The coronavirus outbreak has put the future of many businesses, both big and small, at risk. To help, and to avoid permanent job losses, the government has said it will cover 80% of “furloughed” employees’ wages under the Coronavirus Job Retention Scheme. But what does being “furloughed” mean?
What is furlough?
Being furloughed is essentially a leave of absence, similar to being laid off. But it differs from being laid off in that you will continue to be paid. The government will cover most of your salary to help employers hang on to staff if they are forced to shut their business temporarily.
So I still get paid if I am furloughed?
Yes. Under the Government’s Coronavirus Job Retention Scheme, all UK employers can access financial support to continue paying part of workers’ salaries. Employers can claim up to 80% of workers’ wages, up to a cap of £2,500 per employee per month.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
But will my pay get cut?
Employers can choose to fund the differences between the government’s contribution and a worker’s usual salary, but they don’t have to. So, yes, your pay could get cut.
Do I still have to work during furloughed leave?
No. It’s important that you do not undertake work for your company in order for you to qualify for the Coronavirus Job Retention Scheme.
How do I apply for the scheme and claim my money?
You don’t – your employer must apply for you. Once an employer applies for the scheme, it will inform furloughed employees of this change. Employers then submit furloughed employees’ wages through an online portal created specifically for the Coronavirus Job Retention Scheme. Your employer will inform you of any pay cuts, but money should still come in as normal, as your employer will have 80% of your wage reimbursed by HMRC.
How long does this scheme run for?
The Department for Business, Energy and Industrial Strategy said: “We intend for the Coronavirus Job Retention Scheme to run for at least three months from 1 March 2020, but will extend if necessary.”
What happens afterwards? Will I be kept on?
Unfortunately, we can’t answer that one. The point of the scheme is to avoid redundancies and staff cuts, so ideally yes. However it’s unclear how much longer this will go on for and the state companies will be in after.
Nic studied for a BA in journalism at Cardiff University, and has an MA in magazine journalism from City University. She joined MoneyWeek in 2019.
Contributions to Tax-Free Childcare accounts rise but many parents aren't using the scheme
News Fewer than 60% of open Tax-Free Childcare accounts are used - could you be missing out?
By Marc Shoffman Published
Pensioners to receive up to £600 in winter support - who is eligible and how to claim
Up to £600 in cost-of-living payments is starting to land in pensioners’ bank accounts. We explain who qualifies and what to do if you don’t receive the cash.
By Ruth Emery Published
UK wages grow at a record pace
The latest UK wages data will add pressure on the BoE to push interest rates even higher.
By Nicole García Mérida Published
Trapped in a time of zombie government
It’s not just companies that are eking out an existence, says Max King. The state is in the twilight zone too.
By Max King Published
America is in deep denial over debt
The downgrade in America’s credit rating was much criticised by the US government, says Alex Rankine. But was it a long time coming?
By Alex Rankine Published
UK economy avoids stagnation with surprise growth
Gross domestic product increased by 0.2% in the second quarter and by 0.5% in June
By Pedro Gonçalves Published
Bank of England raises interest rates to 5.25%
The Bank has hiked rates from 5% to 5.25%, marking the 14th increase in a row. We explain what it means for savers and homeowners - and whether more rate rises are on the horizon
By Ruth Emery Published
UK wage growth hits a record high
Stubborn inflation fuels wage growth, hitting a 20-year record high. But unemployment jumps
By Vaishali Varu Published
UK inflation remains at 8.7% ‒ what it means for your money
Inflation was unmoved at 8.7% in the 12 months to May. What does this ‘sticky’ rate of inflation mean for your money?
By John Fitzsimons Published
VICE bankruptcy: how did it happen?
Was the VICE bankruptcy inevitable? We look into how the once multibillion-dollar came crashing down.
By Jane Lewis Published