In the last couple of weeks, and with the opening of the Coronavirus Job Retention Scheme portal, a number of questions have been asked and a few things have been changed as a result by HMRC.
Written on by
Can employees now take holidays during furlough?
The government has changed their guidance and holidays can now be taken during furlough leave.
If holiday leave is taken, employers must top up the pay to 100%, but they can still claim for the other 80% through the grant. This includes bank holidays.
The extension to the Working Time Directive, whereby annual leave can be carried forward for up to 2 years, still exists and can be utilised. However, this will mainly apply to employees who are prevented from taking annual leave due to an increase in workload (e.g. key workers).
Can I insist that my employees take holidays during furlough?
Ideally, you should gain the employees consent to take holidays during furlough. However, the bottom line is that if they disagree, you can still insist that furloughed employees use up some, or all, of their annual leave during the furlough period.
Many employers will want to do this to reduce the amount of annual leave to be taken once the lockdown ends and businesses return to normal.
Legislation states that employers can force employees to take holiday as long as they give twice as many days’ notice as the period of leave the employee is required to take. For example, if the employer requires the worker to take two week's annual leave at a certain time, it must give the worker at least four weeks' advance notice (unless something different is specified in their contract of employment).
Can employees withdraw from salary sacrifice schemes during furlough?
Employees can request to stop participating in salary sacrifice schemes if there is a ‘life event’. HMRC have confirmed that COVID-19 counts as a life event, so salary sacrifice arrangements can be changed. This would amount to a variation of the employment contract and it is recommended that you confirm any change in writing – even if it is only on a temporary basis.
What happens to other non-monetary benefits?
Non-monetary benefits like health insurance or a company car should still be provided throughout furlough.
However, these non-monetary benefits (including taxable benefits in kind, salary sacrifice and pension contributions) should not be included in the reference salary to work out the 80% of furlough pay.
Can I claim for those on statutory leave receiving enhanced pay?
You can claim through the scheme for those employees receiving enhanced company benefits/ pay for:
- Maternity pay
- Adoption pay
- Paternity pay
- Shared parental pay
- Parental bereavement pay
How do I calculate a furlough claim for salaried employees?
The claim should be based on 80% of a salaried employee’s wages on the employee’s last pay period prior to 19th March 2020.
How do I calculate a furlough claim for employees who work variable hours?
The claim should be based on 80% of either (whichever is highest):
- The same month’s earnings from 2019, or
- Average monthly earnings from the last year
If an employee has less than 12 months’ service, then the claim should be based on an average of actual monthly earning since their start date.
Salaried employees on irregular salaries can be based on a previous earnings average, as above.
What is furlough pay based on?
Furlough pay should be based on your ‘regular contractual pay’. This includes:
- Compulsory commission
- Past overtime (not necessarily contractual but regular over a 12-month period)
It does NOT include:
- Discretionary commission (including tips)
- Discretionary bonuses
- Non-cash payments
- Benefits in kind
Is there any guidance on what working life might look like after lockdown?
Government plans are expected to be released on Sunday 10th May.