You can claim for furloughed employees if they were on your PAYE payroll on 28th February. You must designate them as furloughed employees and confirm this in writing. To be eligible for reimbursement, the employees must have been furloughed for a minimum period of 3 weeks. This applies to every period of furlough leave and not just the first one. It’s unclear whether zero hours workers (those in respect of whom you have no obligation to offer work) will qualify for payment under the scheme however we are expecting regulations to be released in the near future which should clarify the position for these workers.
What documents do you need to issue?
You must write to your employees to confirm that they have been furloughed and keep a record of this for five years. You will also need their consent to be furloughed unless you have a contractual right to lay off.
Rotating furlough for fairness
We know many employers are concerned about how to fairly decide who to furlough, especially where it is necessary for some employees to continue working on reduced hours. One option is to rotate your employees between furlough leave and working, provided each employee performs no work for at least 3 weeks you can develop a rota of who will be furloughed and when. Alternatively, you can furlough based on skills and levels of work. The anti-discrimination laws still apply during these times and therefore any decisions made, should be capable of being justified.
Employees who have already left
Employees who left for any reason after 28 February 2020 be can be re-engaged and then furloughed. There is however, no obligation for you to do this.
Employees who are off sick
Many employees who have been off sick for a long time are now advising that they are well and wanting to be furloughed. Ordinarily if someone is unable to attend work for reasons of ill health or they are self-isolating in line with Government guidance they would be incapable of attending work and therefore entitled to sick pay rather than furlough leave.
The third set of government guidance now confirms that you can decide whether or not to furlough these employees. You can’t however claim for salary under the Coronavirus Job Retention Scheme and SSP at the same time. The Coronavirus Job Retention scheme is not intended to cover short term absence from work for ill health, which is why the SSP rebate scheme was introduced and also one of the reasons why the minimum furlough period is three weeks. If someone becomes ill whilst furloughed or is already ill, it’s up to you to decide whether to furlough them or not. Employees who are shielding in line with public health guidance or need to stay home with someone who is shielding can also be furloughed.
Can employees cancel pre-booked annual leave now that they have been furloughed?
We are seeing many employees try and do this, but the current guidance does not prohibit furlough leave and annual leave being taken at the same time. It’s therefore at your discretion whether to allow this to be cancelled or whether to decide that the holiday still needs to be taken. The ACAS guidance suggests that furlough leave and annual leave can be taken at the same time but HMRC may decide differently and there is always a risk that they say that any annual leave taken during furlough leave breaks the furlough period or that the sums paid are not recoverable. We expect updated guidance in the next few days on this. We consider it unlikely that annual leave would break the period of furlough leave due to the bank holiday situation that arose this weekend. Any annual leave should however be paid at full pay and not on a lower furlough rate. You can also allow employees to carry forward holiday that they are unable to take during the current leave year due to the effects of coronavirus.
How to calculate monthly salary
How you calculate the amount you need to claim for each employee will depend on how their pay accrues.
For an employee who is paid an annual salary each month you simply calculate with reference to their monthly salary as it stood before tax on 28th February.
For an employee whose monthly pay varies you will need to calculate their pay with reference to the higher of:
• The same months’ earnings in the previous year; or
• The average monthly earnings for the 2019/20 tax year.
HMRC’s reimbursement will cover income tax and employee contributions for National Insurance and auto-enrolled pension. Employers will be able to claim employer’s National Insurance and minimum pension contributions separately.
Can you claim overtime, fees, commission, bonuses and non-cash payments?
Yes, if these are regular payments that you are obliged to pay your employees. However, your claim should not include discretionary bonuses, commission payments or non-monetary benefits such as the value of a car or health insurance.
When will the service be ready?
We have been advised that the online service is expected to be available on 20 April 2020 with the first payments being made from 30 April 2020. Live testing has already started. A guidance document on how to apply is expected this week.
What information will you need to make a claim?
• Your employer PAYE reference number
• Number of employees being furloughed
• Names, payroll and NI numbers for those being furloughed
• Your self-assessment taxpayer reference, corporation taxpayer reference or company registration number
• The start and end dates of the period that you are claiming for
• Amount claimed
• Your bank account number and sort code
• Your contact name and number
If you have any questions relating to furlough leave or how to protect your business, please contact us.