What is a Furloughed Worker?
We are getting a lot of questions on what a Furloughed worker is, How do you designate employees as a Furloughed worker, Can a Director be a Furloughed worker and what does this mean for your business? We have the answers for you!
So what is a Furloughed Worker?
A Furloughed Worker is an employee that is no longer working for the company, but is still on your payroll. This means that whilst an employee is designated as Furlough they are not able to carry out any work for you even though they are on your payroll. This is to ensure that employees can keep their jobs, still get paid and there is not a spike in unemployment at this difficult time. Once an employee is designated as Furloughed you will be eligible for for the 80% Coronavirus Job Retention Scheme. We cannot stress enough that to be able to designate a worker as Furloughed, they must be on a payroll scheme. If you do not have a payroll scheme running you cannot designate the worker as Furloughed and claim the 80% grant for wages.
How do you designate an worker as Furloughed?
This can vary from business to business as it depends on your contract and current employment law. We are not experts in employment law but we do know this. If in your contract it states you can change the status of your employees, then all you will need to do is write to your employee and explain to them that you are designating them as a furloughed worker and that you will be claiming 80% of their wages from the Government so you can still pay them. You should always get them to sign and acknowledge this change.
In the most cases your contracts with your employees will not allow for this to happen and you will need to discuss this with your employees as they will need to agree to being designated as a Furloughed Worker. In this case you will need to write to them explaining the situation and that you would like to designate them as a Furloughed worker, so you can claim the 80% grant to cover their wages. Again you should always get them to sign to acknowledge and accept this change.
In these letters you need to ensure you include the following:
Date and time that the worker will be Furloughed from
How long you anticipate the worker to be Furloughed
Statement that the worker can be asked back to work at any time
How the worker can contact you whilst they are Furloughed
Area for the worker to sign
Details of workers pay (it is not yet clear whether the 80% is based on average earnings or contacted earnings)
Can a Director be a Furloughed Worker?
Details surrounding this question are not very clear at the moment and there is conflicting information online. What this really comes down to is whether the Government classes Directors as Employees or Self Employed. The other reason a director may not be able to be Furloughed is that business decisions still need to be made, like approval of VAT returns, Year End accounts and Payroll. You will also still need to be making payments to your employees and ensuring any regular bills that need to be paid get paid. You also need to talk to us to ensure your business is getting what it needs in these times. Due to all of this, you will still be working so you are not able to be Furloughed... As we said, there is no clear information on this currently, so as soon as we know any more we will be in contact.
What does this mean for your business?
Well, it means that you will not have to let any of your employees go and you can still pay them so they can still live. We are anticipating the portal for the Coronavirus Job Retention Scheme to go live at the end of this month, so we can start to put claims in as soon as it is open. As I am sure you are aware, this may take some time for us to implement and do for all of our clients, so please bear with us whilst we are sorting it.
In these times we need to stick together and your employees need you more than ever right now.
Please note that we are not employment law specialists and we have provided the above information to help our clients to get through these difficult times. You should check this information with an employment law specialist if you have any queries. Revis & Co Accountancy Services Ltd cannot be held liable for anything on this page.
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