Furlough pay is a measure devised by the Government to deter employers from laying off workers amid the devastating impact of the coronavirus outbreak on companies. The Chancellor of the Exchequer Rishi Sunak unveiled a £330billion package to support individuals, families and businesses amid the crisis. But when will furlough be paid and do you have to repay it?
What does furlough mean?
Furlough is temporary leave for employees due to the special needs of a company or employer, which may be down to economic conditions at the specific employer or in the economy as a whole.
Furloughed workers in regards to the coronavirus schemes are those who are unable to work because their workplaces have been forced to close due to the viral outbreak.
Furloughed workers are not people who have been made redundant.
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To prevent workplaces from firing employees due to the drop in business amid the coronavirus pandemic, employers are able to access governmental support to continue paying their staff’s wages.
Mr Sunak has promised to pay 80 percent of a worker’s salary up to £2,500 a month after National Insurance, tax and pension contributions.
The Department for Business, Energy and Industrial Strategy said: “To qualify for this scheme, you should not undertake work for them while you are furloughed.
“This will allow your employer to claim a grant of up to 80 percent of your wage for all employment costs, up to a cap of £2,500 per month.
“You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.
“If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
“We intend for the Coronavirus Job Retention Scheme to run for at least three months from March 1, 2020, but will extend if necessary.”
How to access the Coronavirus Job Retention Scheme
All UK businesses with a pay as you earn scheme created and started on or before February 28 are eligible for the scheme.
All employers must designate employees as furloughed employees and notify their employers of this change.
Next employers must submit this information to HMRC about the employees that have been furloughed and their earnings, once the new portal is live.
HMRC is currently working to set up a system to pay these grants.
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When will furlough pay be made?
The Coronavirus Job Retention Scheme is due to run for three months from March 1.
Mr Sunak has said he will extend the scheme if necessary after that point.
To make a claim, companies must submit their applications on the online portal created by HMRC.
The online service has not yet been launched but is scheduled to do so in April.
The government’s Business Support website reads: “We expect the first grants to be paid within weeks, and we’re aiming to get it done before the end of April.
“If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.”
Furlough payments will be made shortly after the online portal opens and claims have been submitted.
Only one claim can be submitted at least every three weeks, which is the minimum length an employee can be furloughed for.
Do you have to pay back furlough?
Furlough pay given by the Government is a grant meaning that it does not need to be repaid.
However, if a furloughed employee undertakes any work for you during the period when they are furloughed, you may have to repay the grant.
The guidance says that this includes “providing services or generating revenue”.
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