Almost half of UK companies are expected to furlough at least 50 per cent of their staff in the next few week due to coronavirus. The report by the British Chambers of Commerce (BCC) comes as the Treasury had estimated that roughly 10 per cent of the private sector workforce would be put on furlough. The government's coronavirus job retention scheme covers 80 per cent of the wages of furloughed workers, to a maximum of £2,500 per month.
The report, based on a poll with 600 businesses, also found that 62 per cent of British firms only have to up three months' cash in reserve. While almost one in five businesses (18 per cent) had less than a month's worth of cash. UK business secretary Alok Sharma told banks, "it’s time to repay the favour" and bail out small businesses in their time of need. While thousands of struggling small business owners say greedy banks are "cashing in" on virus crisis leaving them high and dry.
BCC director general Adam Marshall said: "The coronavirus pandemic has taken a heavy toll on business and economic activity across the UK. While businesses have welcomed the unprecedented size and scope of the government support packages, our findings highlight the urgent need for that support to reach businesses on the ground as soon as possible. The majority of firms cannot wait weeks or months for help to arrive."
What does it mean to be furloughed?
Until a fortnight ago, many British workers had never encountered the term 'furloughed', but now it is a concept that has been thrust into the spotlight by the coronavirus crisis. Chancellor Rishi Sunak has unveiled a series of measures to cover the wages of millions of people suddenly left without work and prevent businesses going bankrupt due to the coronavirus crisis - and furloughing staff lays at the heart of it. The so-called coronavirus job retention scheme enables businesses to continue paying part of their employees' salary who would otherwise have been laid off because of the crisis.
Sunak said the Government will cover 80 per cent of salaries up to a ceiling of £2,500 a month - equivalent to the UK average wage of £30,000 a year. The scheme, open to all firms with employees, will be up and running by the end of April and backdated to March 1. But in order to access it, businesses will have to 'furlough' their employees who they can no longer afford to pay.
Essentially, if you're being furloughed by your employer, it means you're being sent home, but will still receive 80 per cent of your salary from the Government, up to a maximum of £2,500 a month. This Government job retention scheme is only for employed people, it does not apply if you are self-employed. However, you first need to agree to be put on furlough by your employer, who can then apply for the money to the government. You cannot apply for it yourself.
Your employer can choose to pay the remaining 20 per cent of your wages, although it is not obliged to do so. If you earn more than £2,500 a month, your employer can choose to 'top up' your salary, but again it is not forced to do so. You will still continue to pay income tax and national insurance contributions while on furlough.
