Furloughed Workers

[Displaycentreuk]

HMRC is set to reimburse 80% of furoughed workers wage costs up to £2500. This implies, to me, that the employer will be required to contribute 20%.

Although our sales have dropped off a cliff this week, we do not want to send everyone home and have a plan for a skeleton staff to work short weeks to keep things going (eg making sure our invoices are paid and paying suppliers) and getting oursleves ready for when things start to get back to normal.

Looking on the Internet a 'furloughed worker' is not able to do any work at all - even answering a call or sending an email breaches their status. On one hand I assume that HMRC wil rigidly apply this definition, on the other hand it wouldnt seem unreasonable for an employer to expect a pro-rata (eg 20%) amount of efffort from a 'furoughed worker'. In our case, there will be very little revenue earning work to be done but some customers may still want our support and my team want something to do.

I understand that this legislation has been rushed through and applaud the government for taking this step. I just want to make sure that my understanding of the rules is correct so that I can make the correct decision for my business and its employees.

 

[UKSBD]

That was my reading of it too.

The employer will still have to pay 20% of the wages, plus the employee shouldn't do any work for them.

If it is going to be like that, a lot of business owners are going to be disappointed as they thought it meant the Government were simply going to be paying 80% of the wage bill

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

 

[UKSBD]

@Newchodge have you seen this yet, do you think we are interpreting it correctly?

 

[UKSBD]

Just to add
When I said be disappointed I think that's a massive understatement

If our interpretation is correct, this is going to be a real shocker for those who were thinking the Government were simply going to be paying the 80%

 

[Gordon - Commercial Finance]

I took to be staff who couldn’t come in, but were unable to work from home. A hotel receptionist for example.

 

[UKSBD]

I took to be staff who couldn’t come in, but were unable to work from home. A hotel receptionist for example.

Have you read the link above, it seems to imply what we think.

 

[UKSBD]

I took to be staff who couldn’t come in, but were unable to work from home. A hotel receptionist for example.

Hell of a lot of businesses are going to be totally Peed Off by this, plus employees when the employers don't take up the offer.

Watch the Governments popularity bomb when the realisation kicks in.

 

[UKSBD]

Hope I'm wrong about the 20%

 

[lesliedocherty]

I read it as the government pay 80%, the employer can if he chooses to, pay the other 20%

"Your employer could choose to fund the differences between this payment and your salary, but does not have to."

 

[UKSBD]

hope so, but could mean above £2,500

 

[UKSBD]

I read it as the government pay 80%, the employer can if he chooses to, pay the other 20%

"Your employer could choose to fund the differences between this payment and your salary, but does not have to."

"How to access the scheme
You will need to:

• designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers."

That still reads to me that you have to say how much you've paid them, and can then claim 80% of it back.
Guess we will just have to wait and see

 

[Gordon - Commercial Finance]

Have you read the link above, it seems to imply what we think.

Yes I think I thought this was one of the other threads about this subject. Sorry.

 

[UKSBD]

Yes I think I thought this was one of the other threads about this subject. Sorry.

It's getting confusing with all the threads all over the place, mods are having discussions on how to simplify this (grouping posts together more)

 

[Gordon - Commercial Finance]

It's getting confusing with all the threads all over the place, mods are having discussions on how to simplify this (grouping posts together more)

That would be nice...

 

[JB89]

I'm currently an employee that has had hours reduced significantly, initially I thought myself and anyone in this situation would be included in the governments plans above as it was being backdated to 1st March, i.e. if I earned £1000 a week then and now down to £600, the government would offer to pay £800 (80%) with my employer having the chance to pay the remainder.

After reading the above it looks like we cannot be doing any work to be eligible. Seems ridiculous as I'm going to be earning less for still trying to provide a service a couple of days a week than I would if I was sat at home watching Netflix in my dressing gown all week!

FWIW I think I'd go bonkers doing the latter so probably won't be asking if my employer will consider shutting the doors!

 

[Mr D]

I'm currently an employee that has had hours reduced significantly, initially I thought myself and anyone in this situation would be included in the governments plans above as it was being backdated to 1st March, i.e. if I earned £1000 a week then and now down to £600, the government would offer to pay £800 (80%) with my employer having the chance to pay the remainder.

After reading the above it looks like we cannot be doing any work to be eligible. Seems ridiculous as I'm going to be earning less for still trying to provide a service a couple of days a week than I would if I was sat at home watching Netflix in my dressing gown all week!

FWIW I think I'd go bonkers doing the latter so probably won't be asking if my employer will consider shutting the doors!

Well you could subscribe to the Mouse Channel next week.

Some people are focusing on their gardens, on their hobbies, on helping others while enforced away from work.

Beats spending the day in the jobcentre.

 

[JamieM]

I read it as the government pay 80%, the employer can if he chooses to, pay the other 20%

"Your employer could choose to fund the differences between this payment and your salary, but does not have to."

That’s how Rishi Sunak explained it on the announcement. Employers can make up the 20% if they choose to.

 

[Newchodge]

First, this is only for employees who the employer would have laid off (if in their contracts or by staff agreement) or made redundant due to CV. It was made clear in the presentation, although not in the guidance, that the government would pay the employer 80% (of what is not yet clear) and the employer could chose to add from 0 up to 20% so the employee gets 80% at least of their 'normal pay' (whatever that is). The employer cannot work for the employer while receiving this. It is not a lifeline to keep businesses going if they have less business. It is a lifeline to prevent millions of people having to claim benefits when they are all made redundant at the same time.

Apparently the theory is that, in 3 months everything will be getting back to normal and businesses will still have the staff available to restart.

There are lots of bits missing - will employers have to pay employers' NI and pension contributions? Will minimum wage increases kick in and increase the employee's pay? What is the baseline that 80% is calculated from?

Like many announcements it sounds good until you start working out how it works, then it changes, possibly substantially.

For instance what if the employer decides not to bother? What if only half the workforce is going off - how do you select? etc etc

 

[ADW]

Not sure why some thought this could be used for employees who are working. You would have Tesco making a fortune and slashing their wage bill. If employers have work for their staff then that would assume they are able to function as a business. However, I think there is some clarity needed on the middle ground. Where work has been substantially reduced and hours cut by half for example, is there access for 80% funding against the dropped hours. Is it all or nothing on help?

 

[Gordon - Commercial Finance]

Where work has been substantially reduced and hours cut by half for example, is there access for 80% funding against the dropped hours. Is it all or nothing on help?

I think that’s where they hope one of the other measures mentioned will be useful. Rates relief, EFG loan etc

 

[ADW]

I think that’s where they hope one of the other measures mentioned will be useful. Rates relief, EFG loan etc

I guess the other way around a big drop in work whilst having to tick along is half your staff furloughed and the other half having to work fulltime rather than all working reduced hours. I understand the Government don't want this open to abuse and taken up by those only really in need of support.

 

[Chris Ashdown]

Whatever the outcome, it would be fair to assume that no money will be payed for a couple of months as all the systems will need to be set up before the money is transferred so cashflow may still be a large problem

 

[Newchodge]

Not sure why some thought this could be used for employees who are working. You would have Tesco making a fortune and slashing their wage bill. If employers have work for their staff then that would assume they are able to function as a business. However, I think there is some clarity needed on the middle ground. Where work has been substantially reduced and hours cut by half for example, is there access for 80% funding against the dropped hours. Is it all or nothing on help?

The 80% is all or nothing. It is not clear whether the furloughed employees could then work for someone else, though.

 

[Gordon - Commercial Finance]

The 80% is all or nothing. It is not clear whether the furloughed employees could then work for someone else, though.

That’s a good point. I’m putting my wife’s salary on hold for 3 months as she’s picked up a temp contract in the co-op. In theory if I was inclined to abuse the system I could get 80% of her £719 a month paid as I’m putting her on 3 month leave to help the business cash flow.

 

[UKSBD]

For instance what if the employer decides not to bother?

I would think it's only really an advantage to an employer if they have an employee who has worked for them for a number of years
ie
So they don't have to pay them large redundancy

A lot of employers will probably be balancing out the costs as to whether they are better of paying redundancy or keeping them on.

If the employee has only been working for them for 5 years or so, they may think they it will be more cost effective just making them redundant

 

[UKSBD]

In theory if I was inclined to abuse the system

Do you think that would be abusing the system?

Edit to add: If she gets another job I would agree, but what if she couldn't get another job, do you think it would be fair to do it?

 

[ADW]

Do you think that would be abusing the system?

Edit to add: If she gets another job I would agree, but what if she couldn't get another job, do you think it would be fair to do it?

If she got another job it would be. This is in place to try and help people (both employers and employees) get through this very hard ime and not make extra dosh.

I think the £10k and £25k grants should be more selective rather than the blanket coverage, especially the 10. Many companies will not need these and I have seen companies workloads go up since this has started. There biggest fear is they have to many staff self isolating and can't keep up with their increased demand. I know it is a smaller percentage but they still get rates paid and a £10k bonus us on top it appears.

 

[UKSBD]

If she got another job it would be. This is in place to try and help people (both employers and employees) get through this very hard tme and not make extra dosh.

That's what I said, if she got another job, or sneakily carried on working, I would consider it abuse.
Would it be considered abuse though if you just treated her like any other employee?

 

[Gordon - Commercial Finance]

That's what I said, if she got another job, or sneakily carried on working, I would consider it abuse.
Would it be considered abuse though if you just treated her like any other employee?

Yes I think I would that was abusive, but without the other job, probably not?

I’m hoping I will get the £10k grant from my SBRR as no one is buying any assets for the next 3 months so I’ve no revenue whatsoever.

 

[UKSBD]

Yes I think I would that was abusive, but without the other job, probably not?

I was on the verge of having to let my daughter go.

I asked a question earlier in the week about whether I was allowed to keep my daughter on Payroll but withhold her wages - https://www.ukbusinessforums.co.uk/threads/not-drawing-wages-gone-through-payroll.404553/

This system seems like it is devised for Companies like mine, so would it be fair to use it (even though she is my daughter) ?

 

[Newchodge]

I was on the verge of having to let my daughter go.

I asked a question earlier in the week about whether I was allowed to keep my daughter on Payroll but withhold her wages - https://www.ukbusinessforums.co.uk/threads/not-drawing-wages-gone-through-payroll.404553/

This system seems like it is devised for Companies like mine, so would it be fair to use it (even though she is my daughter) ?

If the alternative is redundancy then it is probably fine, but I would like to read the regulations (when they appear) before giving definitive advice.

 

[ADW]

That's what I said, if she got another job, or sneakily carried on working, I would consider it abuse.
Would it be considered abuse though if you just treated her like any other employee?

If she has a track record of earning £719 pm then entitlement of 80% if no work available should be fine. It is up to the business owners and where the grey areas are I would think. Whilst they not expected to do any work at all which is understandable. Making a couple of supplier payments, paying in a customer cheque that comes through, taking in a delivery etc. all is essentially working but would you allow that to stop you claiming? Probably less than an hour in a week where if you stuck to the rules 100% could make you not get through this. It is like the idiots with their spare bedroom full of toilet rolls and pasta, it is down to the individual where you say screw everyone else or do your best and take just what you really need.

 

[UKSBD]

If she has a track record of earning £719 pm then entitlement of 80% if no work available should be fine.

We don't pay her that much, I tried to make it fair price for what she does.
Problem is she is 21 in a few weeks and was due a 35% pay rise (because of minimum wage)

It's going to look really dodgy if we give her this rise.

 

[Newchodge]

We don't pay her that much, I tried to make it fair price for what she does.
Problem is she is 21 in a few weeks and was due a 35% pay rise (because of minimum wage)

It's going to look really dodgy if we give her this rise.

That is one of the areas that needs clarifying.

 

[Mr D]

If she got another job it would be. This is in place to try and help people (both employers and employees) get through this very hard ime and not make extra dosh.

I think the £10k and £25k grants should be more selective rather than the blanket coverage, especially the 10. Many companies will not need these and I have seen companies workloads go up since this has started. There biggest fear is they have to many staff self isolating and can't keep up with their increased demand. I know it is a smaller percentage but they still get rates paid and a £10k bonus us on top it appears.

Blanket coverage is quick and doesn't involve a lot of admin.

More selective - that's more admin which costs and would take more time.

Balance one against problems caused by delays.

 

[Mr D]

If she has a track record of earning £719 pm then entitlement of 80% if no work available should be fine. It is up to the business owners and where the grey areas are I would think. Whilst they not expected to do any work at all which is understandable. Making a couple of supplier payments, paying in a customer cheque that comes through, taking in a delivery etc. all is essentially working but would you allow that to stop you claiming? Probably less than an hour in a week where if you stuck to the rules 100% could make you not get through this. It is like the idiots with their spare bedroom full of toilet rolls and pasta, it is down to the individual where you say screw everyone else or do your best and take just what you really need.

How much toilet roll and pasta does a household need to isolate themselves for 3 or 4 months?
Just following government guidelines requires 60 odd million people to stock up.

 

[Displaycentreuk]

As the OP, I fully agree with 'Not sure why some thought this could be used for employees who are working. You would have Tesco making a fortune and slashing their wage bill'.

The question 'Where work has been substantially reduced and hours cut by half for example, is there access for 80% funding against the dropped hours. Is it all or nothing on help?' is what we need to understand. It may be that govrenment will be too busy to anser this for us and the best we can do is reach a colective view as to what is reasonable. This is why I started the thread.

I believe that all the businesses that desere to survive will realise that this is not the time to be thinking about making money or exploiting loop-holes. Coming through this situation in the right way is what is important.

 

[Gordon - Commercial Finance]

If I was guessing, I would say there might be a caveat that it can’t be for paying directors, or certainly in cases where the director is the only employee. Reason being, you’re not going to make yourself redundant, or the business would cease to exist. If you can’t pay your own wages then the business disappears.

Edit: This is me guessing of course. We’re all just speculating until actual info is released

 

[Mr D]

If I was guessing, I would say there might be a caveat that it can’t be for paying directors, or certainly in cases where the director is the only employee. Reason being, you’re not going to make yourself redundant, or the business would cease to exist. If you can’t pay your own wages then the business disappears.

Edit: This is me guessing of course. We’re all just speculating until actual info is released

A director sets own wages - can take a time of not having wages while business still running.
The limited company ability to trade isn't directly linked to director salary being paid.

 

[Gordon - Commercial Finance]

A director sets own wages - can take a time of not having wages while business still running.
The limited company ability to trade isn't directly linked to director salary being paid.

Nor did I say it was - what I was getting at is that if the director is made redundant, the business ceases to exist as it was the director who generated the revenue.