Furlough, latest guidance

[Newchodge]

The government has finally issued more guidance, following the original 2 paragraphs in the original guidance. It is not clear whether there will also be regulations or if this is it.

The actual guidance is here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

I set out some of the main points below. Can I ask that, if anyone has any uestions about furlough they put them on this thread, just to save my sanity in trying to answer the same question in numerous different threads - Mods, I hope that is OK?

1. Any employer is covered by the Job Retention Scheme if they were registered for payroll on 28 February 2020.
2. Every employee who was on payroll on 28 February 2020 is covered. Anyone taken on after that date is not eligible.
3. Agency workers are covered. The phrasing is strange:
   Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:
   
   • full-time employees
   • part-time employees
   • employees on agency contracts
   • employees on flexible or zero-hour contracts
   That sounds as if the 'employer' of agency workers (which sounds like the client) will claim the 80% and pay it to ? the agency or the worker? Not clear. It is also not clear what happens if someone was taken on on 1 February by an employer who (very unusually) runs payroll on the last calendar day of the month, as being a leap year, the last calendar day of fenruary was Saturday 29 February.
4. Directors who are on payroll are not excluded, so one must presume they are included.
5. Employees must not undertake work or provide services for their employer. No mention of working for someone else, so this will be subject to the employment contract. Those without restrictions can work anywhere ese, apparently. Thse whose contracts state they cannot work for anyone else, cannot.
6. Furlough must last for at least 3 weeks and can be renewed. This seems to mean that an employer could furlough half the workforce for 3 weeks, then reverse the situation and furlough the other half for 3 weeks. Agency employees cannot take other work.
   
7. Employer NI and statutory level pension contributions can also be reclaimed.
8. Wages to be reimbursed for people with standard income will be that due on 28 February, excluding fees, commission and bonus. For those on varied income it will be the higher of the same payment period for the previous year (the guidance says month, which ignores the weekly paid, but heck, civil servants are not weekly paid) or an average of 2019/20 earnings.
9. Employer's NI and statutory minimum pension contributions m ust be paid.
10. National Minimum Wage will not apply as the employees will be doing no work.

There is a lot more in the guidance, but I hope I have covered most of the main points. I am happy to field any questions, but please put them on this thread.

 

[Dean Sayer]

That is certainly a bit clearer but quite a few questions need answering for me yet, my payrol for manual workers is weekly and at the moment I do not know what pay elements are to be included, one guy is a supervisor and gets an additional amount for his supervisory role and project bonuses for any overtime, I currently assume neither of these elements will be covered as he is not supervising or doing overtime - but it does make up his average pre-deduction wage that is similar each week... Confused.

 

[Newchodge]

That is certainly a bit clearer but quite a few questions need answering for me yet, my payrol for manual workers is weekly and at the moment I do not know what pay elements are to be included, one guy is a supervisor and gets an additional amount for his supervisory role and project bonuses for any overtime, I currently assume neither of these elements will be covered as he is not supervising or doing overtime - but it does make up his average pre-deduction wage that is similar each week... Confused.

I would have thought the supervisor's allowance should be included as it is part of the rate of pay for the job.

As written, the guidance only states that fees, commission and bonus are not payable only for salaried employees. If pay varies, for example by overtime, then you should be using the previous year's pay or averaging method. That would include a bonus that is paid in lieu of overtime that would otherwise have been paid, I think!

 

[Dean Sayer]

I would have thought the supervisor's allowance should be included as it is part of the rate of pay for the job.

As written, the guidance only states that fees, commission and bonus are not payable only for salaried employees. If pay varies, for example by overtime, then you should be using the previous year's pay or averaging method. That would include a bonus that is paid in lieu of overtime that would otherwise have been paid, I think!

Thank you, I was hoping it would be via averaging so fingers crossed, I want to do the best for my staff as they have worked tirelessly for me, I wish I could have helped the self employed that also make a big part of our teams, thanks again :thumbs:

 

[MrAB]

I have 'furloughed' 3 members of staff. Will i have to continue to pay their wage and then claim it back or are they effectively 'off the payroll' until the government provide the support? I can't afford to have them on th epayroll so do I make them redundant or 'lay them off' until I can get the support?

 

[The Soup Dragon]

I have 'furloughed' 3 members of staff. Will i have to continue to pay their wage and then claim it back or are they effectively 'off the payroll' until the government provide the support? I can't afford to have them on th epayroll so do I make them redundant or 'lay them off' until I can get the support?

I think they are on the payroll and you still have to pay them and claim it back when the scheme is fully operational

 

[Newchodge]

I have 'furloughed' 3 members of staff. Will i have to continue to pay their wage and then claim it back or are they effectively 'off the payroll' until the government provide the support? I can't afford to have them on th epayroll so do I make them redundant or 'lay them off' until I can get the support?

The idea is that you continue to pay them. Are they paid weekly or monthly? The scheme should be up and running by the end of april and you can make your claim before you normally pay payroll. If the business cannot afford to pay weekly paid staff, the banks should agree a temporary facility to allow you to pay them.

 

[Dean Sayer]

There is some good advise Q&A on Sage Help centre, this looks helpful (bad news for some some if correct) Copy/Paste

Can employed directors receive furlough payments?
Yes. You can furlough directors if the business still has at least one active director for the company to trade. You can't furlough the only director in a business.

 

[EeeTea]

So I seem to fall through the gaps. Having started my Ltd Company (just me as a sole director, no other employees) with the first company year-end last Nov. I am paying myself once annually, just enough to get the NICs and not the income tax.. so approx £8600 from memory. The rest of the income for that year is to be by Dividend (still to be worked out, but just a couple of k probably).
This year is different with much of the work from last year now paid into the coffers, dividends at the end of this year look to be good, with the business doing well. However, in the bit between now and then - and with all my work on hold, and money in being reduced, is there anything in this "comprehensive" help that will help me?

I fear not.

 

[Newchodge]

There is some good advise Q&A on Sage Help centre, this looks helpful (bad news for some some if correct) Copy/Paste

Can employed directors receive furlough payments?
Yes. You can furlough directors if the business still has at least one active director for the company to trade. You can't furlough the only director in a business.

That is not true. You can furlough the only director in a company if all they are doing is a director's statutory duties. If there is no work all they need to do is payroll and reclaiming the job retention payment which they can outsource before furloughing themselves (I just made up a new word, my previous one was furloughisation).

I do not understand why accountants and Sage is an accounting business, believe they are HR experts.

 

[Dean Sayer]

That is not true. You can furlough the only director in a company if all they are doing is a director's statutory duties. If there is no work all they need to do is payroll and reclaiming the job retention payment which they can outsource before furloughing themselves (I just made up a new word, my previous one was furloughisation).

I do not understand why accountants and Sage is an accounting business, believe they are HR experts.

That's interesting then, good that is not cut and dried, will be interesting to see how this developes.

Agreed Sage is mainly accounts but they do other stuff including HR and Payroll, so can only conclude/guess they work with HMRC quite closely to inform users on the newest legislation and implement it in their software to HMRC standards/approval, hopefully they get some info early when Beta Testing.

 

[Newchodge]

That's interesting then, good that is not cut and dried, will be interesting to see how this developes.

Agreed Sage is mainly accounts but they do other stuff including HR and Payroll, so can only conclude/guess they work with HMRC quite closely to inform users on the newest legislation and implement it in their software to HMRC standards/approval, hopefully they get some info early when Beta Testing.

They get info about accounts and how to run payroll technically. I do not believe they ahve much understanding about employment law, and furlough is employment law, not accountancy or payroll.

 

[Mr D]

Thanks Cyndy.
Useful information as always, helpful to many.

 

[UKSBD]

Do we know yet if furloughing rules are gong to be similar to redundancy rules?

I.e
I believe in redundancy the role the employer was doing has to no longer be there for them to made redundant.

If someone is put on furlough is someone else allowed to fill the role they were doing?

for example if currently 2 employees but only enough work for one.
Can one be put on furlough and the other take over the role they were doing?

 

[xray123]

I read the Covid 19 job retention scheme guidelines and confused about this particular sentence:

"The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020."

Does this mean for employers are eligible if they registered for PAYE on or before Feb 28 or only staff that were registered on or before Feb 28?

I opened my business (nail salon) late feb but only registered for PAYE a few days ago as I need to run payroll for my 10 days of trading in Feb and a few weeks in March before I closed temporarily due to COVID 19.

 

[Newchodge]

Do we know yet if furloughing rules are gong to be similar to redundancy rules?

I.e
I believe in redundancy the role the employer was doing has to no longer be there for them to made redundant.

If someone is put on furlough is someone else allowed to fill the role they were doing?

for example if currently 2 employees but only enough work for one.
Can one be put on furlough and the other take over the role they were doing?

You can furlough as an alternative to lay off, short time working or redundancy caused by Covid-19.

An employee without a LOST clause in their contract can refuse to accept furlough, and would then need to be either kept on, or dismissed, fairly , by reason of redundancy.

If you need to keep one and not two you could decide - X is a much better employee so I will pay them to work 100%, Y is useless so I will pay them 80% to stay home and do nothing. That may be unpopular with either or both of them, but as long as you can show the decision was not based on a protcted characteristic, you can do it.

Or you could furlough X for 3 weeks, then bring them back, then furlough Y for 3 weeks.

 

[Newchodge]

I read the Covid 19 job retention scheme guidelines and confused about this particular sentence:

"The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020."

Does this mean for employers are eligible if they registered for PAYE on or before Feb 28 or only staff that were registered on or before Feb 28?

I opened my business (nail salon) late feb but only registered for PAYE a few days ago as I need to run payroll for my 10 days of trading in Feb and a few weeks in March before I closed temporarily due to COVID 19.

The bit you quote means the employer has to have registered as an employer and started a payroll scheme by 28 February. That means they have issued their first EPS or first FPS on or before 28 February.

IF the employer qualifies because they have started a payroll scheme, then only those employees who were on payroll on 28 February are eligible. How many employees did you pay, and when did you pay them?

 

[The Soup Dragon]

The bit you quote means the employer has to have registered as an employer and started a payroll scheme by 28 February. That means they have issued their first EPS or first FPS on or before 28 February.

IF the employer qualifies because they have started a payroll scheme, then only those employees who were on payroll on 28 February are eligible. How many employees did you pay, and when did you pay them?

What if you started a new employee on Feb28th and already have a valid PAYE scheme in operation?

 

[UKSBD]

If you need to keep one and not two you could decide - X is a much better employee so I will pay them to work 100%, Y is useless so I will pay them 80% to stay home and do nothing.

Thanks, yes I get that, but is the one kept on allowed to do the others work?

 

[Newchodge]

What if you started a new employee on Feb28th and already have a valid PAYE scheme in operation?

I don't think they will be eligible -

"Furloughed employees must have been on your PAYE payroll on 28 February 2020,"

I take that to mean have been included on an FPS or EPS related to 28 February.

So if they started on 28 February and you ran your payroll on 28 February they would have appeared as a starter on that date even without any pay due.

If you ran it later, for February (some run payroll on 5th of each month, for instance, or run weekly payroll, they would have to have appeared on an RTI on the first RTI after 28 February.

If payroll is monthly, and was run on 27 February, then maybe them appearing on the March RTI with a start date of 28 February may work. But not many payrolls are run on the last Thursday of every month.

When was your February payroll run?

 

[xray123]

I haven't paid my employees for February yet. They agreed they would receive February's pay with March's payroll. My accountant said it was acceptable as he could back date pay. I haven't done payroll for myself either. I have a total of three employees plus myself= 4.

 

[Newchodge]

Thanks, yes I get that, but is the one kept on allowed to do the others work?

Given the reason for furlough is reduction in work, there would only be part of the other's work to be done. There may be an issue if someone's role continued 100% and they were furloughed while all their work was given to someone else, but it is not yet clear.

 

[Newchodge]

I haven't paid my employees for February yet. They agreed they would receive February's pay with March's payroll. My accountant said it was acceptable as he could back date pay. I haven't done payroll for myself either. I have a total of three employees plus myself= 4.

Then ask your accountant but I think you will not be eligible. What date did you start employing staff? Were they contracted to weekly or monthly pay? I take it you are a ltd company?

 

[The Soup Dragon]

I don't think they will be eligible -

"Furloughed employees must have been on your PAYE payroll on 28 February 2020,"

I take that to mean have been included on an FPS or EPS related to 28 February.

So if they started on 28 February and you ran your payroll on 28 February they would have appeared as a starter on that date even without any pay due.

If you ran it later, for February (some run payroll on 5th of each month, for instance, or run weekly payroll, they would have to have appeared on an RTI on the first RTI after 28 February.

If payroll is monthly, and was run on 27 February, then maybe them appearing on the March RTI with a start date of 28 February may work. But not many payrolls are run on the last Thursday of every month.

When was your February payroll run?

Embarrassingly I don't know it is all outsourced to our accountants.

 

[xray123]

I pay them monthly and operate as a ltd. It will be such a help if I can use this scheme. Even if the accountant backdates I wont be eligible?

If I can get hold of my accountant I'll ask....

 

[Lougbr]

Hi all,

Can employees be asked to take their annual leave whilst on furlough?

Many thanks

 

[Mr D]

Hi all,

Can employees be asked to take their annual leave whilst on furlough?

Many thanks

Is there any benefit to the employee?

 

[Newchodge]

Hi all,

Can employees be asked to take their annual leave whilst on furlough?

Many thanks

It is not clear.

Employment law continues, and you can ask an employee to take annual leave if you give them notice (twice as much time as the leave you want them to take). But it must be at the appropriate holday pay - 100% of contract or average over previous 12 weeks (52 weeks if after 1 April), if higher. It is not yet clear whether an employee can be on furlough and on annual leave at the same time. Logic suggests not so you cannot claim 80% of the holiday pay and you cannot give annual leave if it means the employee's furlough period is less than 3 weeks.

However that is supposition.

The requirement that employees take at least 4 weeks of their annual leave within the annual leave year is to be relaxed, so all outstanding leave could be carried forward to the next annual leave year.

 

[Newchodge]

I pay them monthly and operate as a ltd. It will be such a help if I can use this scheme. Even if the accountant backdates I wont be eligible?

If I can get hold of my accountant I'll ask....

I think you are not eligible. Sorry.

 

[The Soup Dragon]

I don't think they will be eligible -

"Furloughed employees must have been on your PAYE payroll on 28 February 2020,"

I take that to mean have been included on an FPS or EPS related to 28 February.

So if they started on 28 February and you ran your payroll on 28 February they would have appeared as a starter on that date even without any pay due.

If you ran it later, for February (some run payroll on 5th of each month, for instance, or run weekly payroll, they would have to have appeared on an RTI on the first RTI after 28 February.

If payroll is monthly, and was run on 27 February, then maybe them appearing on the March RTI with a start date of 28 February may work. But not many payrolls are run on the last Thursday of every month.

When was your February payroll run?

Yes I agree its all a bit tricky.

I mean if an employee signed a contract to start a job say Feb 27th it would be reasonable not to pay them at the end of Feb and leave it until the March pay run...…………………..

 

[Newchodge]

Yes I agree its all a bit tricky.

I mean if an employee signed a contract to start a job say Feb 27th it would be reasonable not to pay them at the end of Feb and leave it until the March pay run...…………………..

There again it would be very easy to produce a contract with a start date of 27 February, for several family members to be employed at £2,500 per month. I am not, for one moment suggesting that you would do that, (although there were Ltd company directors on here musing about increasing their PAYE from £719 to £2,500 in March) but there has to be control because of that, and February payroll is very unambiguous.

 

[Pot131]

I really want to Furlough my employees after today other than just lay them off but do not have the funds to keep paying until the grant comes in at the end of April, how does this work? They say they are happy to wait until the end of April for the money

Secondly, can I furlough myself as a company Director? I am on the paye, however I’ve never paid myself a dividend and pay myself a weekly salary which I pay the paye tax and ni on etc, I’ve always been told by other directors that I’m stupid paying myself this way so has it screwed me up?

Thanks

 

[UKSBD]

When they mention the £2500 maximum, is that the wage or the amount people will get?

IE

To get £2500 the employee needed to earn over £3,130

or is it maximum wage meaning the employee will get a maximum of £2000

 

[Pot131]

And another question, I’ve had a member of staff on payroll for over a year, however on feb 27th he was a casual worker with set hours, on 2nd March I decided I wanted them on a salary as felt it fairer for the employee and wanted to pay what I thought they was worth, if I was to furlong them would they get 80 percent of their salary?

 

[MBE2017]

@ Newchodge,

Out of interest, my daughter is in the middle of swapping jobs, officially leaves her old job on April 13th, was supposed to start her new one around April 14th.

Her new employer still wants her to join the nursery, but it has an enforced shutdown with a school it is attached to. The owner had told my daughter she planned to furlough her until the nursery was back open, but according to this feb date that looks unlikely.

Do you know of any help she might be entitled to?

 

[Newchodge]

When they mention the £2500 maximum, is that the wage or the amount people will get?

IE

To get £2500 the employee needed to earn over £3,130

or is it maximum wage meaning the employee will get a maximum of £2000

The maximum the employer can reclaim is 2,500, which is probably 80%, employer NI and employer pension, so the employee does not get 2,500

 

[Newchodge]

And another question, I’ve had a member of staff on payroll for over a year, however on feb 27th he was a casual worker with set hours, on 2nd March I decided I wanted them on a salary as felt it fairer for the employee and wanted to pay what I thought they was worth, if I was to furlong them would they get 80 percent of their salary?

yes

 

[Newchodge]

@ Newchodge,

Out of interest, my daughter is in the middle of swapping jobs, officially leaves her old job on April 13th, was supposed to start her new one around April 14th.

Her new employer still wants her to join the nursery, but it has an enforced shutdown with a school it is attached to. The owner had told my daughter she planned to furlough her until the nursery was back open, but according to this feb date that looks unlikely.

Do you know of any help she might be entitled to?

She can ask her old employer to allow her to retract her resignation, furlough her until the new employer wants her. Failing that it is state benefits.

 

[Newchodge]

I really want to Furlough my employees after today other than just lay them off but do not have the funds to keep paying until the grant comes in at the end of April, how does this work? They say they are happy to wait until the end of April for the money

Secondly, can I furlough myself as a company Director? I am on the paye, however I’ve never paid myself a dividend and pay myself a weekly salary which I pay the paye tax and ni on etc, I’ve always been told by other directors that I’m stupid paying myself this way so has it screwed me up?

Thanks

Ask the bank for support, or leave them unpaid until end april. Do you pay weekly?

Please read this thread for directors stuff

 

[qqcs]

What If I have PAYE debt? I canceled all VAT and PAYE payment when we realise reduced (zero) enquirie and heard about VAT deferral.