Flexible Furlough - EXTENDED TO 30 April 2021
Most of us are by now familiar with how the scheme works but let us recap the main points here:
The UK Government will pay 80% (up from 60% in October) of the wages of the hours furloughed i.e. not worked up to a cap of £2,500 per employee per month.
Employers will continue to pay the National Insurance and the minimum pension contributions.
Employers can “top-up” wages to 100% if they choose to do so.
Neither the employer nor the employee needs to have previously used the furlough scheme.
The payperiod for reference for previously furloughed employees & any existing employees on the payroll will remain at the wage in February or March 2020 but for new employees it will be the last pay period ending on or before 31st October 2020. Rules are bit complex if on variable pay but speak to us.
Employees do not have to be furloughed full time because they can work some of their hours.
Employees must be on the payroll at some point from 20th March – 30th October and a RTI submission showing that employee must be made by 30th October 2020.
All claims must be submitted by 14 working days after the month the claim relates to.
Employees on the payroll until 23rd September but were since made redundant can now qualify for the scheme if they are re-employed.
It is important to get the agreement in writing with the employees you are now going to furlough due to the new lockdown. Most employers should have something in place if you have previously furloughed the same employee, but you need to revisit it now and review and amend it before agreeing it again. Make sure there is a written record, and a copy must be kept in case there is a HMRC audit.
The job retention bonus which was an incentive to retain jobs until January is also now no longer relevant and is therefore postponed.
Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days. The exceptions would be if you are claiming for the first few or the last few days of the month.
If you make an error when claiming
If you have made an error in a claim that has resulted in an overclaimed amount, you must pay this back to HMRC.
You can now tell HMRC about an overclaimed amount as part of your next claim. You will be asked when making your claim whether you need to adjust the amount down to take account of a previous error. Your new claim amount will be reduced to reflect this. You do not need to take further action but should keep a record of this adjustment for six years.
If you have made an error that has resulted in an underclaimed amount, you should contact HMRC to amend your claim. As you are increasing the amount of your claim, they will need to conduct additional checks.
If you have made an error in a claim and do not plan to submit further claims, HMRC are working on a process that will allow you to let them know about your error and pay back any amounts that you have overclaimed. You will need to keep a look out for the guidance as it is updated.
Furloughed employees continue to accrue leave as per their contract. Although the agreement can be varied as part of the furlough leave, most employees will be entitled to statutory paid annual leave which includes bank holiday.
Employees can take holidays whilst on furlough and as an employer you need to plan the return to work for your team that are on furlough and accrued holidays should be part of the discussion.
The working time regulations state that employees are paid for holiday at the normal rate of pay. Therefore, during furlough, any holidays taken will need be paid at the normal rate so hence employers are obliged to pay additional amounts over and above the grant. This would have applied to the Easter and May bank holidays and if you have not already topped up the furlough payments then you need to do so.
If we are processing the payroll for you then please can you speak to your normal payroll contact about your agreement with your furloughed workers.
As a reminder those employees that are on furlough still have the same rights to benefits like SSP, maternity and parental leave rights, redundancy process and payments and of course rights against unfair dismissal.
HMRC will continue to monitor schemes after the closing date. You are therefore required to keep records for 6 years just like most other tax records. HMRC are going to update the personal tax account for each employee to indicate if their employer is claiming anything for them under the scheme.
If you would like to discuss any particular aspect the please email Priya at firstname.lastname@example.org