £2,500. 

However, the amounts paid by employers will start to increase over the next few months. Until June, the government will continue to cover 80% of wages for hours not worked, but from July this will drop to 70% with employers paying the remaining 10% as well as National Insurance employer pension contributions.

Then in August and September the amount paid by the government will drop to 60%, with employers covering the other 20%. 

Workers can be brought back to work full-time or on a part-time basis if it suits the needs of the business. In this situation your employer will be responsible for paying your salary for the hours you work and can furlough you for the remaining hours.

Will I receive my salary from the government?

No, your employer will still pay your salary. It is responsible for claiming through the Coronavirus Job Retention Scheme on your behalf.

When will furlough end?

The furlough scheme is due to end on 30 September 2021, but given the fact it has been repeatedly extended over the last year it may be best to view that as the date the government hopes the scheme will conclude.

Will my company top up my salary?

Your employer can top up the remaining 20% of your salary if it wishes, but it is not mandatory.

Can I continue to work if I’ve been furloughed?

You are not allowed to undertake work for your employer while on furlough hours, but you can go on training courses or do training online.

However, depending on your contract, you may be able to work elsewhere. Second jobs will not affect your employer’s ability to claim under the government scheme.

Who can be furloughed?

To be eligible for furlough, employees must have been on an employer’s PAYE payroll by 23:59 on 2 March. There’s no requirement that either the employer or employee used the furlough scheme previously to be eligible this time round.

From 1 November 2020, there isn’t a limit on the number of employees that can be placed onto furlough. In addition, there is no minimum timeframe that an employee must be on the furlough scheme to be eligible.

Your employer must confirm in writing to you that you have been furloughed, and keep a written record for five years.

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

Employees who have been made redundant or stopped working but were employed and on the payroll on 23 September 2020 can be re-employed and claimed for.

Any employee who was on a fixed-term contract that has expired since 23 September 2020, can also be re-employed and claimed for.

How long can I be furloughed for?

Flexible furlough agreements for individual workers can last any amount of time.

However, employees must make company furlough claims for a minimum claim period of seven consecutive calendar days, according to government guidance.

Furlough and redundancy

The furlough scheme is designed as an alternative to redundancy during the pandemic, but inevitably, some businesses will not be able to survive as they are. This means redundancy could be on the cards for workers.

If you’re in redundancy talks with your employer, you could request to be furloughed instead, helping get some money in while you look for a job elsewhere.

Read our guide to furlough and redundancy for more information.

Does being on furlough affect benefits?

As being furloughed means a change in your circumstances, a number of benefits can be affected by the amount you earn. The main ones are Universal Credit, Working Tax Credits and Housing Benefit.

See our Furlough and benefits guide for more information.

What does furlough mean for my pension?

There is currently no change to the automatic enrolment rules for defined contribution (DC) pension schemes, the timescales for contribution payments, nor any allowances for a payment holiday.

This means unless you are told otherwise, your own pension contributions and your employer’s contribution will continue at the current percentage but will be based on the amount you are paid while on furlough rather than your normal salary.

See our Furlough and pension guide for more information.

Furlough and maternity entitlement

Furloughed workers planning to take paid parental or adoption leave (on or after 25 April) will be entitled to pay based on their usual earnings rather than a reduced furloughed rate, the government confirmed.

This method of calculation of earnings will apply to maternity pay, paternity pay, shared parental pay, parental bereavement pay, and adoption pay.

If you’re on statutory maternity leave, you still have the right to return to work.

See our Furloughed workers to receive full parental leave pay for more information.

What happens if I’ve booked holiday during furlough?

Annual leave can be taken at the same time as furlough and this means your employer must pay you your standard rate, rather than the reduced rate under the furlough scheme. Whether you are able to cancel or amend your holiday leave is down to your employer.

The law was recently changed to allow carry over into the next two leave years where it’s not been reasonably practicable to take it in this leave year because of coronavirus. However, this isn’t an automatic entitlement.

Training during furlough

Workers can undertake training and are encouraged to do so as long as they’re not providing any service for the business or generating revenue.

Here they’re entitled to be paid at least the national minimum wage for this time which should mostly be covered by the 80% job retention scheme. However, government guidance confirms firms may be required to top-up salaries where wages fall below the minimum requirement.

The government is also offering free online courses to adults at home due to the coronavirus lockdown.

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