New information regarding furloughing

 

The full details are here https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses. There are two unanswered points in the latest guidance – date scheme will open and date of first payment but this is anticipated to be 22 April, and accrual of holiday during the furlough period (assumed to be determined by employer as at or above the minimum). It is clear that further guidance will be forthcoming and that this will be supplemented, so some unanswered questions remain.

 

The key points are:

 

Open to all UK employers of whatever size, provided the company and payroll was in existing on 28 February 2020

Furloughed employees must have been hired or contracted by this date

Furloughed workers can include full, part time, agency and flexible or zero hours contracts  

You can use the scheme at any point during the initial 3 month period (note it may be longer) – this means you can make a decision about furloughing some people now and add others to furlough as circumstances change

 

Who is covered

The scheme is only for employees who are not working – if the employee is working on reduced hours or reduced pay, they are not eligible and will need to be employed normally. Employees with more than one job can be furloughed for each job and the cap applies to each employer. 

Employees can take part in volunteer work or training, providing this does not provide services to the company or generate revenue – so if individuals want to undertake on line training or complete apprenticeship training in their own time, but if they are required to do so then you must make sure that they are paid at least NMW/NLW for the time spent in training even if this is more than 80% of salary

Employees on unpaid leave cannot be furloughed unless they were placed on unpaid leave after 28 February

If workers were made redundant since 28 February 2020, they can be rehired and furloughed  

 

Process

You should discuss with your staff about placing them on furlough. This will include making changes to their employement contract by agreement if necessary and where the contract does not provide for furlough. You should record your decisions about who to offer furlough to and write formally to your employees to confirm. 

There are no set consultation timescales and processes, but where sufficient numbers are involved, you may need to engage collective consultation process to secure changes in contracts. The anticipation is that this will be capable of being concluded swiftly, however, you will need to demonstrate that in taking a decision to furlough you have followed equality and discrimination laws.

You will be able to submit 1 claim at least every 3 weeks, which is the minimum length and employee can be furloughed for. You should make your claim in accordance with actual payroll amounts at the point at which you run the payroll or in advance of an imminent payroll and you must pay the employee all of the grant you receive for their gross pay.   

Where a company is operating under administration, the administrator will be able to access the scheme

 

Work out what to claim

You will make a claim for wage costs through an online portal and receive a grant from HMRC to recover 80% usual monthly wage costs, up to £2,500 a month, plus Employer NIC and minimum pension contribution

Fees, commission and bonuses should not be included (we are checking re tronc)

An employer can choose to top this up but is not obliged to. If you do top up, you are liable for the employer NIC and pension on the top up element.

For full and part time salaried employees, you use the actual salary before tax as of 28 Feb

For variable hourly paid staff, you can use either the same month’s earnings from the previous year or average monthly earnings from the 2019/20 tax year, whichever is higher If the employee has been employed for less than 12 months you can claim an average of their monthly earnings since they started. If an employee only started in February 2020 , use a pro rata of earnings to date.

More guidance will be issued in due course about how to calculate claims for employer NIC and pension contributions before the scheme goes live.

Berin Jones

Chairman