Share this content

Furlough doesn't work for weekly-paid

All HMRC guidance assumes staff being paid monthly!

Didn't find your answer?

We have reported furlough pay on FPS submissions for week 52, week 1, 2 and 3. The employer was shut down on 20/3 and with zero income has been unable to make any of these payments pending the CJRS grant. The claim was submitted on Monday 20/4 so we anticipate the wages can be paid possibly next Thursday 30/4.

New RTI guidance issued 23/4  states we should submit an EYU to remove the week 52 wages. It’s not clear what we should do about weeks 1,2,3, but presumably those figures should also be zeroed, and instead the 4 weeks’ worth of payments entered into week 4?

Concerns

1 – staff will be penalised by receiving a lump sum in week 4 – many will pay NICs and/or pension contributions that were not due when they were getting smaller weekly amounts. It’s not their fault that this has come as a lump sum, nor it is the employer’s fault because no funds were available until after the CJRS opened for claims this week.

2 – if we had acted as per the RTI guidance, any staff who’d made a successful claim for Universal Credit would presumably be penalised in week 4 due to the large lump sum. Would DWP try and claw back the monies? After week 4, staff probably won’t be paid again until week 7 – it’s feast or famine.

3 – how can we calculate the CJRS claim when the goalposts have moved? I calculated it in good faith based on 2019/20 bands for week 52 NIC and pension. How do I calculate the lump sum to pay the staff this week? If it’s now all based on 2020/21 bands it’s going to differ from the claim we’ve already put in!

Given the hours we’ve already worked this week, I am feeling flattened by this. Anyone else with this issue?

 

Replies (10)

Please login or register to join the discussion.

avatar
By GW
25th Apr 2020 14:24

There are two seperate things going on here:

1) Employer puts staff on furlough and pays them
2) Employer claims financial support from the government

From what I have seen there is nothing stopping you processing employees pay weekly there does not have to be a direct correlation between payments to employees and receipts from HMRC. Alternatively switch the employees onto monthly pay for the duration - so monthly rather than weekly limits apply, or make one claim for the back pay and weekly claims going forward and report all the payroll as weekly even if the early ones were paid late.

Thanks (0)
Replying to GW:
Avatar
By I'msorryIhaven'taclue
25th Apr 2020 16:39

GW wrote:
...or make one claim for the back pay and weekly claims going forward and report all the payroll as weekly even if the early ones were paid late.

GW, picking up the ball on your latter point do you think there's scope to "pay" employees in the same fashion as you might directors? ie Dr P&L "Employees' Wages" Cr Employees' Loan Accounts (akin to a Cr to a Director's Loan Account).

That way the weekly integrity of the RTI payroll submissions could be maintained.

Thanks (0)
Replying to I'msorryIhaven'taclue:
ALISK
By atleastisoundknowledgable...
25th Apr 2020 18:01

It’s just a net wage debt that the e’er has. Even better if the e’ee / e’er furlough agreement says they won’t be paid until the e’er received the CJRS claim.

NB not legal advice.

Thanks (0)
Replying to I'msorryIhaven'taclue:
avatar
By GW
25th Apr 2020 19:30

Yes, as long as employee has agreed to wait

Thanks (0)
RLI
By lionofludesch
25th Apr 2020 16:41

I wouldn't have recalculated the wages to the actual date of payment.

As far as I'm concerned a debt is created at the time when the wages are due under the contract. The fact that the employer hasn't got the money to pay them is irrelevant to the calculation of the wages.

Thanks (1)
avatar
By [email protected]
26th Apr 2020 21:03

Calculating the furlough payment to employees and claiming the grant are two seperate issues and should be dealt with in such a manner. The guidance on both are reasonably clear.

As I see it the accountancy rules are clear and nothing has changed since the introduction of the CJRS. A balancing figure needs to be calculated in the next furlough grant claim.

Thanks (0)
By coops456
27th Apr 2020 08:29

So I now understand that the law requires us to calculate NI on the retrospective payments as individual payments, rather than as a lump sum which would disadvantage the employee from an NI and pension contributions perspective.

But I've yet to determine how to do this in Moneysoft!

Thanks (0)
Replying to coops456:
avatar
By GW
27th Apr 2020 08:59

Why would it disadvantage the employee? - if they are being paid weekly the weekly NI limits apply, if they are being paid monthly the monthly limits should be applied.

If you process four weeks amounts as nothing for three weeks and all in week four, they loose out on three weeks worth of 0% NI band, they also fail to get 52 weeks worth of NI contributions required to get the year to count towards state pension entitlement.

You process the payroll in Moneysoft as if eack weekly payment was made on the due date rather than being paid late.

Thanks (0)
Replying to coops456:
RLI
By lionofludesch
27th Apr 2020 09:15

coops456 wrote:

But I've yet to determine how to do this in Moneysoft!

You need to go back and reopen the weeks in Moneysoft which you did wrongly. Do them properly and submit an end of year update for 2019/20.

Thanks (0)
avatar
By meadowsaw227
27th Apr 2020 10:45

Oh dear !

Thanks (0)
Share this content