This is how the furloughed workers scheme works - and if you still have to pay taxes

Furloughed workers are those whose employers cannot cover staff costs due to coronavirus (Photo: Shutterstock)Furloughed workers are those whose employers cannot cover staff costs due to coronavirus (Photo: Shutterstock)
Furloughed workers are those whose employers cannot cover staff costs due to coronavirus (Photo: Shutterstock)

In response to the coronavirus outbreak, the government has introduced a number of emergency measures to support workers affected by the pandemic.

Under the newly introduced Coronavirus Job Retention Scheme, the government will cover 80 per cent of the wages of millions of workers, up to the value of £2,500 per month.

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All employers in the UK will be able to access the scheme to continue paying the wages of staff that have been furloughed.

What are furloughed workers?

Furloughed workers are those whose employers cannot cover staff costs due to coronavirus, and as such they have been asked to stop working, but have not been made redundant.

Such employers are now able to access support to continue paying part of their staff’s wages, to avoid redundancies.

How does the scheme work?

If your employer intends to access the job retention scheme, they should discuss with you becoming classified as a furloughed worker.

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This would mean that you are being kept on your employer’s payroll, rather than being laid off.

Can I work while I’m furloughed?

You should not undertake work for your employer while you are furloughed.

Workers will remain employed while furloughed, and your employer could choose to fund the differences between this payment and your salary.

If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.

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The scheme will initially run for at least three months, from 1 March 2020, with all UK businesses eligible, and will be extended if necessary.

How much money will I get?

Furloughed workers will receive at least 80 per cent of their usual monthly earnings, up to a maximum of £2,500.

You can claim furloughed pay for a minimum of three weeks and for up to three months, although this may be extended.

Your employer can choose to pay you more than the grant, but they do not have to.

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When the government works out your normal pay they will not include any commission or bonuses you might normally get.

Will I still have to pay tax?

You will continue to be paid by your employer as long as you are furloughed, receiving at least 80 per cent of your normal wage, and will still pay taxes from your income.

Your employer will then deduct Income Tax, National Insurance contributions and any other other deductions that they would normally make.

The grant will start on the day you were placed on furlough and this can be backdated to 1 March.

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What happens while I’m on furlough?

Your employer will need to notify you before they put you on furlough.

After this point, you will not be able to work for your employer, but you can undertake training or volunteer, providing you are not making money or providing services to your employer.

If you are required to complete training courses while on furlough, you must be paid at the National Living Wage or National Minimum Wage for the time spent training, even if this is more than the 80 per cent of your wage that has been subsided.

Can I be made redundant?

Your employer can still make you redundant while you are on furlough, or afterwards.

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However, your employee rights are not affected while on furlough, including your redundancy rights.

What if I don’t want to be furloughed?

If your employer asks you to go on furlough and you refuse, you may be at risk of redundancy, or termination of your employment.

If this is the case, it must be in line with normal redundancy rules and protections.