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Does payslip need to mention furlough?

Client wants mention of furlough taken off payslip and payslips reissued for staff wanting mortgage

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Paylips all authorisd and issued.  A client employee is on furlough being paid 100% of wage.  There is a note on the payslip stating that total pay includes furlough and top-up, client has just asked that this note is removed from payslips for last few months and they are re-issued as staff member is applying for a mortgage and it will be easier without mention of furlough. 

Doesn't sit comfortably with me,  surely mortgage companies will ask about furlough at the moment anyway? 

I think it would be different if they didn't want it mentioned going forward but to re-issue without the note seems misleading.

PS I am a regular poster but don't want the client potentially seeing this.

Replies (32)

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By Truthsayer
01st Feb 2021 09:59

There is no legal obligation to separate out furlough on payslips. Nothing is being faked: it is genuinely their wages whether on furlough or not.

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RLI
By lionofludesch
01st Feb 2021 10:27

If clients want furlough shown, you need to show it. Or vice versa. It's what the client wants.

I know what you mean about the mortgage companies, though. One employee told me they'd asked when furlough would end. What can you say beyond "Dunno"?

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By RaxJ
01st Feb 2021 10:11

Can't see that being an issue. As an accountant, you need to obey your clients and do what they say. That's how it works in this profession.

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Replying to RaxJ:
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By Paul Crowley
01st Feb 2021 10:20

Depends whether client wants it done for free.
Most payslips come straight from the software

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Replying to Paul Crowley:
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By RaxJ
01st Feb 2021 10:25

It still needs to be done though. That's the client. Client gets what the client wants.

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Replying to RaxJ:
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By Paul Crowley
01st Feb 2021 10:38

No
Clients often want thangs done that are inappropriate.

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Replying to Paul Crowley:
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By RaxJ
01st Feb 2021 11:14

Like what?

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Replying to Paul Crowley:
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By RaxJ
01st Feb 2021 11:18

Sounds like you have some dodgy clients...

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Replying to Paul Crowley:
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By Paul Deakins
03rd Feb 2021 10:25

I totally agree with you on this, clients seem to think accountants are miracle workers and can overcome every hurdle in the book.

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Scooby
By gainsborough
01st Feb 2021 10:22

OP, you are correct anyway in that most mortgage companies will be asking more detailed questions of the applicant. There was a Which report a few months ago mentioning that some banks are ignoring furlough income, whilst others want to see some written proof of an agreed return to work date.

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By Paul Crowley
01st Feb 2021 10:22

I would ask whether the mortgage advisor is living in the real world

If the mention of furlough is perceived as a lending risk then to knowingly withhold that information..............

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By AthollAccounts
01st Feb 2021 10:44

There isnt a legal requirement to show furlough on the payslip, however my understanding is mortgage providers are asking if you've been on furlough so it may be pointless

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By AthollAccounts
01st Feb 2021 10:44

There isnt a legal requirement to show furlough on the payslip, however my understanding is mortgage providers are asking if you've been on furlough so it may be pointless

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By Wanderer
01st Feb 2021 10:47

Quote:

Doesn't sit comfortably with me,  .......? 

I think it would be different if they didn't want it mentioned going forward but to re-issue without the note seems misleading.

In contradiction with some other contributors I am 100% with you.
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Replying to Wanderer:
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By legerman
01st Feb 2021 11:27

Quote:

Quote:

Doesn't sit comfortably with me,  .......? 

I think it would be different if they didn't want it mentioned going forward but to re-issue without the note seems misleading.

In contradiction with some other contributors I am 100% with you.

I agree, doing it retrospectively means you are aiding and abetting a potential non disclosure to a mortgage company. Going forward, if the client asks for furlough to be removed from ALL employee wage slips that wouldn't cause an issue for me.

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By mbee1
01st Feb 2021 11:24

I don't see it as an issue to remove the furlough payment from the payslip. There is no requirement to show furlough pay separately. Whether the mortgage applicant is asked the question by the potential lender is nothing to do with us and i can see the employer's point if a mortgage application could be a problem for the use of a word.

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Giraffe
By Luke
01st Feb 2021 11:48

Surely the issue with this is not whether or not to separate it out on a payslip, which can be answered either way.

The issue must be that re-issuing previous payslips without the note purely for the purpose of obtaining a mortgage is, as legerman also said, aiding and abetting a potential non disclosure to a mortgage company? That cannot be ethically right, can it??

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By brumsub
01st Feb 2021 12:27

To avoid having to re-do payslips, I would just go back to the client and say the mortgage company will ask the question of the company and of the employee. On a recent reference, we were asked these 2 initial questions for a client by a mortgage company.

1. Have they been affected by Covid? (Company)
2. And was he placed on Furlough at any point? (Employee)

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Replying to brumsub:
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By Paul Crowley
01st Feb 2021 13:20

That suggests hiding it is rather pointless

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By kestrepo
02nd Feb 2021 12:25

There is no legal requirement for it so I would re-do the payslip without the word Furlough mentioned. I would also suggest the employee is furnished with a letter confirming their normal salary level - just a few lines written on company letterhead. They then have all the "facts" and can choose whether they then pass this to their broker or mortgage provided.

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By psimonparsons
03rd Feb 2021 09:53

There is no requirement to show or separate out furlough pay on the employees pay statement.

They can call it whatever they want.

Furlough amounts relate to employer government grant applications which is. Separate activity. As long as any grant claim is paid over to the employee as pay then that meets the ticket.

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By Mr_awol
03rd Feb 2021 10:35

Why did you put it on there in the first place? Was it a client request to show how generous they are? Or did you decide to put this voluntary info on all your payslips as a matter of course? The answer to that may determine whether reproduction of payslips is 'chargeable' or not. That's if you consider it appropriate to re-issue the payslips of course.

On that matter, I'm with what I perceive to be a large minority (or maybe nobody wanted to say it first and it's now a majority view in later posts). For me, it is somewhat dishonest to re-issue payslips to 'hide' the fact that the employee was furloughed.

I appreciate the fact that it's bad luck for the e'ee that if his employer (or their accountant if this was simply the OPs blanket policy) hadn't put the word on the payslip in the first place - but at the end of the day the employee is genuinely furloughed and the payslips showed that fact. I don't think the E'ee can claim that have been disadvantaged by a lost opportunity to defraud by omission.

A quick Google shows what we all knew - that mortgage companies require borrowers to confirm that they have declared all material facts:

Nationwide say "you can rely on the information I have given you on this form in deciding whether to lend me money or arrange my insurance and I confirm it is true, complete and contains all material facts relating to my application"
https://www.nationwide.co.uk/support/support-articles/legal-information/...

Paragon say "As a responsible lender, when you apply for a mortgage, we have to assess all material facts before an offer is issued. It is your responsibility to
disclose any material facts that could influence our decision"
https://www.paragonbank.co.uk/resources/paragonbank/documents/mortgages/...

I would reply to the client saying that the payslips were issued in accordance with his instructions/my policy (delete as appropriate) and were not queried previously. As such, the only reason for changing them would be to assist the employee in hiding a disclosable fact from a mortgage lender and as such i am not prepared to do so.

As professionals we know full well that the only reason for this is to try and hide it from a lender and personally I'm not a fan of the 'not my fault if something I'm about to do helps someone else commit fraud, the bank should have asked' ostrich approach.

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Replying to Mr_awol:
A Putey FACA
By Arthur Putey
03rd Feb 2021 10:44

Is being furloughed a disclosable fact in itself? An applicant might want to mention that their earnings are a bit lower at the moment due to it, if they are not being topped up, But how is it relevant otherwise?

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Replying to Arthur Putey:
RLI
By lionofludesch
03rd Feb 2021 10:52

Quote:

Is being furloughed a disclosable fact in itself? An applicant might want to mention that their earnings are a bit lower at the moment due to it, if they are not being topped up, But how is it relevant otherwise?

Logically, an applicant might want to disclose that he's only getting 80% of his normal wage at the moment. Unless, of course, he sees it as a prelude to the Spanish Archer.

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Replying to Arthur Putey:
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By Mr_awol
03rd Feb 2021 11:17

Do you think it isn't relevant? If I asked to borrow £300k from you and showed you my January payslip as proof I can afford to pay you back, wouldn't you want to know if there was a good chance I'm about to be made redundant? The Paragon clause, in particular, actually states that the applicant has declared all facts that 'could' affect the lender's decision.

If the Employee hadn't thought of it, then you might have been able to argue that they had an honest belief that they had disclosed all material facts - the argument of ignorance/innocent mistake, if you will.

The very fact/reason for them wanting it off the payslip makes it very much disclosable I'd say. They know (or suspect) that the lender will treat their application differently if this fact is declared. As such if they hid it and signed one of those declarations, they would be lying. Whether the lender actually cares is not relevant to them making that declaration.

And that's where some have gone down (IMO) the wrong road in focussing on whether the fact does or doesn't need to be there. Yes that's the first thing i would ask myself - not because it's the most important, just because it's the easiest. If something has to be there then I don't need to consider whether I should or shouldn't remove it. case closed as such.

If, however, i get a request to remove something and i decide i am legally able to, then i have to consider the reasons - especially (but not only) when it hasn't been a problem for months. If i thought the employer wanted it removed, for example, because he was making the e'ee work whilst on furlough, or to hide it from a lender.

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A Putey FACA
By Arthur Putey
03rd Feb 2021 10:39

The point that many are missing is that while there may be no requirement to show furlough pay separately on the payslip, most payroll systems have a way of calculating it which results in it being shown separately in payroll and on the payslip along with other pay elements. It then forms the basis for the CJRS claim and demonstrates to the employee that their employer has paid them it.

Going back and reopening a pay period and changing a payslip it is extra work and can mess up other things, is the client going to pay for that?

Why would a mortgage provider discriminate against furlough pay anyway? Are they going to make some risk based judgement on job security?

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Replying to Arthur Putey:
paddle steamer
By DJKL
03rd Feb 2021 10:53

" Are they going to make some risk based judgement on job security?"

I doubt an individual is making any judgement but would not be at all surprised if a bit of software used the data in whatever algorithm it currently uses to determine acceptance or rejection- think of a Dalek without any feelings.

(Some may note in my posts that my opinion of most UK lenders is not very high)

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Replying to Arthur Putey:
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By Mr_awol
03rd Feb 2021 11:14

Quote:

T

Why would a mortgage provider discriminate against furlough pay anyway? Are they going to make some risk based judgement on job security?

Given that your car insurers use your occupation (which on the face of it is completely irrelevant) to assist them in determining your driving risk (or more likely as an excuse for loading your premium) I wouldn't be at all surprised.

I'm pretty sure I'd be reluctant to lend money to a stranger who worked as a barman in a pub and was effectively on benefits (albeit at a much higher level than would normally be paid) until such time as his employer was either allowed to open, or forced to close permanently.

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By [email protected]
03rd Feb 2021 11:21

I would be very nervous about doing this. I thought that furlough was a measure to keep people from being made redundant. If there was no furlough, the employee would have been made redundant or be under a notice of being made redundant. This becomes a material fact regarding the prospects of that employee repaying the mortgage.

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By Mr_awol
03rd Feb 2021 11:28

Side-tracking a little, on the subject of what is/isnt disclosable, where would people see the following (both hypothetical but probably not that uncommon):

1) A couple are remortgage but the wife is due to have a baby in a couple of months and they need her income to meet the lending criteria. The accelerate the application (paying an early redemption penalty if necessary) so as to ensure that the wife doesn't have to hand over payslips showing 'maternity pay'. She will have a year off and go back part time so income will be dropped to c£150/week for a bit and then permanently reduced by (say) 50% for the term of the mortgage. They are deliberately organising their finances to obtain a mortgage which they feel they wouldn't get if they waited until they would otherwise have applied. Are they technically caught by the duty to disclose material facts?

2) Having got the mortgage (or perhaps not) the couple tint the rear windows of their family car to keep the baby cool/out of direct sunlight. This doesn't affect the safety or otherwise of their driving/vehicle and you could argue that will be safer drivers now they have a baby on board. The insurer asks about any 'modifications' to the car - should they mention it, even though it wont/shouldn't affect the premium?

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Replying to Mr_awol:
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By Hugo Fair
03rd Feb 2021 13:00

I'll admit to sharing DJKL's opinion of most UK lenders (or anyone involved in 'financial services' for that matter), but the problem from a non-moral perspective is reliance on that (deliberately) loose word "material" ... as whether something is deemed to be disclosable under this term is only known by the mortgage provider or insurer etc.

For instance, my car insurance for years attracted a lower rate (not a discount) because my wife was a named driver alongside me - even though, as I told them on countless occasions, she never had and never would drive the car. After her death, I informed them (purely as an administrative task so they could remove the extra named driver on the policy) - and was immediately hit with a surcharge! The answer to my incredulous question as to the reason was that the algorithms rated a single person as a higher risk (despite 40+ years of unblemished driving).

So if I hadn't happened to mention the passing of my wife (not a material fact in my opinion with regard to the same car being driven by the same person from the same address), would I have been deemed uninsured? And where does the dividing line between material/immaterial become visible to the average joe (or janet)?

I know all this is a little off-piste from the OP, but it shows the danger when we start to pontificate on what someone should do (as opposed to must do or can do).

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By Arcadia
05th Feb 2021 17:40

There is a difference between an insurance contract and a mortgage contract. Insurance is a contract based on 'uberrimae fidie', utmost good faith and if you fail to disclose something which the underwriter would take into account when deciding to insure then one can see that this would be dishonest, and potentially liable to result in a refusal of claim.
This is not the case with a mortgage. With a mortgage, it seems to me there is no dishonesty in so arranging things on application to give yourself the best chance of success. It is only dishonest if you don't intend to make the payments. One poster has postulated the situation where the wife is expecting for example. It is now generally known that lenders ask for copies of bank statements for a period. Who knows what they are actually looking for or what they do, but lets assume they are looking for signs of a profligate lifestyle. With a bit of foresight one could ensure those statements indicate only the most frugal outgoings. Is that dishonest? I say not. The OP's client's employee does not intend to lose their job and default on the mortgage. He hopes and expects that even if the worst were to happen he would find another job. Even if he couldn't and could find no other way of meeting his obligations the lender is after all fully secure. My vote is to re-issue the payslip. Inadequate consideration was given to the consequences of the unnecessary disclosures in the first place, and this should be corrected.

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