This has not been easy for employers. Since the scheme was announced, the guidance has been updated on four occasions.
The latest guidance was issued 15 April 2020.
Despite now having had almost a month to consider and explain the scheme, there are still conspicuous gaps in the guidance. This includes a lack of clarification as to whether staff can take annual leave while furloughed.
More surprisingly, the latest guidance contains some radical changes.
To add to the confusion (and I regret there is real confusion), the government has also issued a formal direction to HRMC on the scheme. This direction may be the nearest we get to a comprehensive account.
Despite the fact that the guidance and direction were issued on the same day, the wording used differs and they are not wholly consistent. The latter also appears to introduce new conditions on eligibility.
This lack of clarity is deeply disappointing.
Headline changes
Although both are required reading for those dealing with the scheme, here are some of the headline changes —
Employers can claim for furloughed employees if they were on your PAYE payroll on or before 19 March 2020, and were notified to HMRC on an RTI submission on or before that date. This is a move from the previous cut-off date of 28 February
The ability to re-employ staff and to furlough them applies to employees who were on the payroll on 28 February 2020 and whose employment ended before 19 March 2020. This appears to place a new limit on those we can re-employ (previously there was no mention of when their employment came to an end)
Unlike the guidance (which refers to written notification) the direction refers to a requirement for a written agreement with an employee that they be furloughed
Employers appear to be under an obligation to pay the full amount recoverable under the scheme as a furlough payment to the employee. Put broadly, subject to the ceiling of £2,500, this is 80% of regular salary; however, the guidance on the precise calculation of a furlough payment is confusing and (in my view) on occasion nonsensical. If we underestimate the recoverable payment this may impact on eligibility
The direction states that if an employee is eligible for statutory sick pay (SSP) at the time an employer seeks to furlough them, then the furlough only commences when that initial period of eligibility for SSP ends. This is stricter than the guidance
As ever with the scheme the caveat is that the government may have a different interpretation and could still (yet again) change its position.
Maximum amount recoverable
The suggestion that staff must get the maximum amount recoverable may be the biggest challenge. This should be ok when staff are on a fixed annual salary. However the guidance is not clear about what should and should not be included for staff on variable wages including those who regularly work overtime.
My view on regular overtime is that it is included if there is a contractual right to be paid for this; however, the government has not set this out in unambiguous language.
The aim appears to be that discretionary payments are not to be included, but the wording may (perhaps inadvertently) go far wider.
Precise calculation of furlough pay is too detailed a subject for this post but here is a steer.
We are relying on the government not to let us down. In particular businesses are entitled to expect HRMC not to be over officious and technical in how the scheme is administered and policed.
Accordingly, if we approach the scheme in good faith and do our best, including in the calculation of regular wages, our expectation should be that HRMC will be supportive.
That is not a guarantee; however, many businesses will share my view that this is not too big an ask.
