HMRC Guidance can be found here.
The guidance was updated on the 15th April with new eligibility dates, bringing in some previously excluded employees that began work prior to the 19th March. While the claim includes employer pensions and employers national insurance, don’t forget that the new Employment Allowance kicks in and is likely to cover Employers National insurance in the first instance.
Where CGA prepares payroll on your behalf
We will be making this claim on your behalf and other than ensuring that we have information in respect of your payroll (including copies of any furlough letters issued to staff) as soon as possible. This month’s payroll will be very complicated and time-consuming, please do your best to help us help you.
Where CGA does not prepare payroll on your behalf
If you have furloughed staff or yourself as a Director then don’t forget the following:
You will need to formally furlough staff/Directors and the company will need to write to confirm this, please see an example letter at the bottom of this page.
The furlough can be back-dated to the date when the employee/director ceased to undertake any work for the company (but not before 1st March 2020). The furlough period must be a minimum of 3 weeks.
If you are a Director there will also need to be a formal minute, so that there is also a record in the company statutory books. Where we carry out your company secretarial services we can prepare this document for you if you let us have a copy of your furlough letter.
The furlough scheme requires no work to be undertaken for the company, as a Director there are some statutory duties which can be undertaken but we don’t have any real guidance as to what this covers. Some discussions amongst professionals have mentioned that the statutory duties of running the company do not constitute work and so filing accounts/confirmation statements and maintaining company assets are not work for this matter. However, looking at a sales quote/production rotas/dealing with payments/payroll etc would.
Below is a possible Draft Furlough letter – this should include guidance from a qualified HR Lawyer and should be prepared in conjunction with your staff contracts.
PLEASE NOTE: THIS IS AN EXAMPLE ONLY AND SHOULD NOT BE RELIED UPON UNTIL YOU HAVE CONFIRMED CONTENTS WITH YOUR LAWYERS AND / OR HR SPECIALISTS
An employee furlough refers to a temporary leave or modification of normal working hours for a specific amount of time. It’s a leave of absence given to an employee with the promise that they will still have their job once the leave is over.
There are numerous reasons why employers implement a furlough employee policy, such as plant shutdowns, seasonal work, company reorganizations and reduced demand due to COVID-19.
Don’t rush into implementing an employee furlough policy without talking to your lawyer or HR specialist first.
If you decide that putting employees on furlough is the best option for you and your employees, then you need to prepare a notification letter. Your furlough notice letter should contain the following:
- Address – This is a formal letter, a furlough notice should clearly state the date, employee’s name, and their address.
- Purpose – State the purpose of the letter. Get straight to the point. Include the employee’s position, department, reason for the furlough, and information about any changes to employee benefits. It is advisable to tell the employee that this action does not reflect dissatisfaction in job performance.
- Detail – Explain what a furlough is, determine the length of the furlough, and communicate employee benefits during this period to employees.
- Future communication – Offer a way for the employee to keep in touch. End the letter on a positive note.
EXAMPLE TEXT [NOTE: RUN THIS PAST YOUR LAWYER OR HR SPECIALIST]:
[Send to employee’s address or email. Note you should discuss and record employee agreement to be Furloughed before you send this letter. See Knights Plc comments on Furloughing employees.]
Dear [Employee name],
NI NUMBER AND / OR PAYROLL NUMBER
The purpose of this letter is to formally notify you that your position as [INSERT] on the [XXX DEPARTMENT] is being closed temporarily due to the downturn in business as a result of the COVID-19 Pandemic.
Your last official day of work will be [1 March / 1 April INSERT DAY]. Your salary and benefits will continue at their current level [or 80% insert as applicable] during the Furlough period. Please understand this action in no way reflects dissatisfaction with your job performance.
The length of this furlough is [insert future date or unknown currently].
We will provide regular information as the current Pandemic unfolds and when we return to normal working routines.
A Furlough is a short-term paid temporary leave of absence at full / 80% [AS APPLICABLE] of current salary. The furlough period and provisions may be changed or terminated at the sole discretion of the Company, and does not create any employment contract, express or implied.
During the furlough period, your pension and other benefits will continue [IF APPLICABLE].
Thank you for your contributions to the business and if I can help in any way, please contact me.