How is furlough leave implemented?
9 April 2020 by Tony Fisher
Following on from our blog, what you need to know about the Coronavirus Job Retention Scheme, we look further into furlough leave and how it can be implemented, what steps employers need to take, how to decide who to put on furlough leave, can employees request to go on furlough leave and how does an employer claim for reimbursement from the HMRC.
- What steps must employers take to put employees on furlough leave?
The guidance states that employers should discuss the proposal with staff and make changes to the employment contract by agreement. It is a condition of eligibility for reimbursement that furlough leave is confirmed to the employee in writing.
Employers will need to:
- Decide which employees to designate as furloughed employees.
- Notify furloughed employees of the intended change.
- Consider whether it needs to consult with employee representatives or trade unions.
- Agree the change with the furloughed employees. Most employment contracts will not permit an employer to reduce an employee’s pay, provide them with no work and change their employment status, without agreement. However, faced with the alternatives, which are likely to be unpaid leave, lay-off or redundancy, the majority of affected employees are likely to agree to be placed on furlough leave.
- Confirm the employees’ new status in writing. This is an eligibility requirement for accessing the subsidy, and a record must be kept of this correspondence. Ideally, the employer should advise how long it expects furlough leave to continue, however, this may be difficult in the current climate. Employers may wish to put employees on furlough leave for an initial period, subject to review.
- Submit information to HMRC about the employees that have been furloughed and their earnings through the new online portal, expected to be operational by the end of April 2020.
- Ensure that the employees do not carry out any further work for that employer while they are furloughed.
- How does an employer decide who to put onto furlough leave: do they need to go through an equivalent redundancy scoring exercise?
An employer could initially ask for volunteers. However, in some cases an employer may receive more volunteers than it wants to furlough. The procedure an employer follows to decide which employees to furlough may depend on its current financial situation. If the employer needs to very urgently furlough employees or make them redundant in order to be able to continue to trade, a limited selection procedure carried out on an urgent basis is likely to be acceptable. However, where an employer does not have any immediate financial concerns, it is likely to be more reasonable for it to follow a more comprehensive procedure. Avoiding discrimination is important and do contact us if you are in need of guidance on this.
- Can an employee request their employer puts them onto furlough leave?
Yes, an employee can request this, but the employer does not have to agree.
- How does an employer make a claim to HMRC for reimbursement?
To claim, the employer will need to submit:
- The employer’s PAYE reference number.
- The number of employees being furloughed.
- The claim period (start and end date).
- The amount claimed.
- The employer’s bank account number and sort code (UK bank account)
- A contact phone number.
Employers can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated to 1 March 2020 if applicable.
Reimbursement will be paid via BACS payment to the nominated bank account.
The claim can only be made at the point at which the employer runs payroll or in advance of an imminent payroll because actual payroll amounts need to be submitted.
For help with any of the above FAQ’s, contact the Fisher Jones Greenwood quick response team on 01206 700113 for initial telephone advice free of charge or email [email protected].
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