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23 Mar 2020 - News

Your job, furlough, what it means and how it could work

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The government have announced that they are proposing a “furlough “of employees who would be out of a job but still be registered with their employer and therefore receiving 80% of their wage.

  • It applies to all businesses
  • Employees who would otherwise be made redundant can be designated a “furloughed employee” by the employer
  • It is the employer’s decision, but the employee will have to agree (why wouldn’t you as otherwise going to be redundant)
  • It is max 3 months to 1st June when it will be reviewed for extension
  • They will get 80% of wages
  • The employee must not do any work for the employer whilst on furlough
  • The employer does not have to top it up to full wages
  • It is, I believe, based on February’s wages
  • It does not apply to those who have already agreed to reduce their hours
Process

The employer would notify the employee they were selected for furlough and get the employee’s agreement.

It is not yet clear as to how the employee would be requested to return to work but assumed that this would happen when the business was able to re-employee.

Process for payment

As I understand it, the employer still pays and then submits information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required). This is not yet clear but HMRC are working on this as a priority. We hope to have a clear understanding this week.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Summary

So, it is something that an employer can start talking to an employee about if they are thinking about redundancies.  It may be that the business does still go down a redundancy route in some cases, say where the business is not going to be viable and the trainer is going to stop training.  There may be other scenarios where they still do redundancy but hopefully that will come out in some of the further information that should appear this week

It does not help finally in a reduced hours situation as the employee must do no work.

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