UKHospitality has published guidance on how to apply for the government scheme that protects furloughed workers due to coronavirus crisis.
The government has now detailed the way in which salary and wage costs can be recovered by businesses, and the scheme, open to all UK employers of any size, is expected to be operational from late April.
Now industry trade body, UKHospitality, answers your Frequently Asked Questions regarding the guidance, and explains how you and your business can benefit.
Q. When will the online portal be set up and when will I receive my first payment?
This has not been confirmed by Government, but we know HMRC is working at pace to set up the new online portal to allow businesses to register. The process will be simple and easy to complete and will allow companies to register their e-payroll number and bank account details and submit the gross rebate claim. We do not believe that the outline scheme will require individual employee details to be uploaded or individual claims submitted. We anticipate that this will be established in April to allow first payments to be made by the last week in April ie monthly payroll run.
Q. Are staff who were taken on after 1 March covered?
The guidance makes clear that staff who were hired or contracted after 28 February are not covered by the scheme. You may choose to furlough them to protect their employment status and to provide them with certainty about their job at the end of the crisis, but you may not make a claim to recover their salary or employment costs. For these workers, you may choose to furlough at a reduced set our hours or salary or even on the basis of no pay or you may choose to make a payment to them, this measure will simply protect their job and ensure that they are retained by you. These workers would still be eligible for enhanced UC and housing benefit support.
Q. I have a number of staff who were hired and contracted before 28 February but only started work 1 March – are these staff covered?
The guidance refers clearly to contract or hired by 28 February and, provided that you have a clear audit trail to demonstrate that this was the case and that they had started working, then they are capable of being furloughed. We are urgently.
Q. Do I need to ensure that staff are not working when they are furloughed? What about other employers?
You need to make sure that any staff you furlough are not undertaking any work for you during the period, but an employee may have multiple jobs and may be furloughed by all workers or only some. The fact that an employee remains working for another employer during a furlough period will not invalidate your furlough claim.
Q. Is there a means testing which would be applied?
No, the furlough scheme is not subject to any form of means testing – any worker at any level who is unable to work and would otherwise lose their job is capable of being furloughed and you will be able to recover 80% of their salary up to a maximum of £2,500 pcm. The only requirement relates to them being employed
Q. How is existing salary to be calculated?
The salary will be an average of pay made over the last financial year April 2019-March 2020 or year to date, if they have been employed for less than 12 months. We expect further guidance around this for variable hours staff and those who have been employed only during the first quarter of 2020
Q. If staff receive a regular tronc or service charge through PAYE, should this be included?
The guidance explicitly excludes fees, commission and bonuses from the calculation of pay but allows all other payments made and taxed through the payroll to be used to calculate pay in the case of variable hours or variable waged staff. This suggests that tronc and service charge are to be included.
Q. What about individuals who have been on sick pay or otherwise not working full time over the calculation period – is there an alternative mechanism to be used?
More detailed guidance on salary calculations is being developed and we will feed into that to ensure the specific sector concerns re seasonal employment are considered. Q. Does holiday entitlement continue to accrue throughout the furlough period? Unless you specifically amend contractual elements as part of the furlough agreement and letter, they will continue to apply throughout the furlough period. We therefore recommend that companies make clear that holiday will not continue to accrue while a worker is on furlough and will resume when they restart work. For key workers who continue to be employed throughout the corona virus crisis, the Government has extended the period unused holiday may be rolled over to 2 years.
Q. Will tax, NI and pension still be deducted from furloughed worker payments?
The payment to the employee must be made through the payroll and therefore subject to the normal tax deductions. Your employees may wish to opt out of any pension deductions made under auto enrolment but unless they do, this should also be deducted. So you claim for gross salary and pay out net to them. You are able to claim back the employer NI and pension contribution.
Q. Am I supposed to pay my staff ahead of the rebate being received in April?
Unfortunately the timing of the scheme going live will case a problem for businesses and staff which operate a weekly payroll and there will be a delay with payment always being received in 3 week arrears. There is no requirement for you to make payment in advance providing you amend your contract terms. It may be possible for you to propose to your staff that they move to monthly or fortnightly payroll during the furlough period, but we appreciate that this will be challenging for many individuals.
Q. What other help will government make available to bridge the gap between pay and process of claim?
When operational, the scheme should provide a rapid process and payment of claims and is designed to be paid ahead of an imminent month end payroll. The challenge comes from weekly payroll. Other than seeking worker agreement to change this, some companies may receive cash grants through the business rates system (premises of less than £51k RV receive £25k grant for each such premises) and the business rates holiday and VAT deferment as well as potential rent deferment may help manage this in April. Otherwise commercial lending or CBIL may be required to ease cashflow and allow payments to be made in advance.
Q. What information will need to be submitted to claim relief for a specific employee?
To claim, you will need your ePAYE number, the number of employees being furloughed, the claim period (start and end date), amount claimed, bank account and sort code, contact details. You do not need to provide specific employee details and you make the claim on behalf of the business. HMRC will pay the claim into your bank account by BACS
Q. When I can I start my furlough claim from? I had to lay people off and close my business in advance of government guidance – can I claim for that?
Claims may be backdated to 1 March but you would need to be able to demonstrate that the business was closed or employees were not working from the date that you choose as your start date. For the majority of the sector, this will be either 16 or 20 March when social distancing guidelines were imposed but it would be possible to furlough people from an earlier date providing you have clear evidence to support this and highlight that they were laid off or their job was at risk. You should make this date clear in your furlough letter. The minimum period you then claim for is 3 weeks but you may choose to set a longer furlough – at the moment the furlough rules will apply for an initial 3 month period, but may be longer and you may find it more reassuring for workers in closed businesses to set the furlough period for the initial 3 months March-May
In making your first claim your start date will be the start of the furlough period in March and you will be asking for a longer period than the minimum 3 weeks, ending with the date you submit the claim. You will need to calculate wages and wage costs over this period. For subsequent claims it will be for 3 weeks from the date you make your last claim. We are checking to see whether for subsequent claims the HMRC portal will facilitate weekly payroll.
Q. Can I move a worker in and out of furlough to allow a rota for reduced production of delivery and takeaway?
Yes, you can, but the rota must be a 3 week one as the minimum period of time a worker may be furloughed is 3 weeks. For businesses choosing to operate at reduced levels, if they reduce all staff hours or reduced working days, they will be unable to furlough them at all or even for the reduced part and will need to continue paying the employee through payroll.
Q. I had to lay staff off during March – can I now take them back on?
Yes, the guidance makes clear that staff made redundant due to COVID 19 can be reemployed and then furloughed. For these staff, their employment will be deemed to be continuous and any employment costs paid during this period recovered. We are clarifying the details of how staff laid off without pay should now be reimbursed and whether salary/wages which would have been paid if they had been retained may be recovered and passed on to them, but we assume that this will be the case as this is the intent of the new scheme and legislation.
Q. Can furloughed workers volunteer for activities?
Yes, workers undertaking voluntary activities or duties during furlough eg helping out NHS, social care, local government, retail and delivery would not invalidate their furlough.
Q. What happens if an employee has booked a period of annual leave during furlough?
You should make clear provisions regarding the treatment of leave in the furlough letters. Leave which has already been accrued may continue to be taken – this is at your discretion. We recommend that you make explicit that additional leave does not accrue during the furlough period and that holiday will only accrue once work resumes.
Q. What happens about maternity leave and pay?
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement and must be provided for Employees who qualify for SMP, will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020. If you offer enhanced earnings related contractual maternity pay, this is included as wage costs you can claim through the scheme. The same principles apply where your employee qualifies for adoption, paternity or shared parental pay.
Q. What do I need to do about National Living Wage/National Minimum Wage?
Individuals are only entitled to NLW or NMW for the hours they are working and furloughed workers, who are not working, must be paid the lower of 80% of their salary or £2500 even if, based on their normal working hours, this would be below NLW/NMW
Q. What about directors, can they be furloughed?
Yes, providing they are not working (no more than fulfilling director’s statutory obligations) directors can be furloughed and will receive the lower of 80% of salary of £2500 pcm. This would also apply to owner operators paid through the payroll. We advise businesses to furlough as many people as possible.
Q. What about post relief – are there conditions/requirement about continuing employment for furloughed staff after the scheme ends?
No. Nobody knows what state the economy will be in at the end of the crisis and there are no ongoing obligations to provide employment at the end of the process. When the scheme ends, you will need to make a decision, depending on your circumstances, whether employees can return to their duties or whether it is necessary to change the term of their employment or consider redundancy. At that point, normal employment law will cover their situation. Employees that have been furloughed have the same rights that they did previously in terms of unfair dismissal, redundancy payments and SSP or parental leave/pay entitlement.