Smarter accounting

Furlough FAQ and resources

29 March 2020, Charities, Companies, Creative Industries, Employer, Sole Traders

Coronavirus Job Retention Scheme – Furlough FAQ

All UK employers will be able to access support for furloughed workers.  This includes charities, non profit and public bodies.  The government expects that the scheme will not be used by many public sector organisations.  The majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.  HMRC and HM Treasury have been working hard to provide answers to furlough FAQ.
Coronavirus Job Retention Scheme Furlough FAQ and resources

Can sole directors be furloughed?

All directors who were on PAYE on 28 February 2020 along with any other employees on the payroll at this date can be furloughed.  This also applies to salaried individuals who are directors of their own personal service company (PSC).  The HMRC page on the Self-Employment Income Support Scheme states that directors may be able to claim funding under the Job Retention Scheme.  This was confirmed by Ben Kerry from HM Treasury in a CBI webinar on 27th March.  The relevant part of the furlough FAQ on this webinar is at around 26 minutes in, with the answer from Ben Kerry at 28 minutes.

Can you put people on and off furlough?

The minimum length of time an employee can be furloughed for is three weeks.  Ben Kerry from HM Treasury confirmed it was possible to put people on and off furlough provided the 3 week minimum period of furlough is met each time.

Does Holiday accrue through the period of furlough?

Ben Kerry from HM Treasury also confirmed that holiday does accrue through furlough.  If employees had already booked or agreed holiday, the opportunity to furlough is only available after the pre-agreed leave has finished.

Even if your business ceased trading while an employee was away on holiday, you can’t backdate the start of furlough.

If a worker has been furloughed this does not count as holiday.  Any holiday allowance will need to be used separately.

Are dividends included in remuneration for the furlough calculation?

No – only salary reported to HMRC through RTI is taken into account.

Do I have to pay minimum wage to a furloughed worker?

Individuals are only entitled to the National Living Wage (NLW)/ National Minimum Wage (NMW) for the hours they are working.  Furloughed workers have been laid off on a temporary basis and are not permitted to work for their employer (or anyone else) during this period of absence.

As furloughed workers are not working the NLW/NMW does not apply.

What if I have to provide training to prepare for return to work?

If workers are required to complete training e.g. complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training. If this is more than the 80% of their wage being subsidised you must pay extra salary for these hours.  The additional cost will not be funded by the Coronavirus Job Retention Scheme.

What about redundancies after 28 February?

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

What about part time employees?

All employees with regular wages will have their February 2020 salary used as the basis for the calculation.  This is the same for part time and full time workers.  Fees, commission and bonuses should not be included in the base figure.  This means if your regular monthly gross salary is £1,000 and you received a bonus of £500, it is just the £1,000 that is used to calculate the grant.  Your wage will be £800 a month for time that you are furloughed.

What if employees have a job with another employer?

You can furlough part time employees who have another job or self-employment.  They can still continue to work in that other job, so long as the roles are separate.

What about employees with variable pay?

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

This would also apply for directors who do not receive a regular monthly salary.

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

Can employers top up the pay to 100%?

You can choose to provide top-up salary in addition to the grant.  Employer NIC and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme.

Voluntary automatic enrolment contributions above the minimum mandatory employer contributions will not be funded either.  The minimum employer pension contribution is 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).

Resources for employers

If you don’t have an in house payroll service or you no longer have support from an external payroll bureau, please contact Alterledger using the form below to see how we can help.  All our systems are online, including the client sign up process, so we can provide the support you need wherever you are based.

For HR advice get in touch with our friends at Connect Three.  They have an HR service, which can provide support with change your organisation is facing and manage the furlough process with your staff.  You will need to check your contracts of employment, for which legal advice is advisable.

The website has a page on the Coronavirus Job Retention Scheme
The CBI webinar with Ben Kerry from HM Treasury has lots of useful information.

Website by Haiwyre