Update to Furloughed Workers

As and when further detail is being released by the government we are able to update our guidance to you.

We have compiled below the most up to date guidance on furloughed workers and the calculation of furlough salaries:-

  • Furloughed workers must not work for the employer during the entire period in which the employee is furloughed;
  • The furlough can be backdated to 1st March 2020 and will last for at least 3 months which may be extended if necessary;
  • Although the scheme is backdated to 1st March 2020, the grant will only apply from the date the employee is furloughed i.e. stopped working for the employer;
  • The scheme is open to employees on the payroll as at 28th February 2020;
  • All UK businesses are eligible;
  • The scheme pays out a taxable grant to the employer;
  • Employers must designate the relevant employees as furloughed and submit any claims to HMRC via a new online portal (currently under construction);
  • HMRC have stated that this system will take time to build therefore businesses should look to the Coronavirus Business Interruption Loan Scheme (CBILS).

The maximum grant is calculated as the lower of:-

    • 80% of an employee’s ‘regular wage’ and,
    • £2,500 per month

Plus the associated employers national insurance contributions and the minimum auto enrolment employer pension contributions.

This means that using the maximum cap of £2,500 is as follows:-

Furloughed salary £2,500
Employer’s NIC £   245
Auto enrolment cont. £     59 (if enrolled)
Maximum Grant £2,804
  • “Regular wage” for most employees will be in reference to their February 2020 payslip. However, “regular wage” for employees with variable pay will be calculated as follows:-
    • If the employee has been employed with the business for a 12 month period prior to the claim you can claim the higher of:-
      • The same months earnings from the previous year; or,
      • The average monthly earnings for the year.
    • If the employee has worked for the employer for less than 12 months then a claim should be made for their average monthly earnings since starting work.

Once this has been calculated, the relevant employer’s NIC and employer auto enrolment pension contributions will need to be calculated as the employer will be entitled to claim this.

  • Employees may be moved in and out of furlough (to cover staff sickness etc), however, employees must be furloughed for a minimum of 3 weeks before being brought back.
  • Employees do not have to accept furlough although the employer could then make the employee redundant instead.
  • Although furloughed employees cannot work (i.e. generate any income for) the employer, they are able to undertake training whilst on furlough.
  • Employees with more than one employment can still work for another employer whilst being furloughed with the first employer as long as the employments are with different, unconnected employers.

We understand there is a substantial amount of information above. Please do not hesitate to call your relationship partner should you wish to discuss further.

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