CORONAVIRUS – latest update 27/04/2020
ADVICE FOR EMPLOYERS
Hopefully many of you will have managed to get onto the HMRC Portal to register a claim for the furlough grant of 80% of employees’ wages (up to £2,500 per month) plus Employer’s N.I. and Pension contributions up to a maximum of 3%. The guidance for doing so is at: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme.
This bulletin, just covers off a few of the key questions being asked by employers at the moment:
As the employer you are responsible for making sure you have all the information about your claim, even if you have an Agent doing this for you. There is additional guidance in the last bulletin but in essence it is highly recommended that you:
- Retain all documentation about your decisions for at least 5 years – note HMRC have changed the tone of their guidance from “we reserve the right to audit claims” to “we will be now be auditing claims” – it is not believed they will audit everyone, but if you do get audited on your furlough grant claim, you need the information collated now and not try to find it or cobble it together in 18 months’ time
- Key things you will need are:
- All the letters and correspondence with your employees – note in order to be able to claim you MUST have a signed agreement from your employees that they have been furlough and are NOT working during this time – you will also need any other letters (such as when you bring them back), emails, WhatsApp messages etc that relate to your employees on furlough
- Your reasons/dates for furlough – Board Minutes
- Your Claim Reference Number – when you submit a claim you will not get an email so note it down/screen shot it (if your Agent submits the claim, then get him/her to send it to you)
- Your calculations for each employee and the overall claim (again if your Agent does this then get these from him/her)
- Document your reasons for furloughing employees when you did; such as “we tried to maintain activity, but suppliers impacted ability to do so” or “with the downturn in business income, we would now have had to consider redundancies” – a good place to document your decisions are in your Board Minutes.
- Also document your reasons for having employee work from home and when/why you decided to bring employees back to work
If you do get audited, it is probable that any over claim will need to be repaid. However HMRC have stated that they will not claim back or refuse a grant if all calculations and application have been carried out in a reasonable manner – but that may change over time. As an aside you must also pass on the whole amount of the wages claim to the employee, you cannot keep some back to use for other purposes.
Unfortunately, there are some nasty people out there who wish to profit for your fears, especially if you are expecting money to arrive form a grant or other funding source. Please be vigilant as to potential scams. These may mimic government messages such as ‘Stay at home’ and ‘Stay home, stay safe’, as a way of appearing authentic and unthreatening.
Such communication will usually require you to open a document or click on a link, and don’t reply to or give out any private information on text messages from your bank or other government authority – they won’t ask you to do this, so its likely to be a scam.
HMRC have stated do not panic if you have submitted a claim and haven’t yet received the money yet – it takes at least six days to get the money to your bank account from the successful submission of the claim.
Calculating Pay Reference Periods and Rates of Pay
In the last bulletin, it was highlighted that there appeared a discrepancy in how an employee’s rate of pay was calculated and it is hoped this clarifies what appears to have occurred.
HMRC are using a “pay reference period” of 365 days a year for calculating an employee’s “Day Rate” and have referenced a month as divisible by 30 or 31 days depending on the month.
In employment law, an employee’s “Day Rate” – a day’s pay – is usually based on only 260 days in a year allowing for weekends i.e. that there are generally 5 working days in every week, not 7, and 52 weeks in a year. To calculate the day rate, you would normally divide annual salary by 260. For a month this would be by either 21 or 22 days depending on the month. There are some differences to this with variable hours workers, so contact us if you are unsure.
The reason for the apparent contrary guidance is in the use of language. HMRC are referencing a “Day Rate”, when in fact they actually mean “a maximum daily amount that can be claimed”. This is because the HMRC portal and the claim for the furlough grant is based on a full period from one date to the next and does not differentiate whether the days in between are normal work days or weekends as it is a single period of furlough.
When carrying out your calculations, you may have to calculate a mix of month, week and day periods so calculate the appropriate time as actual days irrelevant of what day of the week. This means that to calculate the daily amount for the claim, use 30/31 days in each month and 7 days in a week.
This advice is being reviewed and updated regularly and is currently in line with HMRC, UK Government and ACAS guidance as updated 27th April 2020.
Should you require any further advice or guidance please call us on our usual HR number of: 01325 488425 or email: firstname.lastname@example.org