What HMRC's furlough guidance doesn't tell us

Employers' questions answered

HMRC are racing to set the Coronavirus Job Retention Scheme up and many employers have questions about furloughing their workers.

The official guidance lays out the bare bones of the scheme with a few of the details still to be clarified, and it’s believed the online portal will be live by the end of April.

What the HMRC guidance can’t offer is advice about how employers navigate some of the greyer areas, like how to maintain positive employee relationships; how to communicate measures to staff; how to keep furloughed employees engaged without breaking the rules; and what to do if they refuse to be furloughed.

Our webinar on Thursday 9 April at 14:00 will examine some of these issues, with expert advice from XCD Payroll specialist Graeme Walker will team up with HR expert and founder of ReThink HR Zoe Wilson.

Find out more and sign up here.

Quick furlough facts

The UK Government will provide a grant of up to 80% to over wage costs (salary plus associated National Insurance and minimum pension contributions) of workers who would otherwise have been laid off during this crisis. 

The grant is subject to a cap of £2,500 per month, per employee, and only applies to employees on the PAYE Payroll as of 28 February 2020. 

Furloughing is applicable to any employee, apprentice or director. It covers full time, part time and zero hours employees, provided they were in contract on 28 February 2020. 

Employees must not undertake any work for their employer while furloughed (although they can still volunteer elsewhere). 

The Department for Business, Energy and Industrial Strategy said: “We intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.”

What should I do now?

Employers should designate employees as ‘furloughed’, notify them in writing and seek their agreement in line with the terms of their contract of employment – HERE IS A TEMPLATE LETTER

Employers will be asked to submit their claim information to HMRC via an online portal – this portal is not expected to be live until the end of April

Speak to your HR & Payroll software provider about how your system will help you track and report on furloughing and how they plan to help you pull together all the required data

How can I claim?

You’ll need the following information to make a claim:

  • PAYE reference number
  • The number of employees being furloughed
  • The claim period (start and end date, the start date cannot be before 1 March 2020)
  • Amount claimed (the minimum length of furloughing is 3 weeks)
  • Your bank account number and sort code
  • Your contact details

How do I calculate my claim?

You’ll need to calculate the amount you can claim. HMRC will not do this for you, although they retain the right to audit all aspects of your claim retrospectively.

  • The grant will cover 80% of an employee’s regular wage up to £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage
  • It will not cover any fees, commissions or bonuses
  • Where the employee’s salary varies, and they have been employed with you for a year or more, calculate the higher of:
    • 80% of their gross salary for the same month the previous year
    • 80% of their average monthly gross salary across the 2019/2020 tax year
  • If they’ve been employed with you for less than a year, use 80% of their average monthly salary since they began their employment

HMRC provides more detail: READ IT HERE.

For XCD customers:

Your XCD system already allows you to start tracking Furlough data immediately by setting up a new compensation record. HERE’S A SHORT VIDEO THAT EXPLAINS HOW. It’s quick and easy. You have received instructions via email, but please contact support if you require help.

Our developers are working hard to build additional functionality to help our customers manage and track the furloughing process, and address challenges like SSP. If you’re part of the XCD Customer Community, look out for further information.

And if you have specific questions or requirements, please don’t hesitate to get in touch.

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