Student Advice guide to job retention and the furloughed scheme

Like us in the Student Advice team, many of you will have learnt a new word in the last 3 weeks and that word is ‘furlough’. But what does it mean and how might it affect you?

Government advice is to stay at home where possible. If your place of employment is considered non-essential work and your duties cannot be completed remotely from home, your employer might be able to keep you on the payroll.

Your employer could pay 80% of your regular wages through the Coronavirus Job Retention Scheme, up to a monthly cap of £2,500. From August 2020, the amount the state will contribute will reduce and the amount your employer will be expected to contribute will increase. NB this scheme has now been extended to the end of October 2020.

This is known as being ‘on furlough’.

Job Retention Scheme

Your employer is responsible for claiming for the grant through the Job Retention Scheme on your behalf, you cannot apply for the scheme yourself.

Eligibility

You must have been on your employer’s PAYE payroll before or on 19 March 2020.

You can be on any type of contract, including a zero-hour contract or a temporary contract.

This scheme also applies if you are a foreign national.

How your monthly earnings are calculated

If you’ve been employed for a full year, employers will claim for the higher of either:

• the amount you earned in the same month last year
• an average of your monthly earnings from the last year

If you’ve been employed for less than a year or you are on a zero hour contract and your monthly pay varies, employers will claim for an average of your regular monthly wages since you started work.

If you started work in February 2020, your employer will pro-rata your earnings from that month.

The income will include any overtime you did over the calculation period .

Taxable Grant

Your employer pays you the reduced wage on a monthly basis and out of this you’ll still pay Income Tax, National Insurance contributions, Student Loan repayments and any other deductions,such as pension contributions.

While you’re on furlough 

Once you are on furlough you will not be able to work for your employer. However you can undertake work for another employer as long as you are able to return to work for the employer that has placed you on furlough. NB  furloughed employees will be able to return to work part time from July 2020.

If you take on new employment you will be asked to declare this to your new employer and of course any activities undertaken must be in line with the latest Public Health guidance.

Check this gov.uk web page  for more information on specific types of employment ie apprenticeships, public sector employees, maternity leave etc.

Redundancy

Unfortunately, your employer can still make you redundant while you’re on furlough or afterwards and in this case you may need to apply to Universal Credit for assistance

Student Advice Service