An update on Furlough leave

According to HMRC, 185,000 employers submitted claims on the first day of the launch of its online portal (20 April 2020).  These claims alone are worth £1.5billion and represent 1.3million UK employees.

The British Chamber of Commerce has also provided up to date statistics which show that between 15-17 April 2020,  71% of employers in the UK had furloughed staff which is up from 66% the previous week.  The British Chamber of Commerce has also launched a tracker which measures the Covid-19 pandemic’s impact on businesses and the effectiveness of Government support measures.

When broken down these statistics also show that  30% of businesses had said that they had furloughed 75% or more of the workforce.

One of the biggest concerns for employers is cashflow with 59% of businesses suggesting that they have only three months’ or less cash reserves.

These concerns are heightened further when HMRC has had such a short period of time since the launch of its online portal on 20 April,  to ensure that staff receive their pay by the end of the month.

HMRC has pledged to deposit funds to employers within 6 working days which means for example that those businesses that applied on the first day the portal was launched should receive payments on or about 28 April 2020.

The Coronavirus Job Retention Scheme has recently been extended by the Chancellor of the Exchequer for an additional month to 30 June 2020 and has changed the eligibility date for staff who were on the payroll from 28 February to 19 March.  There are however still problems for staff who were on the payroll as at 19 March but who did not have Real Time Information (RTI) submitted to HMRC by then, who are still excluded and are not eligible to be paid under the scheme, which is somewhat unfair.

At the time of writing, HMRC has also provided helpful guidance on a discrepancy between the Treasury Direction and HMRC Guidance.  The Treasury Direction requires employees to agree to cease all work in writing whereas conversely HMRC guidance states that written agreement from the employee is not necessary.

HMRC has attempted to clarify this and has stated that employers should follow the Guidance with the crucial paragraph stating ‘the employer and the employee must reach an agreement and an auditable written record of this agreement must be retained.  It does not necessarily follow that the employee will have provided written confirmation that such an agreement was reached in all cases’.

In practice, this means that HMRC will not deny an employer the ability to reclaim funds simply on the basis the employer had not obtained written agreement from the employee to cease all work for the employer.

The Furlough scheme will no doubt throw up some more anomalies as the system beds in and we see how efficient it actually is in ensuring the Furloughed staff are paid in a timely manner.

If you have any concerns about the Furlough scheme either as an employer or as an employee then contact Steven Eckett – Partner and Head of Employment at Meaby & Co LLP.  seckett@meaby.co.uk or 020 703 5034.