HOW to Furlough an employee?!

BookerTee

Anyone any idea how to furlough an employee!

Cannot find a single word on any .gov or HMRC page...?!

sharpe106

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

calcotti

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Agreeing to furlough employees
Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

BookerTee

Yes I have been on that page, it seems there is NO advice on HOW to do it because there is still no WAY to do it!

However I didnt see any advice on how the process is supposed to work i.e what does the employee live on until the system to report is up and running? To say nothing of how long money would take to come through...?

bradders1983

The employee lives on the money you continue to pay him or her until the Government pay you.

neilmcl

BookerTee said:

Yes I have been on that page, it seems there is NO advice on HOW to do it because there is still no WAY to do it!

However I didnt see any advice on how the process is supposed to work i.e what does the employee live on until the system to report is up and running? To say nothing of how long money would take to come through...?

Well for a start you and your employee need to agree to the furlough, so you'll need to send them a letter. A template can be found here - https://www.makeuk.org/news-and-events/news/2020/03/25/covid-19-furlough-letter-to-employee

The guidance is relatively clear on how it will work in practice. You continue to run the payroll as normal then once the system is up and running you'll claim back the 80% from HMRC every 3 weeks or so. The important thing to remember is that you are still paying your employee, it's then for you the employer to claim back the grant from the government. It's also down to you as to whether to pay the full wages as normal, ie, topping up the 80% or reduce your employee's wages to 80%.

BookerTee

Its a pity there isnt a word of that on the above page or how/if you are required to inform HMRC of such payments!

neilmcl

BookerTee said:

Its a pity there isnt a word of that on the above page or how/if you are required to inform HMRC of such payments!

Have you actually read it all the way through, it's pretty clear what you as an employer are expected to do.

unholyangel

Technically you're asking an employment law question. The only way to get a reliably accurate answer would be to have a solicitor review your contracts of employment and give advice. 

The government have not made any special provision in employment law for this scenario so it's really a contractual matter with you & your employees and you would be seeking to vary the terms of their employment if your contracts don't currently allow you to furlough. Your employees basically need to agree to be furloughed but as the alternative may be redunancy, a lot of employees have been agreeing. 

It's the elephant in the room a lot of employers seem to be missing in their rush to furlough employees and could be potentially costly for them if any of their employees are so inclined. 

BookerTee

I have been through the page several times but most of it doesnt apply as it covers every possible situation of employment, holiday, maternity, sick, training, apprentices etc etc. The overview at the top of the page is very brief and no real help it says

"If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage"

i.e you cant afford to pay staff as there is no work, I still cant find anything on that page that actually says the employer pays the employee (somehow) and back claims the money 'at some point in the future'.

Its 'suggested' under CLAIM

"If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC."

However its a massive assumption an employer can keep paying staff when they have been told to stop trading.

As I understand it the payments are called GRANTS (i.e not income) so that it doesnt attract income tax and NI but if they are to be paid through the normal PAYE system then its already been taken!...none of which is covered on the page either. But is DOES say, if the 20% is made up by the employer then NI IS payable...!!??

Illusionary

BookerTee said:

I have been through the page several times but most of it doesnt apply as it covers every possible situation of employment, holiday, maternity, sick, training, apprentices etc etc. The overview at the top of the page is very brief and no real help it says

"If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage"

i.e you cant afford to pay staff as there is no work, I still cant find anything on that page that actually says the employer pays the employee (somehow) and back claims the money 'at some point in the future'.

Its 'suggested' under CLAIM

"If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC."

However its a massive assumption an employer can keep paying staff when they have been told to stop trading.

As I understand it the payments are called GRANTS (i.e not income) so that it doesnt attract income tax and NI but if they are to be paid through the normal PAYE system then its already been taken!...none of which is covered on the page either. But is DOES say, if the 20% is made up by the employer then NI IS payable...!!??

Payments (as you say, "grants") from HMRC are made to the employer and are taxable in the hands of the employer (as they offset tax-deductible salary/NI/pension contributions) - this is covered at the end of the guidance. The employer's obligation to continue to pay their furloughed employers (potentially at a reduced rate) follows from the employment contracts, which, subject to modifications to allow the furlough arrangement, continue in force. Wages/salaries received by employees are taxable in the normal way.

To actually make the claim, HMRC's online application process is currently undergoing beta testing and should open generally on 20 April.