24/03/2020

If you have been ‘furloughed’ then the new Coronavirus Job Retention Scheme may be able to help. If you are furloughed it essentially means that your employer has given you a temporary leave of absence or a type of sabbatical to help cope with the economic turmoil resulting from COVID-19. If you are on furlough, then you should be at home and not working. However, you remain technically employed.

The new scheme will see the government cover up to 80% of wage costs, up to a cap of £2,500 per month per employee. HMRC are working to set up a system for reimbursement and the first grants are expected to be paid in the coming weeks. The scheme will run for at least 3 months, backdated from 1 March 2020, but will be extended if necessary. The government has not placed any limit on the funds to be provided using this scheme, but the costs will run into the billions each month the scheme is operational.

The use of this scheme is designed to encourage employers to avoid making people redundant and to help avoid significant financial hardship for individuals who have unfortunately been furloughed.  Your employer could choose to fund the differences between this government payment and your salary but is under no obligation to do so.

If your salary is reduced as a result of these changes, you may also be eligible for further welfare support. It appears that these grants will only be available to PAYE workers. It was not clear how this will apply to gig workers or those on zero-hours contracts. There will also need to be proper safeguards to ensure that this scheme is not subject to abuse.