What does furlough mean?
April 16, 2020 • 2 min read
Since the coronavirus outbreak, lots of businesses have had slowed sales, or have had to stop trading entirely. To protect the future of these businesses, the government has introduced the coronavirus job retention scheme, which involves furloughing workers.
We’ve explained what it means to be a furloughed worker below, and if you’re furloughed, you can work out how much you’ll be paid with our furlough pay calculator here.
The coronavirus job retention scheme helps businesses stay afloat
To help businesses survive the coronavirus pandemic, and to keep people employed, the government introduced the coronavirus job retention scheme.
Under the scheme, the government has promised to pay 80% of an employee’s salary, up to £2,500. For an employee to qualify for this, they’ll need to be furloughed.
Furloughing helps keep people’s jobs safe
A furloughed worker takes a temporary ‘leave of absence’ from their company, usually because of economic conditions either at the company itself, or because of the economy as a whole.
The government are paying employers, so they can pay employees during the coronavirus pandemic
If you’ve been asked to become a furloughed worker, it’s likely that your company’s applying for the coronavirus job retention scheme because normal business has been affected by the coronavirus outbreak, and they need to save money for now.
This means:
- You’ll be paid 80% of your salary for as long as you’re furloughed. If you earn more than £2,500 a month, your pay will be capped at that. This is before tax.
- You won’t be expected to do any work whilst you’re furloughed. You’re not allowed to make any money or provide any services for your company whilst on furlough.
- You’ll be paid by your employer, like normal
- If you’re furloughed, you’re allowed to volunteer (for the NHS, for example) – if your employment contract lets you.
You’ll be eligible to be a furloughed worker if you’ve worked for your company before 19th March.
The government has full guidance on being a furloughed worker, which you can read here.
Work out how much money you’ll actually take home whilst furloughed
Whilst you’re furloughed, you’re still expected to pay tax, national insurance and your student loan (if you have one). You might also still be contributing to your pension.
We made a free, simple to use calculator that shows how much you’ll take home in pay each month whilst on furlough.
Written by Jack Cully who lives and works in London building useful things. You can follow him on Twitter