Furlough?

Furlough?

You may have seen the government information about the extension to the Furlough scheme which they estimate could mean 200,000 more people able to take advantage of this scheme.

The scheme involves the employer designating the employee as ‘on furlough’ and then 80% of their wages are paid by the government. Whether or not an employee is furloughed is up to the employer – it is not an absolute right and it means that the individual is not working but kept ‘on the books’ by the employer – ie not unemployed.

The issue that was a problem was the fact that the cut off date for people to be eligible for the scheme was 28th Feb and there were people who started work between then and 19th March when the lockdown started. These people were not eligible for furlough and were potentially losing out on money as a result. So the government issued the extension.

However there are a couple of problems :

  • firstly, it is up to the employer whether or not the agree to the employee being furloughed – some may choose to make the post redundant instead, especially if they have cash flow problems. The scheme reimburses the employer but does not pay up front. This means that any business which is going through a drop in income might not be able to use the furlough scheme as they won’t be able to pay the employee and then claim the money back from government.
  • secondly, the payment can only happen if the employer has done a return to the tax office. This is called the Real Time Information return and is a tally of who is employed and what they are paid. It is done by the employer usually at the time of the regular pay run. For most employees this is monthly and is usually at the end of the month. So anyone who started work between 28th Feb and 19th March but is paid after 19th March won’t qualify for the scheme. Anyone who is paid weekly or fortnightly might qualify under the extension.

This means that it is highly unlikely that 200,000 people will benefit from the extension. For more information check out the government information on this