To help you navigate the confusing changes in markets, we have assembled some key information surrounding Furlough Leave, how to access the government scheme and what it means for businesses.

What does Furlough mean?

Deriving from the Dutch origin, furlough is a leave of absence or temporary leave of employees due to special circumstances such as economic conditions.

We have precious few details on this new scheme at the moment except the official information released by the government:

(This link also sets out the wider range of government financial support on offer for businesses)

Support for businesses through the Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, once this comes into force, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

Eligibility

All UK businesses are eligible i.e. sole traders employing staff, LLPs, Ltd companies etc. The Chancellor announced that the Coronavirus Job Retention Scheme will be open for three months initially, but will be extended if required.

How to access the scheme

You will need to:

·       Designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation

·       Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

What this means in employment law terms (once the scheme is in place) is that:

At Activ8, we are dedicated to providing you with all the support you need at this time so we’ll continue to bring you updates as they become available.