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Furlough Leave UPDATE - 06/04/2020

Here is our perspective from the Government 's latest update on 4th April on Furlough Leave.

It clears up a number of ambiguities that has confused employers over recent weeks.

This is a general view on Furlough Leave together with further links to the appropriate Government guidance, if you require specific advice then please contact us T: 0330 333 4997 E: info@smeadvisor.co.uk

WE ALREADY KNEW

These points had already been established

  • All UK employees are eligible
  • Qualifying employees must have been on payroll on or before 28th February 2020, and enrolled by their employer through online PAYE
  • Maximum £2,500 reclaimable from HMRC per furloughed employee per month and the employer must have a UK bank account
  • £2,500 can still be claimed by an employer if they need to furlough an employee, even if that employee works elsewhere and has been furloughed by them already
  • An employee’s 80% is based upon their earnings at 28th February 2020, variable pay is calculated using the higher of pay in February 2019 or the average monthly wage since
  • The minimum furlough period is 3 weeks
  • A furloughed employee cannot work for their employer whilst on Furlough Leave
  • National Minimum Wage, it is permissible to pay an employee less than the NMW as a result of the reduction to 80% under furlough
  • Any training whilst on furlough leave however is subject to the NMW
  • If an employee stopped working for the employer after 28th February then the employer can re-employ them, place them on Furlough Leave them, pay them 80% and reclaim this from HMRC
  • If an employee is sick or self isolating then they can claim SSP. An employee cannot be furloughed whilst on sick leave
  • An employer can furlough employees who are shielding in accordance with Public Health Guidelines or who have caring responsibilities, for example, for children at home from school
  • Furloughed employees can volunteer provided that this is not a service to their employer or produce revenue to their employer
  • Directors can be furloughed but this must be through a formal resolution and recorded within the company records. During their furlough the director may only fulfil their statutory duties, for example, filing Company returns

WHAT IS NEW OR HAS BEEN CLARIFIED?

Following the release on Saturday we now know more in these areas

  • Notifying your employee in writing

You must notify your employee that they are being furloughed – in writing. The Government guidance reads

Agreeing to furlough employees

“Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way. To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years” 

IMPORTANT If you are unclear on any wording, if an employees exercises their right to request redundancy or you need help on how to go about either process then please ask as we can help.

 T: 0330 333 4997 E: info@smeadvisor.co.uk

Make sure you keep records, it is likely that HMRC will check some businesses whether during general investigations or spot checks

  • Additional Employment

If you have an employee who is on Furlough Leave and wanting to supplement their reduced pay by taking up further employment then they can. The Government guidance reads

Working for a different employer

“If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.”

The employee’s contract of employment is still binding and therefore they should seek your permission if your employment contract prohibits taking further employment.

  • Furloughing an employee multiple times

It has now been clarified that an employee can be furloughed multiple times.

“Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.”

Be sure that each period of furlough is for a minimum of 3 weeks. This will allow employers, if they choose, to rotate which of their employees are furloughed or to allow an employee to return for a short period and then furloughed again.

  • Commission & Bonuses

An employer can reclaim from HMRC compulsory commission or bonuses they are contractually bound to pay their employees, however tips, discretionary payments and benefits in kind fall outside of this and so are still not reclaimable. The Government guidance reads

Past Overtime, Fees, Commission, Bonuses and non-cash payments

“You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.”

This is taking a similar stance to commission and bonus when an employee is on holiday.

The ceiling of £2,500 still applies. The guidance now references “fees” however it is not clear what this means, so we will update you further when this is clarified.

WHAT IS STILL UNCLEAR

There are still a few remaining areas that remain unanswered or are without express guidance

  • Holiday can taken whilst still on Furlough and if so at what rate of pay?
  • TUPE where employees were transferred after 28th February 2020
  • Directors Duties clarification on exactly what a furloughed director may or may not do?

As always the experienced team of HR Consultants at SME Advisor are here to answer specific questions on Furlough Leave and other HR matters

T: 0330 333 4997

E: info@smeadvisor.co.uk

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