Furloughed Workers

Coronavirus Job Retention Scheme (Furloughed Workers)

We are getting a number of enquiries about this at the moment, and there are a lot of details we just don’t know.  There also seems to be some conflict between some of the announcements and Government’s official guidance.  Here are some key points:

1. This scheme is not for employees working from home

2. This scheme is not to replace SSP

3. All UK employers are eligible for this scheme

4. This is where the current coronavirus pandemic would otherwise mean a worker could be laid off and issued a P45 eg bar staff or a gym instructor.

5. If a worker would be laid off and issued a P45 then they could be classified as a Furloughed Worker instead.

6. There will be a mechanism for employers to claim back costs against the gross pay of furloughed workers

7. There will be a portal for employers to report furloughed workers earnings

8. The full details of when, how and for how long are not available

We do not know if an employer should determine an amount to be 80% of the wages and then be able to claim back that full amount up to a £2500 cap, or the employer will pay a furlough wage and then be able to claim back 80% of that amount up to the £2500 cap.

The basic principle is to support employers to keep people employed but at home where they would otherwise lose their job.  At the moment current advice suggests:

1. Pay the furloughed worker

2. Record the furloughed workers and the amounts paid

3. Claim when you are able via the Government Portal

What we need for payroll:

Furloughed workers costs are not reclaimed via payroll; there is no flag in the RTI to mark an employee as furloughed with HMRC.  We suggest the following for our clients:

1. Give us the details of the furloughed worker and to stop all other payments

2. Give us the amount of furlough pay

3. We will pay these amounts on a new pay component line using Furlough in the description.

4. We can put these workers in a new cost centre FURL if you wish.

5. Your payroll reports will then contain the details and amounts for the Furloughed Workers

Please see the Governments website for further details of the support available for employees in the current crisis:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

Update 1.4.2020

The Government have been updating their website, so please have another look if you are planning to furlough workers: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

A few more details have been clarified:

1. “Employees who are shielding in line with public health guidance can be placed on furlough.“

2. “You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.” 

   So you can claim the 80% wages + Employers NI + Employers AE Pension up to 3%
   (The 3% pension appears to be limited to 3% on the amount above the lower limit of qualifying earnings so above £520 from 6th April)

3. There is guidance on what to do if an employee’s pay varies

4. “Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.”

5. The portal for making claims will be available towards the end of April, this has been moved up the page so clearly HMRC are getting a lot of enquiries about when it will be ready.

Update 14.4.2020

The Coronavirus Job Retention Scheme information has been updated and there are a few more points to highlight based upon questions we have been receiving:

1. You can claim for regular payments the employee would receive, this would not be limited to salary

2. You cannot claim for discretionary bonuses (including tips)

3. If there is a salary sacrifice scheme or benefits in kind the reference salary used for the furlough calculation should disregard these amounts.

4. It is unclear whether the whole salary sacrifice pension payments should continue to be made by the employer – speak to your pensions adviser

5. It may be possible for furloughed employees to leave the salary sacrifice scheme and join a conventional scheme – again speak to your pension adviser

Please read the Government website for the latest information.  We have also been asked for a template for furlough letters – there is one available from ACAS here