Furlough for Employers

11th May 2020

Putting employees on furlough means they are required to cease all work for at least 3 weeks this includes working from home. They are kept on payroll and will receive at least 80% of their usual gross salary up to a cap of £2,500 a month under the Coronavirus Job Retention Scheme (the Scheme). You can choose to pay the remaining 20%.

Who does it cover?

  • The Scheme only covers employees registered on the PAYE payroll on or before 19 March 2020, it includes those who work part time and zero hour contracts.
  • Directors can be furloughed and receive 80% of their salary as long as they are registered on the PAYE payroll, whilst they are restricted from undertaking work for the company they are allowed to carry out any statutory duties.
  • If an employee is current maternity, paternity or adoption leave they cannot be furloughed until that leave has ended.

Calculating 80%

  • For those employees that are full time or part time you will take their actual salary before tax as of 28 February 2020 to calculate what their 80% payment should be.
  • For any employee on a zero hours or flexible hours contract if they have been with you for a full 12 months you can claim the higher of either: the same month’s earnings from the previous year or average monthly earnings from the 2019-20 tax year. If they have been with you for less than 12 months you can claim for their average monthly earnings since they started with you.
  • If your employees’ salaries are usually commission based, you can claim 80% of compulsory commission, it will however be based on commission from past sales.
  • It is important to note that any employees who are also shareholders will only receive 80% of their salary that is paid through PAYE, it does not include any dividends that would be taken to supplement their salary.
  • ACAS and HMRC have issued guidance that employees should be paid 100% for any holiday taken during furlough, HMRC have said however that this is under review and could change.

How do I claim?

  • The government portal is now live and the Scheme has been extended to run until June 30 2020 and could be extended again.
  • Salaries for furloughed staff can be backdated to 1st March 2020. Employers must pay the 80% and then claim it back using the portal.
  • The Scheme is a grant not a loan and will cover the associated Employer’s National Insurance and minimum employer’s automatic enrolment pension.

Choosing Employees

  • When choosing which employees to furlough, ensure any decisions are fair and non-discriminatory.
  • Discuss with each employee proposed to be furloughed what this means for them e.g. they cannot undertake any work for you , it will be for a minimum of 3 weeks and whether you are going to pay the Scheme covered 80% or more of their salary.
  • If an employee does not consent to be furloughed you can choose to make that employee redundant.
  • Once an employee has agreed to be furloughed you must keep a written record of that agreement for 5 years, we are able to assist with this, and can provide you with an agreement suitable for you.

Important points to note:

  • Furloughed employees can seek temporary employment elsewhere during their furlough period, check your employment contracts to see if your permission is required and make your employees aware of this.
  • Holiday entitlement will continue to accrue during any furlough period, up 4 weeks of unused leave can be carried into the next 2 years.
  • You must keep a written record of every employee’s agreement to be furloughed and we can assist with this.
  • Being furloughed can be an upsetting time for some employees, so keep in regular contact with them and send out regular updates.

We are here for you during this challenging time, we understand the pressures a lot of businesses and employers are currently facing, if you need assistance on any business or employment matter such as a furlough agreement please contact:

Richard Etheridge on 01603 675627 or rwje@rogers-norton.co.uk.

Or in the alternative

Phil Kerridge on 01603 675671 or pnk@rogers-norton.co.uk.