The Coronavirus Job Retention Scheme is providing great relief for staff and employers alike. But it’s raising many questions, as well.
Below are some common inquiries about the new rules and how they affect restaurant and hospitality businesses.
What is the 80% calculation? Who do they affect?
For furloughed staff, employers can claim 80% of usual monthly wage costs, up to £2,500, each month. Additionally, employers may claim Employer National Insurance contributions and minimum automatic enrolment employer pension contributions.
How much will my employees be paid?
The HMRC will give you a grant to cover the lower of 80% of an employee’s regular wage up to £2,500 per month. This covers the cost for you to then pay your employee the lower of 80% of their usual earnings. Businesses that are able may choose to top up the staff’s salary beyond that, but that is not mandatory.
How do I calculate the pay rate for staff with variable hours?
It’s easy to calculate salaried employees – it’s simply 80% of their before-tax salary prior to 28 February 2020. For hourly employees, you can calculate this in one of two ways:
- Looking at the earnings from the same month last year (for example, the earnings for March 2019). Or,
- Taking a monthly average of the 2019-2020 tax year earnings.
What if an employee hasn’t been with the organisation a full year?
In this case, it is recommended that you take an average of their monthly earnings since they began working for your business.
Is 80% net or gross?
Is Tronc to be included in average earnings calculations?
At Fourth, we are not including Tronc in the calculations, as we have had guidance from the Chartered Institute of Payroll Professionals (CIPP) that it should not be included as it’s not an Employer expense.
Businesses can pay Tronc to Furloughed employees, but it is highly likely they will not be able to claim it back from HMRC.
For our customers, we’ve also gathered up some answers to help you manage any Fourth-specific questions. More FAQs are also available on the community page.
Once we put our employees in Furlough, will Fourth directly notify HMRC, or does the employer have to do it?
The employer will need to claim directly with HMRC. We suggest keeping up to date with the information provided by HMRC here.
Will we be able to add any Additional Payments to the Furloughed employees, such as unpaid hours from a previous month?
As the Furlough payment for hourly paid employees is a manual payment, you can add any other payments which the employee was owed previously.
What functionality do you have built specifically for Furlough?
Click into an employee’s record to see status. There’s a new link to set a COVID-19 Furlough Status. On this screen, there’s information available about how this status actually works.
You can set furlough effective start date, which can be back-dated.
When does the Furlough Effective Start Date?
A ‘Furloughed’ status takes effect from the moment that the details have been agreed between employee and employer. The date must be within the current range set out within the HMRC Guidelines. The current range for Furloughed as per the government guidelines is 1st March to 31st May 2020.
How can I bulk update hourly rates or salaries?
You can use the Employee Batch Update screen for updating rates of pay.
This screen provides visibility of the rates of pay, and you can amend the information as required en mass, rather than having to go into each employee’s record.
Is there any function in which we could change the Furlough status for multiple employees rather than one at a time?
This functionality is in development and we will release it shortly. Please check the Customer Community for release notes!
Does the Furlough status override any upcoming Holidays on the system, or would those have to be cancelled on the system to ensure Furlough is uninterrupted?
At this time, the Furlough status doesn’t override any Holidays which your employees may have booked already, nor prevent any Holiday from being booked for the Furlough period.
We would suggest that Holiday which cannot be taken is deleted from the system, and then run the Holiday Calendar, or the Holiday Status Report to find out which employees have booked Holiday during the Furlough period.
How does Maternity Leave work for employees who have been Furloughed?
Maternity pay has not changed. The employee is still entitled to 90% of their average weekly earnings (this is not Furloughed).
If all staff are Furloughed, can Rotas be closed in advance?
Rotas can be closed and submitted in advance, but only once the current week has started. For more information on Schedules, please visit: WFM – Temporary Closures FAQs
Can leavers still access their payslips and other information through Fourth Engage?
For a period of time, leavers will still be able to log into their accounts and view important personal information such as payslips.
We can also customise this, to give leavers access to payslips, the feed and communication channels (but restricting access to the document library) so that those who have been laid off but you wish to keep in contact with to rehire later will still be kept up to date, and you can easily communicate updates through the platform.
What are the best Payroll reports to run get the average weekly earnings for Furloughed employees in the relevant period?
The average pay is being calculated using the 2019 Tax Year basic pay, in line with the guidance. In order to get the details of the same period but the previous year, the Payroll Summary – individual pay period report; the post pay-run preview or the Payroll payments by Pay Basis exports would be useful.
This is a challenging time. We’re sure you have more questions – and we have more answers.
Be sure to check out the Community Page for more COVID-19-related information and FAQs.
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