Furloughed Workers

[Bushman]

That's got nothing to do with what I'm saying

I'm saying
The government may only pay 80% of "the figure the employer pays".

The way I read it, the employer may chose to make up the difference between the 80% grant and the normal wage.

 

[UKSBD]

The way I read it, the employer may chose to make up the difference between the 80% grant and the normal wage.

we shall see

 

[Bushman]

Yes, only time will tell

 

[UKSBD]

I agree the employer has the choice to make up from the 80% to the full salary

It's whether they are going to have to pay the 20% is what I wonder

I'll give an example using (£1000 and ignoring tax and NI to keep it simple, and ignoring the fact it might be calculated the other way)

the *current* wording is
"HMRC will reimburse 80% of furloughed workers wage costs"

The way I see it,
that means if the employer pays the employee £1000 the Government will then pay the employer £800

 

[Bushman]

Yes, the 2 bits do seem to contradict each other, guess we will just have to wait & see

 

[Bluejen84]

Yeah as it nice as it sounded they reimburse you 80% of the wages you pay. That doesn't help when your business is closed and making no money. I cut down to one full time member off staff. Currently he's just doing some painting/cleaning but as I'm reading to be furloughed i have to send him home and pay him to do nothing?

This isn't going to work long term.

 

[UKSBD]

Yes, the 2 bits do seem to contradict each other, guess we will just have to wait & see

I can't see the contradiction

In my opinion
The employer choosing to pay more relates to the amount over the £2,500

As I keep saying though
We shall see,
I'm only giving my interpretation of things

 

[Mr D]

Yeah as it nice as it sounded they reimburse you 80% of the wages you pay. That doesn't help when your business is closed and making no money. I cut down to one full time member off staff. Currently he's just doing some painting/cleaning but as I'm reading to be furloughed i have to send him home and pay him to do nothing?

This isn't going to work long term.

The theory appears to be the business doesn't go insolvent and doesn't make the staff member redundant / sacked in the relevant time period.
And afterwards the business can get going again with its existing staff.

Reality? We know in business its not always related to the theory very closely.

A million new benefit claimants in March won't help the government. A hundred thousand businesses a week shutting down, some unable to pay redundancy, doesn't help the government.

The measures seem to be trying to keep some business able to reopen.

May well find the 3 million unemployed of a few decades ago to be a small number.

 

[Bushman]

I can't see the contradiction

I simply meant that this bit sounds like we only have to pay the 80%
"Your employer could choose to fund the differences between this payment and your salary, but does not have to."

While this bit sounds like we have to pay 100% of the wage but only claim 80% of it back
"HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month."

 

[UKSBD]

I simply meant that this bit sounds like we only have to pay the 80%
"Your employer could choose to fund the differences between this payment and your salary, but does not have to."

While this bit sounds like we have to pay 100% of the wage but only claim 80% of it back
"HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month."

I think the 1st paragraph relates to the amount over the £2500
ie
if the employee earns £4000 the employer can choose to fund the difference between the £2500 and £4000

Also note: The employee has to agree to everything too.
A high earner may choose not to be furloughed

 

[Bushman]

A high earner may choose not to be furloughed

Given the choice of being furloughed or laid-off without pay I think it's Hobson's choice

 

[UKSBD]

Depends on their contracts
If their contracts give them strong redundancy benefits they may be better off taking the redundancy

 

[Bushman]

Depends on their contracts
If their contracts give them strong redundancy benefits they may be better off taking the redundancy

You can Lay someone off for 4 weeks before they can apply for redundancy

 

[Mr D]

You can Lay someone off for 4 weeks before they can apply for redundancy

And if this problem lasts longer than 4 weeks - just kicks the problem down the road slightly?

 

[UKSBD]

You can Lay someone off for 4 weeks before they can apply for redundancy

like I said, depends on their contract

 

[Bushman]

like I said, depends on their contract

Yes it does, but most properly drawn up contracts will have a Lay-off clause in it.

 

[Newchodge]

You can Lay someone off for 4 weeks before they can apply for redundancy

Only if it is written into their contracts.

Employer wage costs - does that include employer NI and pension contributions? In which case the employee would get nearer 60%

 

[webadvertiser]

Has anyone actually furloughed workers yet?

The situation seems so ambiguous. We want to do it as a business, but given we don't know the fine print we can't commit to doing it yet. Some questions we want answered -

• What sort of guarantee do we need to give people when they come back off the furlough? It's an agreement to be temporarily laid off, but can they come back for 1 day and we terminate/make them redundant? I presume so - a business can make their own decisions.
• Or, will the Government caveat the 80% payment with an agreement that you will, for example keep someone in work for x months, perhaps the same time that they were paid by the Government?
• If this caveat is to exist, then how can any business guarantee work for someone when their furlough ends? Money and funds, and the business might not exist.
• If you breach the agreement for the furlough grant, do you have to pay back the money?

There's much detail that is unanswered right now. The slight worry for us is that we need to save money now, and the Chancellor has said that it can be backdated to the start of March. The scheme is also available for 3 months. Is that from March 1st? So, effectively the Government grants end on May 31st? If so, we want to furlough people ASAP, but can't, because we don't know the detail.

Like many industries we have no idea if our business model will work post-coronavirus, so as much as I don't want to terminate people/make them redundant today to minimise my risk, I might have to. If the Government can pay people i'd rather be nice about it and do that, but tell furloughed employees honestly and informally that they should start looking for another job as their job might not exist in the future. This could be dodgy ground though - telling someone they're on a furlough but at the same time telling them they might not have a job to come back to.

Anyone spoke to HMRC to get a rough idea of when the scheme/system might be up and running?

 

[Alison Moore]

I read yesterday that employers will not be liable for the 20% in wages, if they chose not to be. It is only designed to retain workers who would otherwise he laid off, so they have to not be working at all to be classed as furloughed.

 

[webadvertiser]

I read yesterday that employers will not be liable for the 20% in wages, if they chose not to be. It is only designed to retain workers who would otherwise he laid off, so they have to not be working at all to be classed as furloughed.

Yeah, we read it that way too. I don't expect to have to pay the extra 20%. I did wonder if the 80% included employee NI and pension. A few people are saying it does, so that would cover a lot of costs.

I expect employer NI is still to be paid though, and any other benefits would continue to accrue, so effectively almost 2 days per month leave, any bank holidays etc.

We're just speculating at the moment on the cost to us of furloughing an employee vs terminating them now (1 week's notice - they've been with us less than a year).

Furloughing when you factor in employer NI and leave for a start, plus possibly employee pension on top of that, plus possibly the extra 20% to make their wages up to 100%, becomes fairly expensive for someone not doing any work.

For a lot of employers I expect their questioning whether just laying people off and recruiting them again once business picks up is a better option. Most people are not going to get other jobs in this climate.

 

[Newchodge]

There is still no detail but there is no way an employer will be required to take back employees for a period of time. The letter you send putting them on furlough should include a clause to the effect that they may still be redundant at the end of the period.

Furlough can apply to anyone laid off on or after 1 March, provided they were on payroll on 28 February. It is not clear if it is payable (currently) for 3 months from the furlough date or until end May.

 

[The Soup Dragon]

There is still no detail but there is no way an employer will be required to take back employees for a period of time. The letter you send putting them on furlough should include a clause to the effect that they may still be redundant at the end of the period.

Furlough can apply to anyone laid off on or after 1 March, provided they were on payroll on 28 February. It is not clear if it is payable (currently) for 3 months from the furlough date or until end May.

This is all a bit worrying. I just took on a new full time member of staff ( currently now me and them only in the business) who started with us March 2nd and now the world has turned upside down and no orders in. Sounds like I wont be able to use this scheme as they weren't with me on Feb 28th.

 

[webadvertiser]

This is all a bit worrying. I just took on a new full time member of staff ( currently now me and them only in the business) who started with us March 2nd and now the world has turned upside down and no orders in. Sounds like I wont be able to use this scheme as they weren't with me on Feb 28th.

I guess if the rule is that they did have to work for you on February 29th to qualify then you have some options left -

• Terminate their contract - they've been with you less than a month so you don't owe them any notice.
• Ask them to take unpaid time off with a view to restarting at some point in the future. If times are still bad then you can terminate their contract (as long as they haven't worked for you for 2 years) without much comeback. You will however owe them their contractual notice. If the legal minimum this will be 1 week (up to 1 year's service.

They will however accrue benefits I expect - leave, pension etc while on unpaid leave.

We're in a similar situation. Employee been with us 6 months. It would be far to easy just to let them go and pay up a week notice, but I really don't want to leave someone struggling to survive in this climate.

 

[Newchodge]

This is all a bit worrying. I just took on a new full time member of staff ( currently now me and them only in the business) who started with us March 2nd and now the world has turned upside down and no orders in. Sounds like I wont be able to use this scheme as they weren't with me on Feb 28th.

Even that is not clear. However they need to have something in place to prevent small organisations taking on 15 family members in March and paying them all at £2,500 per month, and I think they will do that with the end February deadline. There again, they may not.

 

[webadvertiser]

Even that is not clear. However they need to have something in place to prevent small organisations taking on 15 family members in March and paying them all at £2,500 per month, and I think they will do that with the end February deadline. There again, they may not.

I had heard somewhere that the 80% payments would be based on what a person earned in the month of February. At least that way HMRC know what payroll was submitted in that month and who is legit and who isn't.

Sure there will be a lot of fraud and attempts to do so. Always is in a crisis

 

[Newchodge]

I had heard somewhere that the 80% payments would be based on what a person earned in the month of February. At least that way HMRC know what payroll was submitted in that month and who is legit and who isn't.

Sure there will be a lot of fraud and attempts to do so. Always is in a crisis

Or possibly 3 month average. Hourly paid employees would be disadvantaged in February as it was a short month. Most pub and restaurant staff are hourly paid and there will be a lot of them affected.

I understand Wetherspoons has dismissed all staff with less than 2 years's service, rather than furlough them.

 

[Mr D]

Or possibly 3 month average. Hourly paid employees would be disadvantaged in February as it was a short month. Most pub and restaurant staff are hourly paid and there will be a lot of them affected.

I understand Wetherspoons has dismissed all staff with less than 2 years's service, rather than furlough them.

Depends on the days worked in February.

Hourly paid staff are not paid for days they aren't in.
20 days pay? 21 days pay? 22 days pay? It can vary even within the same business.

Also depends when business runs pay from and to. Wife is 20th to 19th, paid at end of month - so February is normal month, March is the low one in non leap years.

 

[webadvertiser]

Or possibly 3 month average. Hourly paid employees would be disadvantaged in February as it was a short month. Most pub and restaurant staff are hourly paid and there will be a lot of them affected.

I understand Wetherspoons has dismissed all staff with less than 2 years's service, rather than furlough them.

Interesting. I have also heard the same sentiment from employers. Basically - if you've worked for us less than 2 years it's simple and cheap to let you go and we can rehire once we need people. The only reason we'd keep people on with less than 2 years' service is if they're very specialist and not very replaceable.

Pub workers, casual staff etc - there's going to be loads of people needing jobs when this is over.

 

[Mr D]

Pub workers, casual staff etc - there's going to be loads of people needing jobs when this is over.

Which could be considerably longer than 3 months.

 

[Newchodge]

Or possibly 3 month average. Hourly paid employees would be disadvantaged in February as it was a short month. Most pub and restaurant staff are hourly paid and there will be a lot of them affected.

I understand Wetherspoons has dismissed all staff with less than 2 years's service, rather than furlough them.

Sorry, I was wrong. Apparently Wetherspoons has laid off all staff without pay, without notice, and told them they will get nothing until Wetherspoons can get the money from the government. Meanwhile they should apply to Tesco.

 

[The Soup Dragon]

Sorry, I was wrong. Apparently Wetherspoons has laid off all staff without pay, without notice, and told them they will get nothing until Wetherspoons can get the money from the government. Meanwhile they should apply to Tesco.

All staff? Any idea how many people that might be?

 

[Newchodge]

All staff? Any idea how many people that might be?

Lots

Actually, 40,000 according to this https://www.mirror.co.uk/money/wetherspoons-boss-tells-40000-staff-21743433

 

[ecommerce84]

Sorry, I was wrong. Apparently Wetherspoons has laid off all staff without pay, without notice, and told them they will get nothing until Wetherspoons can get the money from the government. Meanwhile they should apply to Tesco.

It’s not all bad though, apparently they’ll be at the front of the queue to get their jobs back if they want to go back!

It would be somewhat amusing if no one goes back. Training 40,000 new recruits en masse doesn’t sound like it would be fun.

 

[Mr D]

It’s not all bad though, apparently they’ll be at the front of the queue to get their jobs back if they want to go back!

It would be somewhat amusing if no one goes back. Training 40,000 new recruits en masse doesn’t sound like it would be fun.

The Weatherspoons method of making a statement.

Cannot see it becoming that popular.

 

[Gordon - Commercial Finance]

It would be nice to think that public perception of their poor treatment of staff would mean they would lose business once back open again. However I fear that their target market are less bothered about staff welfare than they are about cheap booze.

 

[UKSBD]

I'm surprised some of these companies aren't working together more.
If Wetherspoons want to get rid of 20,000 and Tesco need 20,000 why can't they come up with a scheme where they are still work for Wetherspoons but then supplied to Tesco

Tesco pay Wetherspoons with small margin on top to cover Wetherspoons costs

 

[Mr D]

I'm surprised some of these companies aren't working together more.
If Wetherspoons want to get rid of 20,000 and Tesco need 20,000 why can't they come up with a scheme where they are still work for Wetherspoons but then supplied to Tesco

Tesco pay Wetherspoons with small margin on top to cover Wetherspoons costs

A secondment opportunity.

Not often done on such a scale but could have been made to work if unions would allow.

 

[webadvertiser]

Anyone have any idea when the Government will publish the scheme details?

I know the Self Employed details are going through Parliament now and the Coronavirus Bill is being debated this week. Perhaps the details will come out early next week.

Don't want to make any decisions until we know. I guess the alternative would be to just furlough people on 80% salaries and hope we've got it right. That said, if the furlough deal from the Government isn't what we thought it would be we'd end up having to terminate those people instead, which would be a legal minefield.

 

[Newchodge]

Make sure your furlough agreement states that it is dependent on the government scheme.

 

[Awinner2]

will HMRC use the PAYE figures that are put on the system (presumably). Son has a good salary but low compared to his gross pay due to being a very high commission earner. Don't get me wrong, he and his partner can pay their mortgage and live ok on 2 x £2500 a month but this is about 40% of their normal income.