Furlough, latest guidance

KrisDylan213

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Mar 28, 2020
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Now either they take 3 weeks / more than 3 weeks off or else they work.
One gets them some reimbursement to the company of wages, one doesn't.

There will be directors with no debtors to chase, with no work likely for a while. They may see one option as viable while the other isn't relevant.

Telling people they don't have any option is going to be bad for the director.

Examples of whose not likely to have work for a while?
It is about adapting and evolving your business in these circumstances to continue and survive. If you don't sure as hell your competition will be.

I have a painting and decorating company on the books and they only deal with domestic works and as you can imagine there work has dried up and they have closed the doors at present. However they are spending the time contacting clients where the works were booked in and moving these dates. They are also still getting enquires for quotes and using facetime/skype etc with the prospective client to measure, see the rooms etc so can provide a quote for the works.

I also have fireplace and stove companies taking this approach, flooring companies etc. Work is still out their to be had or planned for.

Yes the likes of me and you are blessed where people will need HR advice (especially in these circumstances) and their taxes filed etc.

But to me its bad advice to tell a one man band they should shut their doors for 3 weeks at a time just to receive £833 or £575. The lost opportunity cost I think would be far greater than this and there is additional support out their from the banks to help with this short term issue.
 
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Newchodge

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    anyone know what happens to grievances whilst on furlough
    They should be put on hold unless most of the participants are not on furlough. If the complainant is the only one on furlough they can agree for it to go ahead. Then every participant has to agree to it being held by telephone.
     
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    Mr D

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    Examples of whose not likely to have work for a while?
    It is about adapting and evolving your business in these circumstances to continue and survive. If you don't sure as hell your competition will be.

    I have a painting and decorating company on the books and they only deal with domestic works and as you can imagine there work has dried up and they have closed the doors at present. However they are spending the time contacting clients where the works were booked in and moving these dates. They are also still getting enquires for quotes and using facetime/skype etc with the prospective client to measure, see the rooms etc so can provide a quote for the works.

    I also have fireplace and stove companies taking this approach, flooring companies etc. Work is still out their to be had or planned for.

    Yes the likes of me and you are blessed where people will need HR advice (especially in these circumstances) and their taxes filed etc.

    But to me its bad advice to tell a one man band they should shut their doors for 3 weeks at a time just to receive £833 or £575. The lost opportunity cost I think would be far greater than this and there is additional support out their from the banks to help with this short term issue.

    Market trader selling goods
    Commercial cleaner with zero clients
    Wedding photographer
    Hairdresser

    Lots of shops have had to shut, you may have noticed?
     
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    Spirconi

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    My business employs mainly on zero hour contracts in the events industry. This suits stagg as they work across the year as suits for 20-30 different companies. Most are students or artists in between work in chosen fields. Some earn £100 in the year some £1000s.

    My understanding of the furlough scheme is that zero hours can be furloughed and they can apply to employer for scheme based on same salary in same month of previous year or avg across year, whichever is higher.

    However we have 100s of staff and could mean fronting tens of £1,000s which no indication of when it would come back. All whilst not being able to legally furlough myself as director simply because of the amount of admin involved to do this. As well as potentially needing to risk getting a loan with personal guarantees to cover it in an industry that's been closed for a month and is likely to take a massive hit even when this is over. This isnt to mention general ongoing running costs that dont just go away.

    I keep re reading in case I have missed something as it seems that most will be in the same boat. And whilst I would love to help all employees regardless if they did a days work or 12 months. No one can be expected to risk their own livelihoods or other personal assets on the line.

    It just seems these measures look great on paper but many more will lose out than will benefit simply because of how it's been set up.
     
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    Mr D

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    My business employs mainly on zero hour contracts in the events industry. This suits stagg as they work across the year as suits for 20-30 different companies. Most are students or artists in between work in chosen fields. Some earn £100 in the year some £1000s.

    My understanding of the furlough scheme is that zero hours can be furloughed and they can apply to employer for scheme based on same salary in same month of previous year or avg across year, whichever is higher.

    However we have 100s of staff and could mean fronting tens of £1,000s which no indication of when it would come back. All whilst not being able to legally furlough myself as director simply because of the amount of admin involved to do this. As well as potentially needing to risk getting a loan with personal guarantees to cover it in an industry that's been closed for a month and is likely to take a massive hit even when this is over. This isnt to mention general ongoing running costs that dont just go away.

    I keep re reading in case I have missed something as it seems that most will be in the same boat. And whilst I would love to help all employees regardless if they did a days work or 12 months. No one can be expected to risk their own livelihoods or other personal assets on the line.

    It just seems these measures look great on paper but many more will lose out than will benefit simply because of how it's been set up.

    There is indication when the 80% would be paid back to the business.
    Its end of April.

    Take that date as you wish, expect at least a few to take to May.


    However if cannot furlough then your choices are simpler. Just not as good for the staff.
     
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    KrisDylan213

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    Market trader selling goods
    Commercial cleaner with zero clients
    Wedding photographer
    Hairdresser

    Lots of shops have had to shut, you may have noticed?

    Firstly In previous posts I said there are some examples where you would by advise Furloughing
    i.e hairdressers (but lets be fair as well the vast majority of these are self employed and not trading through a limited company)

    Yes small retailers would furlough themselves same as the pubs and bars that I deal with. However Some that do food have moved to a takeaway format know again adapting, surviving and promoting their business further.

    Have wedding photographers still getting work and looking for work as people have been still booking their weddings or having to rearrange as their original photographer is booked for when they've rearranged so have to find an alternative.

    Commercial cleaners agree would not have any work but their contracts would most likely still be there (and if your saying their cancelled then theirs opportunity to get a tender in). But if the contract is still there they should be using the time to speak with their clients keep their relationship strong, anything to improve etc to ensure.
     
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    Spirconi

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    Feb 22, 2012
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    There is indication when the 80% would be paid back to the business.
    Its end of April.

    Take that date as you wish, expect at least a few to take to May.


    However if cannot furlough then your choices are simpler. Just not as good for the staff.

    Yeah, the no indication comment was based on previous government history and 1000s of claims claims coming at once.

    As I say, I want to help if possible. Some of these staff would never work for us again so I have no real incentive to, other than to do my bit. Just ashame there is no easy risk free way to do that.
     
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    Mr D

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    Firstly In previous posts I said there are some examples where you would by advise Furloughing
    i.e hairdressers (but lets be fair as well the vast majority of these are self employed and not trading through a limited company)

    Yes small retailers would furlough themselves same as the pubs and bars that I deal with. However Some that do food have moved to a takeaway format know again adapting, surviving and promoting their business further.

    Have wedding photographers still getting work and looking for work as people have been still booking their weddings or having to rearrange as their original photographer is booked for when they've rearranged so have to find an alternative.

    Commercial cleaners agree would not have any work but their contracts would most likely still be there (and if your saying their cancelled then theirs opportunity to get a tender in). But if the contract is still there they should be using the time to speak with their clients keep their relationship strong, anything to improve etc to ensure.

    Some have limited companies, some self employed.
    Often advised by accountants. You know as well as I that there isn't one solution to all business types.

    What will a director of a small limited company do when they have no work? Still draw same wage even if they cannot pay it? Or stop working for a few weeks and at least get some money in so can pay some money out?

    Its not the fact that directors need to work I have issue with. Its people telling them they cannot access something because of being a director when it isn't the only option.

    I know of two wedding photographers who have zero work and cannot yet take bookings because no one knows dates are available. What is the point in booking photographer, reception, honeymoon, flowers, suits, church etc when the places you want to speak to aren't open or cannot agree a date?
    Perhaps the staff of such places and directors are on furlough.
     
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    Mr D

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    Yeah, the no indication comment was based on previous government history and 1000s of claims claims coming at once.

    As I say, I want to help if possible. Some of these staff would never work for us again so I have no real incentive to, other than to do my bit. Just ashame there is no easy risk free way to do that.

    If we wanted easy risk free we wouldn't have gone into business.

    Just this time we don't get very good risks and no chance to reduce risk in advance.

    Sometimes there are no good choices. Merely different bad ones, some less bad than others.
     
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    Displaycentreuk

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    Another shout-out for @Newchodge for all of the questions that you are answering.

    Seems to me that many businesses with more than a couple of employees are going to find it difficult to put all directors on furlough leave, despite it being an option. A business needs some effort to keep it alive and planning for the future (whatever that might be) needs to continue. We have 7 employees and envisage needing to keep one director working.
     
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    Mr D

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    Another shout-out for @Newchodge for all of the questions that you are answering.

    Seems to me that many businesses with more than a couple of employees are going to find it difficult to put all directors on furlough leave, despite it being an option. A business needs some effort to keep it alive and planning for the future (whatever that might be) needs to continue. We have 7 employees and envisage needing to keep one director working.

    So one director gets normal pay and continues things. Other directors don't and get less pay, but covered by HMRC.
    A reasonable and cost effective method of keeping people employed, with minor cost to the company.
    Just not every company will choose that method. Or can afford to.
     
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    adam thompson1981

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    I guess it depends on your buisness.

    I'm a sole director of a window cleaning company. I did have a couple of staff at one point but as of now work solo. 100% domestic no commercial. Everyone told we will be shutting down for a few months, no debts to chase. No need to take calls or reply to emails. No quotes to give as too busy to take on more. Payrol outsourced. If its true I can be furloughed if only performing statutory duties then hopefully I will qualify even though I've already been told by my accountant it's a definite no. I take what accountants tell me with a pinch of salt anyway, I always investigate further as I've found them to be inconsistent at times.
     
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    Newchodge

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    no one any thoughts, i know it's a corner case and with so much uncertainty elsewhere, but this is going to lead to issues in the courts i think
    They should be put on hold unless most of the participants are not on furlough. If the complainant is the only one on furlough they can agree for it to go ahead. Then every participant has to agree to it being held by telephone.
    Post 82
     
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    Aniela

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    My accountant has told me today I won't qualify as a sole director cannot be furloughed. Apparently they got this info from HMRC.

    I think I will contact HMRC myself, seems a ridiculous situation where a sole director is left out of both the self employed and employed schemes.


    A sole director cannot be furloughed if they carry out any work for the business othr than statutory duties. Outsourcing payroll solves that, or furlough for 3 weeks, then time to work, then firlough for 3 weeks. Even if the accountant got their information from the HMRC helpline, it doesn't make it accurate. The self employed support scheme states that directors can be furloughed.

    @Newchodge The self-employed support scheme states that directors who are paid through PAYE can be furloughed, yes.

    However, it doesn't state if a sole director can be furloughed. Which is an important piece of information that is missing.

    That's a big caveat. As with the other support for companies, the overall support tends to be written to sound like it applies to everyone. It's only when you dig into the finer details that companies realise it's often not as open of support as it comes across initially.

    There's a potential that while self-employed directors can be furloughed, there will be a requirement for the company to still have at least one active director. I feel a lot of people have been mis-reading "self-employed director" as if that means a sole director business; someone who just runs a LTD company on their own. Which is not what it's saying.
     
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    Dahu371

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    I've found a furloughing letter template this might be useful, though it seems to date from before the latest government guidance so may need updating(?). This asks for employees to return their signed agreement, we were planning on doing it by email.



    Employee name
    Address

    23 March 2020

    Dear [name]

    Proposed changes to your employment status

    Government Coronavirus Job Retention Scheme

    As you will be aware the Government announced on Friday evening, 20 March 2020, that it was enforcing the closure of all pubs with immediate effect.

    At the same time the Government also announced the statutory Coronavirus Job Retention Scheme which will cover 80% of employee’s wages, if those employees would otherwise have been laid off because of the current coronavirus situation.

    The situation inevitably leaves us (and our industry) in a difficult financial position and means that we have to consider our options with regard to our staff and our ability to continue to pay wages. Those options would have included layoffs but the Job Retention Scheme gives us another option.

    What we know about the Scheme so far

    The government guidance is at:-

    https://www.gov.uk/government/publi...-19-guidance-for-employees#furloughed-workers

    The current position can be summarised as follows (although this is subject to change as and when we receive more guidance from the Government):-

    · To receive the Government grant, any applicable employees must be subject to Furlough Leave (or, “furloughed”);

    · That will involve you agreeing to change your status to that of a Furloughed Worker and agreeing to take a period of leave without undertaking any work;

    · Subject to the above (and to any other qualifying conditions that the Government may determine from time to time) 80% of your current wages (up to a maximum of £2,500 per month, which we understand to be based on gross earnings) will be covered by a Government grant;

    · The Government has indicated that this scheme will apply for 3 months from 1 March 2020 but may be extended if necessary;

    · During any such period as a Furloughed Worker you would continue to be subject to any obligations to us in your normal terms and conditions of employment, save for those relating to salary and the requirement to undertake your duties. Whilst you are classified as a Furloughed Worker you must not work during this period; and

    · The position will be subject always to the rule of the Government scheme in force from time to time.

    At the time of writing we do not currently know the precise details of the Scheme, other than as set out in the government guidance.

    If we receive any further information about the scheme in the coming days that may affect anyone’s entitlement to be covered by this “Furloughed Worker” status, we will let those individuals know.

    Proposed Agreement

    We are therefore writing to you to seek your express agreement to change your status to a Furloughed Worker (subject always to any additional eligibility guidance that the Government may introduce from time to time), in order that we can seek the Government Grant to pay 80% of your wages (subject to the maximum limits).

    If you agree, it is our intention that the change to your employment status as a Furloughed Worker will take effect from 1 April 2020 and your pay will be reduced to the 80% that can be covered by the Government Grant. This is a temporary variation to your employment status, whilst the Government Job Retention Scheme is in force and applies. However, we reserve all our rights to withdraw from this Job Retention Scheme or otherwise to notify you of any changes to this position as and when necessary.

    If you agree to this change, please indicate your acceptance by signing and returning the attached copy of this letter to [NAME] by [DATE] March 2020. You should keep your signed copy of this letter safe.

    If you have any questions in the meantime, please consider the Government guidance in the first instance but you can also contact [NAME].

    Yours sincerely,



    ....................

    For and on behalf of [COMPANY NAME]

    I agree that my employment status shall be temporarily varied to that of a “Furloughed Worker” and as otherwise set out in this letter.

    Signed ........................

    [NAME OF EMPLOYEE]

    Date .........................
     
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    ecommerce84

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    I would be astonished if sole directors cannot be furloughed on 80% of their PAYE income if they effectively ‘pause’ their business.

    In some ways it’s the easiest group for the government to provide support to - I like the self employed they have the data available from RTI submissions but the bill for the government will be substantially lower than that for the other employed workers, especially as many some directors are only likely to receive around £575.
     
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    Aniela

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    I would be astonished if sole directors cannot be furloughed on 80% of their PAYE income if they effectively ‘pause’ their business.

    In some ways it’s the easiest group for the government to provide support to - I like the self employed they have the data available from RTI submissions but the bill for the government will be substantially lower than that for the other employed workers, especially as many some directors are only likely to receive around £575.

    The issues come more down to how companies operate as their own entity; hence the need for a director. If a sole-director furlough himself, who is there to "rehire" them?
     
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    Raw Rob

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    The issues come more down to how companies operate as their own entity; hence the need for a director. If a sole-director furlough himself, who is there to "rehire" them?
    Could they not furlough themselves for a set amount of time? Eg 3 months, so would not need anyone to rehire them at the end of the 3 months.
     
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    Aniela

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    Could they not furlough themselves for a set amount of time? Eg 3 months, so would not need anyone to rehire them at the end of the 3 months.

    I would guess and it truly is an assumption, that it would potentially make it hard to act in the interest of the company, which a company director needs to do.

    Furlough themselves for 3 months, or even 1. Following day/week a client comes knocking that is important for the business. Can't act on it as you're furloughed. As others have suggested, they say you could possibly outsource certain things like that before going on furlough but it still to me seems a technical and legal nightmare.

    Your furloughed and then the outsourced company does something dumb, you can't react to the situation as you're not allowed to be working, apart from the allowed criteria. Potentially big risks involved.
     
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    PPP

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    Hi All, thanks all the information so far, this forum has been great.

    I just wanted to highlight this video to you, which is someone from the Treasury confirming that sole directors can be furloughed. the sound quality is messed up, but scroll on to 26mins in for the correct section.

    As I can't post links as I'm new, I've put the links in the information in my profile. Click my name to the left, the Information so you can see the links are legitimate sources!

    Assuming this is then possible, the .gov guidance also states:

    Employees whose pay varies
    If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

    the same month’s earning from the previous year
    average monthly earnings from the 2019-20 tax year


    Does that mean it is possible for a director to pay themselves a much higher salary for march 2020, so that the average over the tax year as stated above is much more inline with a realistic pay given they are ignoring dividends? So something around the £29,000 mark for March?

    Thanks in advance
     
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    UKSBD

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    Does that mean it is possible for a director to pay themselves a much higher salary for march 2020, so that the average over the tax year as stated above is much more inline with a realistic pay given they are ignoring dividends? So something around the £29,000 mark for March?

    I think it would take a very brave man who has been paying £719 a month for 11 months to suddenly pay £29,000 for the month of March :)

    Also, the extra NI contributions could outweigh the Furlough payments if not furloughed for too long.
     
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    ecommerce84

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    Feb 24, 2007
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    Hi All, thanks all the information so far, this forum has been great.

    I just wanted to highlight this video to you, which is someone from the Treasury confirming that sole directors can be furloughed. the sound quality is messed up, but scroll on to 26mins in for the correct section.

    As I can't post links as I'm new, I've put the links in the information in my profile. Click my name to the left, the Information so you can see the links are legitimate sources!
    Good find!

    The link is: https://www.cbi.org.uk/articles/daily-coronavirus-webinar-job-retention-scheme-27-03-2020/

    And Ben Kerry from HMT does indeed confirm that directors can ‘continue to perform statutory duties (he mentions filing accounts) whilst furloughed’.

    This aligns with what @Newchodge has been suggesting for most of the week, and why it’s better to get HR advice from HR professionals rather than accountants.
     
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    Bushman

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    Nov 17, 2015
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    I've found a furloughing letter template this might be useful, though it seems to date from before the latest government guidance so may need updating(?). This asks for employees to return their signed agreement, we were planning on doing it by email.



    Employee name
    Address

    23 March 2020

    Dear [name]

    Proposed changes to your employment status

    Government Coronavirus Job Retention Scheme

    As you will be aware the Government announced on Friday evening, 20 March 2020, that it was enforcing the closure of all pubs with immediate effect.

    At the same time the Government also announced the statutory Coronavirus Job Retention Scheme which will cover 80% of employee’s wages, if those employees would otherwise have been laid off because of the current coronavirus situation.

    The situation inevitably leaves us (and our industry) in a difficult financial position and means that we have to consider our options with regard to our staff and our ability to continue to pay wages. Those options would have included layoffs but the Job Retention Scheme gives us another option.

    What we know about the Scheme so far

    The government guidance is at:-

    https://www.gov.uk/government/publi...-19-guidance-for-employees#furloughed-workers

    The current position can be summarised as follows (although this is subject to change as and when we receive more guidance from the Government):-

    · To receive the Government grant, any applicable employees must be subject to Furlough Leave (or, “furloughed”);

    · That will involve you agreeing to change your status to that of a Furloughed Worker and agreeing to take a period of leave without undertaking any work;

    · Subject to the above (and to any other qualifying conditions that the Government may determine from time to time) 80% of your current wages (up to a maximum of £2,500 per month, which we understand to be based on gross earnings) will be covered by a Government grant;

    · The Government has indicated that this scheme will apply for 3 months from 1 March 2020 but may be extended if necessary;

    · During any such period as a Furloughed Worker you would continue to be subject to any obligations to us in your normal terms and conditions of employment, save for those relating to salary and the requirement to undertake your duties. Whilst you are classified as a Furloughed Worker you must not work during this period; and

    · The position will be subject always to the rule of the Government scheme in force from time to time.

    At the time of writing we do not currently know the precise details of the Scheme, other than as set out in the government guidance.

    If we receive any further information about the scheme in the coming days that may affect anyone’s entitlement to be covered by this “Furloughed Worker” status, we will let those individuals know.

    Proposed Agreement

    We are therefore writing to you to seek your express agreement to change your status to a Furloughed Worker (subject always to any additional eligibility guidance that the Government may introduce from time to time), in order that we can seek the Government Grant to pay 80% of your wages (subject to the maximum limits).

    If you agree, it is our intention that the change to your employment status as a Furloughed Worker will take effect from 1 April 2020 and your pay will be reduced to the 80% that can be covered by the Government Grant. This is a temporary variation to your employment status, whilst the Government Job Retention Scheme is in force and applies. However, we reserve all our rights to withdraw from this Job Retention Scheme or otherwise to notify you of any changes to this position as and when necessary.

    If you agree to this change, please indicate your acceptance by signing and returning the attached copy of this letter to [NAME] by [DATE] March 2020. You should keep your signed copy of this letter safe.

    If you have any questions in the meantime, please consider the Government guidance in the first instance but you can also contact [NAME].

    Yours sincerely,



    ....................

    For and on behalf of [COMPANY NAME]

    I agree that my employment status shall be temporarily varied to that of a “Furloughed Worker” and as otherwise set out in this letter.

    Signed ........................

    [NAME OF EMPLOYEE]

    Date .........................

    Many thanks for that
     
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    PPP

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    Mar 28, 2020
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    Thanks for the reply UKSBD

    I realise it would look unusual - if my (limited understanding) is that a directors salary can be any figure that is considered to be in line with standard salaries in their industry. This salary would be about 50% of normal dividends taken, so definitely well within a reasonable boundary. I guess what I’m asking is - is it considered legal for a variation in salary, as obviously not trying to suggest anything legally questionable.

    thanks
     
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    Aniela

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    Mar 28, 2020
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    Good find!

    The link is: (removed link due to posting restrictions for new members)

    And Ben Kerry from HMT does indeed confirm that directors can ‘continue to perform statutory duties (he mentions filing accounts) whilst furloughed’.

    This aligns with what @Newchodge has been suggesting for most of the week, and why it’s better to get HR advice from HR professionals rather than accountants.

    We already knew directors can do that.

    I wouldn't say what was posed there actually clarified anything about being a sole-director, unless I'm taking it wrong.

    The question posed wasn't asked as a 'sole-director' question, it was asked and I'm quoting directly as "What if you're the director of your company. Can you yourself apply to be on the job retention scheme"

    The answer was basically, yes. We knew that. The issue is if you're a sole-director, which wasn't asked and therefore answered.

    P.S - Pretty bad audio!
     
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    UKSBD

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    I realise it would look unusual - if my (limited understanding) is that a directors salary can be any figure that is considered to be in line with standard salaries in their industry. This salary would be about 50% of normal dividends taken, so definitely well within a reasonable boundary. I guess what I’m asking is - is it considered legal for a variation in salary, as obviously not trying to suggest anything legally questionable.


    Whether it's legal or not, if you've previously paid £719 a month for 11 months, then pay another £29,000 in month 11 that's going to cost you/company over £7,000 in National Insurance
     
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    PPP

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    We already knew directors can do that.

    I wouldn't say what was posed there actually clarified anything about being a sole-director, unless I'm taking it wrong.

    The question posed wasn't asked as a 'sole-director' question, it was asked and I'm quoting directly as "What if you're the director of your company. Can you yourself apply to be on the job retention scheme"

    The answer was basically, yes. We knew that. The issue is if you're a sole-director, which wasn't asked and therefore answered.

    P.S - Pretty bad audio!

    yes the audio is really bad. Martin Lewis from Money Saving Expert has also confirmed from his talks with the treasury that one person LTD companies are able to furlough, also the video link was saying that operational tasks such as accounts was permitted when furloughed.

    it’s annoying we are having to try and get to the bottom of this all ourselves, and apologies for my persistence, just trying to find a way to save my business as it was erased overnight

    thanks
     
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    Aniela

    Free Member
    Mar 28, 2020
    932
    143
    yes the audio is really bad. Martin Lewis from Money Saving Expert has also confirmed from his talks with the treasury that one person LTD companies are able to furlough, also the video link was saying that operational tasks such as accounts was permitted when furloughed.

    it’s annoying we are having to try and get to the bottom of this all ourselves, and apologies for my persistence, just trying to find a way to save my business as it was erased overnight

    thanks

    Do you have a link to where Martin Lewis stated that? I've been following his updates and haven't seen that mentioned yet, but may have missed it.

    In regards to the guy saying "operational tasks such as accounts was permitted when furloughed" - I believe that would just be filing accounts, that's what the consensus has been from most of the 'experts' anyway.
     
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    PPP

    Free Member
    Mar 28, 2020
    4
    1
    Do you have a link to where Martin Lewis stated that? I've been following his updates and haven't seen that mentioned yet, but may have missed it.

    In regards to the guy saying "operational tasks such as accounts was permitted when furloughed" - I believe that would just be filing accounts, that's what the consensus has been from most of the 'experts' anyway.
    I do but I can’t post links as I’m new here sorry. It’s the 4th post down on his Facebook page. Thanks
     
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