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To furlough or not to furlough....

I don’t know about you but until recently furlough was not amongst the most frequently used terms in my vocabulary. Now it seems to be everywhere you turn.

But what exactly does it mean?

The dictionary defines it as ‘a leave of absence’. Due to the outbreak of COVID-19 many people are taking ‘a leave of absence’ due to a variety of reasons and we need to make sure that businesses are getting all the financial support that they need but also make sure that we are using these correctly, when necessary and legally.

Placing your staff on furloughed leave in the United Kingdom due to COVID-19 has specific terms and conditions that must be met.

“If you cannot maintain your current workforce because your operations have been severely affected by coronavirus, you can furlough employees and apply for a grant”

- If the work is no longer there

- If you cannot afford to pay your staff

- If you would normally make your staff redundant in these conditions

Then you can furlough your employees

This is a ‘Job retention Scheme’ to prevent redundancies, to help the economy to continue through these difficult times and to help people to continue living. It is not to be used to cover the wages to save the business money and allow the employee to continue to work.

You can furlough your employees and apply for a grant that covers 80% of their usual monthly pay, up to a maximum of £2500 per month. This is a temporary scheme in place for 3 months starting from March 1 2020 but may be extended.

You can access this scheme at any point during this time frame and it doesn’t have to be for the full period. Any employee that you place on furlough must be furloughed for a minimum of 3 consecutive weeks. The employee can be furloughed multiple times but each separate instance must be for a minimum of 3 weeks. When they return to work they must be taken off furlough.

The employee must have been on your PAYE payroll scheme on or before 28th February 2020. Any employee hired after this period cannot be furloughed and claimed for on this scheme. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

The most important part of this scheme which is the part that is often mistaken is this.

When on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue.

This rule also applies to furloughed company directors however they are still allowed to complete statutory duties ie, filing accounts, comply with health and safety etc

Answering emails, posting on social media, taking phone calls etc are all services provided by the employee to the employer, whether they are done out of working hours or in a more relaxed capacity they are still ‘jobs’.

Remember, to be furloughed the only other option would have been to be made redundant and theses tasks will not have been completed anyway.

There is a minefield of information to plough through at the moment and these are extremely stressful times. I encourage you to reach out to your accounts professional or payroll provider and ask them to go through the options with you. Trust me, we want to help.

You can call or email me anytime and I will be more than willing to help you where I can.

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