Being furloughed – what does it mean?

As the world has been thrust into the uncertainty and economic crisis of the Covid-19 pandemic, unemployment numbers have risen to unprecedented heights. While some people have been laid off or ‘let go,’ others have been furloughed. But what exactly does furlough mean for employees?

Have you been furloughed? Or maybe your bosses have mentioned that furlough is a possibility? If so, read our guide to everything you need to know about being furloughed.

What is furlough?

If you are like most people across the UK, you were likely unfamiliar with the term ‘furlough’ until the outbreak of the Covid-19 pandemic. ‘Furlough’ means to be sent home with pay. It’s a term that is usually encountered during times of economic hardship or crisis in which the government steps in to help businesses and prevent them from closing their doors.[i] Businesses will put their employees on furlough because they are not earning any profits during the pandemic and/or will simply have nothing for their employees to do.

Under the current Coronavirus Job Retention Scheme, the government will assist your employer in paying you 80% of your wage, up to a maximum of £2,500 each month. This scheme does not apply to self-employed people, who are eligible for their own SEISS (Self-Employment Income Support Scheme) grants.

You do not automatically qualify for the current furlough scheme, and you cannot apply for the money yourself – your employer must first agree to the conditions and apply to the government. Some employers choose to top up the remaining 20%, but this is not a requirement. Similarly, if you usually earn more than £2,500 each month, your employer may choose to top you up. Again, this is not a requirement. You will still be required to pay your typical national insurance contributions and income tax while you are on furlough.

Remember – even if you are on a zero-hour contract, you are still entitled to furlough pay.[ii] In this case, your employer will pay you 80% of your average monthly wages, since the time that you started working for them. If you have worked for your company for less than one year, they will pro-rata your average monthly salary. You are not eligible for furlough pay if you began working on 28 February 2020. In this case, you should apply for unemployment benefits.

What does it mean for employees?

Simply put, your time on furlough is your time. It is up to you to do with it what you choose! For some people, this will mean taking care of kids and helping them do their schooling, which allows for no downtime at all.

Even if you are not offered a furlough scheme, you can ask to be furloughed if you meet certain condition but remember that your employer does not have to agree. You can ask to be furloughed if you meet one or more of the following criteria:

• You are following government guidance and therefore shielding, which means that you are ‘extremely vulnerable’
• You live with an ‘extremely vulnerable’ person
• You need to care for your children while schools are closed
• You have a health condition that is causing you to worry about Covid-19
• You are pregnant
• You are over the age of 70

Your employer may turn down your request, but you can ask for an appeal on their decision.

Remember – your employer should never ask you to do any work while you are furloughed (until 1 August, when they can ask you to work a set number of part-time hours). This includes voluntary work or any tasks that will earn them money. They can, however, ask you to do training, including online courses. If they do ask you to work, they are committing tax fraud, which is a criminal offence, and you could report them to HM Revenue and Customs (HMRC).

How long does furlough last?

While the initial Coronavirus Job Retention Scheme was set to end in July, on 12 May the Chancellor announced that it would continue for an additional four months.[iii] It will now last until 31 October 2020, with new flexibility measures put in place beginning in August. As of the start of August, employees will be able to return to work on a part-time basis to allow for a gradual return to normal.

The government will continue to help businesses pay their employees, topping up these part-time wages (funded by the employer) to 80% of the employee’s regular full-time salary, up to £2,500 each month.

Payment during furlough

By now you are probably wondering – how do I get paid during furlough? It is easier than you probably think.[iv] You are paid by your employer as usual and continue to accrue holiday leave. As of the beginning of August, your employer will be able to ask you to come back to work part-time.

Can I get another job during furlough?

If you are keen to earn some extra money, you might wonder – can furloughed employees get another job? The answer is yes – if your employer doesn’t mind you taking on another job.[v] After all, you are still employed by your place of work, so getting another job could mean that you are in breach of contract.

If they don’t mind you taking on a side hustle (make sure you get this in writing), you could consider making deliveries for takeaways, stocking shelves at grocery stores, or picking fruit and vegetables. If you don’t need the additional income, you could consider volunteering in your community, which is much needed at this time.

Can I collect unemployment benefits if I am furloughed?

If being on furlough reduces your income, you might be able to apply for Universal Credit.[vi] Your furlough earnings will be assessed like any other earnings and will therefore affect the amount of money you receive from Universal Credit. If your contract was for 16 hours or fewer before being placed on furlough, you might be eligible to apply for New Style Jobseeker’s Allowance (JSA). Your Universal Credit allowance will not affect your employer.

Make the most of it, what you can do during furlough

If you’ve been spending any time on social media (and let’s face it, we all have) you’ve probably seen loads of #quarantinehobbies. Whether it’s making sourdough starter from scratch, baking banana bread, or remodelling every room in the house, it seems that everyone is busy with new hobbies! Do you have a passion that you’ve never had time to indulge? Whether it be gardening, surfing, yoga, or wine tasting, now is the time to get serious about your hobbies.

Maybe you have been thinking about improving your skill set, learning a new trade, or just expanding your mind? Being furloughed is the perfect time for education. Of course, in-class lessons and courses aren’t practical amidst the pandemic. Thankfully, you can engage in a range of home learning courses from the comfort and safety of your own home. Make the most of this time and learn all about a new subject or gain a new skill.

Here are some of the most common quarantine hobbies:

• Scrapbooking to make the most of the memories during this strange time
• Online exercise, such as yoga, Pilates, weight training, and kickboxing
• Baking bread, including the ever-popular sourdough
• Life drawing, because we all have a lot of time in home!
• Adopting a pet, because sweet dog and cat snuggles are the best
• Knitting a cosy jumper that will look dashing next Fall
• Learning a new language on Duolingo or Rosetta Stone
• Cycling, hiking, and trail biking to make the most of the great outdoors

Have you been making the most of your time on furlough?

Final thoughts

While the Covid-19 pandemic has not been easy on anyone, hopefully the Government’s Coronavirus Job Retention Scheme will ease most of your financial troubles.

Reference list

Bernal, N. (2020). The UK’s coronavirus furlough scheme, explained by experts. [online] Wired UK. Available at: https://www.wired.co.uk/article/uk-furlough-scheme-job-protection [Accessed 19 July. 2020].

Canocchi, C. (2020). I’ve been furloughed: What does it mean? [online] This is Money. Available at: https://www.thisismoney.co.uk/money/news/article-8168523/Ive-furloughed-does-mean-companies-doing-happens-next.html [Accessed 19 July. 2020].

Cavanagh, N., Knapman, H. and Benwell, S. (2020). Can you get another job while on furlough during coronavirus? [online] The Sun. Available at: https://www.thesun.co.uk/money/11310495/furlough-another-job-coronavirus/ [Accessed 19 July. 2020].

Citizen’s Advice (2020). Coronavirus – being furloughed if you can’t work. [online] www.citizensadvice.org.uk. Available at: https://www.citizensadvice.org.uk/work/coronavirus-being-furloughed-if-you-cant-work/ [Accessed 19 July. 2020].

Department for Work and Benefits (2020). Furlough. [online] Understanding Universal Credit. Available at: https://www.understandinguniversalcredit.gov.uk/employment-and-benefits-support/furlough/#:~:text=Claiming%20benefits%20whilst%20on%20furlough&text=If%20you%20apply%20for%20Universal%20Credit%2C%20this%20will%20have%20no [Accessed 19 July. 2020].

Gov.uk (2020). Chancellor extends furlough scheme until October. [online] GOV.UK. Available at: https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october [Accessed 19 July. 2020].

Lindsay, D. (2020). Martin Lewis offers advice to zero hour contract workers on being paid. [online] Metro. Available at: https://metro.co.uk/2020/03/27/martin-lewis-offers-advice-zero-hours-workers-12466127/ [Accessed 19 July. 2020].

New York Magazine Editors (2020). The Best New Hobbies to Try During Quarantine (That We’ve Written About). [online] The Strategist. Available at: https://nymag.com/strategist/article/new-hobbies-during-quarantine.html [Accessed 19 July. 2020].

Sources

[i] https://www.thisismoney.co.uk/money/news/article-8168523/Ive-furloughed-does-mean-companies-doing-happens-next.html

[iii] https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october

[iv] https://www.wired.co.uk/article/uk-furlough-scheme-job-protection

[v] https://www.thesun.co.uk/money/11310495/furlough-another-job-coronavirus/

[vi] https://www.understandinguniversalcredit.gov.uk/employment-and-benefits-support/furlough/#:~:text=Claiming%20benefits%20whilst%20on%20furlough&text=If%20you%20apply%20for%20Universal%20Credit%2C%20this%20will%20have%20no,Style%20Jobseeker’s%20Allowance%20(JSA).