Key Furloughing Information

Many clients (and non-clients) have been specifically interested in what Furloughing is and how this is covered in the recently announced COVID-19 support package.  Given there are only so many hours in the day and every hour is much in demand at present, I needed to write something up to refer people to in order to assist as best I can, rather than continually regurgitating.

First off, and on a light-hearted note, how do you pronounce the flippin word!  Fur-low.  Not that it matters, but at least you can seem authoritative when talking to your mates down the pub on your online gatherings!  And it’s not Furlonged either….

Into the serious side of things, there are plenty of articles around about this, so do read up elsewhere, but I have yesterday sat on a webinar set up by a friend (Simon Chaplin) who is also an owner of an accountancy business, who was interviewing a top London employment law barrister called Daniel Barnett.  The link to the video is below and I would implore you to spend an hour watching it as he has given the best response I have seen to date, in absence of any actual legislation.

 

From my side, the key points that I have pulled from it (and other sources currently available) are:

You need to have an agreement in place with your employee(s) to furlough.  Daniel kindly gave an example of such an agreement which is attached in this link to download – Furlough Leave Agreement >

They need to be completely off work – this does not allow for part-time or reduced hours.  All in or nowt.

You cannot backdate Furloughing.  If you were still working up until yesterday, don’t bother putting down a date of 1st March.  If you are wanting to do that, and you’re our client, I’ll send you our disengagement letter and a file in a birthday cake for when you’re doing bird!

They cannot have another job so tell them working for Morrisons or Asda’s is out of the question (unless they were already contracted to another job which they are still carrying out).

The minimum wage still needs to be retained.

The employer is not obliged to pay the other 20%.

The system to pay you as the employer the 80% is not yet in place.  End of April if we’re lucky, May likely.  This will mean there will potentially be a cashflow issue to meet the payments.  If this is the case then look at the other support measures eg business loan, grants, reducing your overheads and key costs, time to pay arrangements for HMRC debts, etc.

If you cannot pay them until you get the money from HMRC, have a chat with them and agree to defer the payment.  Obviously you need to think about the knock-on effect of not paying ie loyalty, personal circumstances, etc – do the right thing.

Directors – this is a massive biggy and not an area in which I can find a straight answer.  Some say they will be covered and others say they won’t.  Until they release the legislation then we’ll hold off on this one.

Capped at £2,500.

Variable salaries will most likely be determined on a historic average.  This is currently the average weekly wage over the last 12 months, but this is to change to 52 weeks from April (I’m not an HR lawyer, I am merely giving my comments on the points discussed so you best check that).

 

Ultimately, until we have legislation in place, we are operating on assumptions.  But we still need to act accordingly where we can.  If you would like to chat through anything above, then please give your client manager or me a call.  If you are not a client, you can still give us a call no worries, but obviously our clients will take priority.  Thanks

 

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Huw Moseley
huw@link-accounting.co.uk