The word furlough generally means temporary leave of absence from work. This can be due to economic conditions affecting one particular company or matters affecting the country as a whole. Until now the expression has not carried any meaning in UK employment law.
Furlough leave has been temporarily introduced by the government during the coronavirus pandemic to mean leave offered which keeps employees on the payroll without them working. As the furloughed staff are kept on the payroll, this is different to being laid off without pay or being made redundant. The ability to furlough employees is designed to support employers who are severely affected by economic conditions caused by the coronavirus.
People who get furloughed must not work for the employer during the period of furlough but usually return to their job afterwards unless redundancies follow.
Furloughed workers are those who are unable to work due to the coronavirus because their places of work are having to reduce their workforce or are being forced to close.
The scheme applies to employees on an organisation’s payroll at 28 February that are any of the following:
employees on agency contracts
employees on flexible or zero-hour contracts.
employees who were made redundant since 28 February 2020, if they are rehired by their employer
it is clear that a furloughed employee cannot carry out any work for their employer during the furlough period.
The ability to furlough employees under the Coronavirus Job Retention Scheme will be operational from the end of April. The scheme is backdated and will apply from 1 March for at least three months until 31 May (unless extended).
ipayUK will be making claims monthly, the first claims that we will be able to make hopefully will be processed at the end of April payments will be expected shortly after (unfortunately we will only be making furlong payments when funds are received form HMRC)
The scheme commits to paying furloughed employees 80% of their wages, up to a maximum of £2,500 per month. The wages covered do not include fees, commission and bonuses.
For employees whose pay varies and have been employed for 12 months prior to the claim, an employer can claim and pay the employee the higher of:
a) the same month’s earning from the previous year.
b) the average monthly earnings from the 2019-20 tax year.
For employees whose pay varies but they have been employed for less than a year, the claim should cover the average monthly earnings since they started work.
The government has stated employees on the National Minimum Wage (NMW) can be paid less than this usual legal minimum. They say that the NMW does not apply to furloughed employees. However, if employees are required to engage in training activity, such as completion of an online training courses, whilst they are furloughed, they must be paid at least the NMW for the time spent training.
If you have more than one employer, you can be furloughed for each job. Each job is separate, and the cap applies to each job. You can be furloughed in one job and receive furloughed payments but continue to work for another employer and receive normal wages if your employment contract allows for this.
Furloughed workers must be furloughed for a minimum of 3 consecutive weeks. Once you return to work you will be taken off furlough. You can be furloughed multiple times, but each separate instance MUST be for a minimum period of 3 consecutive weeks.
More information on other benefits that may be available to me can be found below.
If you (or a friend or family) are considering taking advantage of your mortgage lender’s Repayment Holiday scheme.
Please ensure you have completed the registration with your lender before stopping your monthly payments, i.e. Direct Debit (DD) etc.
The payment holiday will not appear on your credit file as missed payments and so will NOT affect your credit score. However, should you cancel the DD before it is approved this may well result in a ‘missed payment’ being recorded and could affect your credit score later on.
From the government announcement, no new proceedings for eviction can be undertaken for three months.
If your tenant is already in arrears, you will need to work with them to arrange a plan for the missed payments. A tenant is expected to pay their rent. If they are unable to do so, arrears will accrue and are still due to the landlord.
You should, where possible start and try to maintain a dialogue with your tenant to fully understand their circumstances, see what they can afford to pay and whether they have looked into financial assistance.
Your lender will do everything they can to help and will discuss the 3-month payment holiday. You need to call them up and explain the situation, and they will be able to talk through your options.
They may want you to provide some verification; for example, a letter from your tenant’s employer confirming that their employment was terminated, plus a copy of your tenancy agreement. They may or may not ask but be prepared.
Thank you to Chris Hornby of Big Sky Finance www.chrishornby.biz
Remember don’t just stop paying your creditors speak to them, many have help facilities in place.