What does furlough mean?

In stories of great public interest, there always seems to be an associated word or phrase that hardly anyone has used before that becomes permanently on the lips of the nation.

There are a few to choose from as a result of the global Coronavirus (Covid-19) pandemic.  For example, “social distancing” or “self-isolation”.

But, in this blog, we’re going to be focusing on a word that has emerged as a result of the government’s economic measures to support businesses and employees: “furlough”.

Furlough Definition

In short, a furloughed employee is someone who is not able to work, but has not been dismissed or made redundant by their employer.  It can sometimes be referred to more informally as “laid-off”, although this term is also sometimes used inaccurately to describe someone who has been dismissed.

A furloughed employee can not go into work or carry out any duties for their employer and is not paid for the period they are furloughed.  By law, this has to be a minimum of three weeks.  The employee is still employed in their job role but can not work due to market conditions, for example. (This is different in the current climate.  See the section on the government’s Coronavirus Job Protection Scheme below).

Think of it as a job being put on pause or in hibernation.  Ready to jump back into life once the worst of the crisis has passed and the wheels of industry and the economy start turning again.

The government’s Coronavirus Job Retention Scheme

The scheme that kick-started all the furlough-talk; this is the incentive that Chancellor Rishi Sunak announced to save jobs around the country.

If businesses can’t trade, they can’t pay staff.  So, the government is stepping in to cover 80 per cent of employees’ wages for anyone furloughed, up to £2,500 per person.  This must be applied for through a claim made by the business.  If successful, it is then at the employer’s discretion whether they top that up to employees’ full usual wage.

It is essentially allowing businesses to pause trading and minimising the financial impact of doing so.

The scheme has been promised to businesses for three months initially, although the Chancellor indicated that it will be reviewed at the end of that period in line with his strapline: “whatever it takes”.

How to claim

Businesses who want to make a claim should visit the government’s website and follow the steps and advice outlined there.

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