The Extended Furlough Scheme
Furlough was extended to 31st March 2021. The Coronavirus Job Retention Scheme, or furlough scheme, was due to end on the 31st October to be replaced by the Job Support Scheme but the Chancellor announced the extension instead. The Job Support Scheme was less generous and more complex.
There have again been several updates to the extended furlough scheme and there are likely to be many before March. The scheme currently pays 80% of the employee’s usual wage and is available for employees paid and reported to HMRC before the 30th October 2020. Note it is now the RTI reporting date, usually pay date or before, that is important rather than the employee start date.
Calculating Furlough Pay
The usual wage can be made up of several pay types such as salary or hourly pay but additionally other contractual payments such as overtime or commission. Calculating the usual wage to be used as the reference value for furlough pay can be straightforward with employees on a regular wage with no other payments, but it is worthwhile checking the Government guidance.
Salary sacrifice arrangements, including pensions, add to the complexity; read the guidance carefully as it should be the post sacrifice payment used for calculating the furlough pay.
For claims from 1st November you can use pay and hours from 6th April 2020 to calculate an average wage if necessary.
Furlough Claim Deadlines
There are new deadlines to be aware of, and they are tighter than previously. 30th November is the deadline for claims for periods up to 31st October, and 14th December for periods up to 30th November. This means claims for November have less time to be prepared and submitted than previously and this pattern is forecast to continue.
Claims from the 1st November must be submitted by fourteen days following the last day of the month, rolling to the next working day if a weekend and there is a calendar on the furlough website.
Further notes and some changes from the previous furlough scheme
- The claims are to be made via the online portal which is already open for claims for November.
- There is no maximum number of employees for the claim and employees still need consultation and written confirmation that they are furloughed but the deadline for retrospective furlough agreements past on 13th November.
- There is no minimum period for flexible furlough, but the minimum claim period is 1 week. Employees can have repeated periods of furlough.
- Furlough pay cannot be used as a substitute for redundancy payments and also cannot be used during notice periods.
- Claims can still be deleted within 72 hours of being made and there is still the opportunity for corrections if there are errors in earlier claims.
- HMRC have a furlough pay calculator for fully furloughed employees but there are a few scenarios where a manual calculation is still required.
- HMRC will publish details of companies making furlough claims from December, which may include indicative amounts that have been claimed. HMRC plan to provide further details of what this will entail at the end of November.
- Where a claim period spans calendar months separate claims are still needed as each claim can only be for a period within a single month.
Current requirements for Furlough and Payroll
It is not necessary to separate furlough pay and any other pay on the payslip but you may find this useful as part of your record keeping requirements. Flexible furlough is calculated as previously, using calendar days and deducting hours worked and our temporary workbook is going to be rewritten.
Care is needed at all steps of the furlough calculation and it is worthwhile noting that when the payment is reported for RTI there is nothing to distinguish a furlough payment from any other payment, it is just gross pay for tax and NI.