HMRC have set up the job retention scheme to reimburse employers for up to 80% of usual wages, paid to employees who are “furloughed” rather then laid off.
Claims for the first furlough scheme, which covers the period 1st March 2020 to 30th June 2020 can be made until 31stJuly.
Each period of furlough, eligible for claim under the first scheme, has to exceed 3 weeks. Only employees furloughed under the first scheme, are then eligible for the opportunities under the second flexi furlough scheme, where furlough periods are calculated in hours. Hence if you have not furloughed employees by 10th June then you cannot claim at all.
The new flexi furlough scheme, which runs to 31st October, has different rules and each month has different amounts you can claim, decreasing from 80% of normal wages plus pension contribution and employer’s national insurance, to 60%.
Basic rules: –
Furlough is a choice and must be made by agreement with employee and employer – in writing. As each of the two schemes has different rules so each needs a separate agreement.
You can offer furlough to workers because you have not got enough work for them or because they are unable to come to work e.g. vulnerable or a career. Do however be aware of possible discrimination if offering furlough to selective workers.
While on Furlough an employee cannot do work for that employer
The employee can:-
- Do voluntary or paid work else where
- Stay at home to look after children or others
- Do training
- Complete the statutory duties of being a director
Flexi Furlough anomalies
Claims for the first scheme are relatively straight forward when you get around the logic of working on calendar days, and all the options.
However, the flexi furlough scheme is a nightmare if you use it to the full and have all employees working a fraction of their usual hours.
You really need to consider if you want to either do the following yourself or pay a professional to do it!
Add up every hour worked in the last tax year
“Match” to amounts paid in the last tax year
Spread over calendar days to get “normal” hours and pay – for each month
Compare to what was paid for same period last year
Decide how many hours to include for holiday, sickness, parental leave or other periods of absence in the above
Add up total actual hours worked in the calendar month before you think about making a claim
Again, consider holidays, sickness etc.- but also pay rises (e.g. the new national minimum wage from April) and contract changes
Now compare to normal hours you prepared earlier to arrive at just the starting point for each claim.
- The final hurdles
Type this all correctly into HMRC website! – You can-not use the spreadsheet attachment option if you have less than 100 employees!
Explain all this to the employee
Keep records and await HMRC enquiry!
If you want help, then do contact us and Good Luck