What does furlough actually mean? - a blog by created Business Butler

So, you’ve been furloughed, but what does it mean?

Until recently the term furlough was an unfamiliar one outside of the USA and now you can’t stop hearing about it, seeing people discussing it on television, or reading online about the new buzzword. But what exactly does it mean?

Furlough is a temporary leave of absence for employees from the company they work for and in its current context is being used in relation to the Coronavirus Job Retention Scheme.


What is the Coronavirus Job Protection Scheme?

This scheme allows employers to claim up to 80% of each employees’ salary, up to £2,500 per month for three months from 01 March 2020. This period may be extended if necessary but once the coronavirus crisis is over those who have been furloughed will be able to return to their jobs.

The purpose of the scheme is to make sure businesses that can’t afford to pay their staff do not make redundancies, therefore, protecting companies, employees and the economy.


Who can apply?

The Job Protection Scheme is available to all UK employers regardless of size and sector. Several Premier League football clubs have recently furloughed all non-playing staff and the biggest company to take advantage of the Job Protection Scheme to date is British Airways who is in the process of furloughing 30,000 employees.

Companies that have already laid off employees due to the coronavirus pandemic also qualify. If this has happened to you or someone you know then contact the employer because anybody who has been laid off will need to be taken back by their employer and granted a leave of absence.

If, on the other hand, you are an employer and you have employees working on a part-time or full-time basis or on flexible, zero hours or agency contracts, then this scheme is for you. Companies using the scheme will have to designate any employees they are claiming for as ‘furloughed workers’ and inform each one of this change.

What else do I need to know?

The 80% that the government covers does not include bonus or commission payments; but it does cover the minimum pension payments and National Insurance contributions. If your employees’ salaries fluctuate each month then you need to either base the salary on what they earned for the equivalent months last year or, an average earnings per month from the 2019/20 tax year and submit the highest of the two.

Employers are not obliged to fund any differences between the 80% subsidy and workers actual salaries but can do so if they wish. To qualify for the scheme employees must have started employment and been on the payroll of a company on, or before 28 February 2020. The minimum period of time an employee can be furloughed for is three weeks.


Speak to an HR expert

HR issues are often complex and because they are so important it is vital that you receive the help of an HR professional when facing such matters. My name is Deb Barrow and I am delighted to be part of the Business Butler panel of experts. As an experienced HR professional I can provide advice regarding all aspects of human resources. I have devised ‘Furlough Leave Agreement’ and ‘Working from Home Risk Assessment’ template letters. So, if you want to receive them, then simply email me at: deb@barrowhr.wales.

For any further advice please email or text: 07702-302-072 to book a free telephone appointment. Or visit: https://www.businessbutlerswansea.com/team/deb-barrow/