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Furlough leave and holidays

Furlough leave and holidays

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Popping into my inbox at the end of yesterday afternoon, and also no doubt to my clients inboxes was HMRC's regular Covid-19 support newsletter

One section in particular caught my attention

"

If you have furloughed employees because of the effects of coronavirus on your business, you can claim under the CJRS for periods of paid leave they take while on furlough, including for bank holidays. You should not place employees on furlough just because they are going to be on leave. 

If your employee is furloughed for only some of their hours, you can count all time taken as holiday as furloughed hours, rather than working hours. This means you can currently claim for 80% of your employee's usual wages when they're on leave.

In line with the Working Time Regulations, if a furloughed employee takes holiday you should make sure you are calculating the correct holiday pay, and not simply continuing to pay the 80% you receive through the CJRS. You may need to top up your employees’ pay to 100% of their normal hourly rate or salary. For more information search 'check if you can claim for your employees' wages' and ‘holiday entitlement and pay during coronavirus’ on GOV‌‌‌‌‌‌‌.UK."

My interpretation of this is if an employer has flexi furloughed their employees (and the employer has complied with the relevant t's and c's), even though they would have the day off on bank holiday anyway, the employer can claim furlough for these days anyway? Thats my interpretation, and no doubt some of my clients will try to claim this, is this correct that someone who would have had the day off on bank holiday's can be classed as furloughed that day.

Would be great to hear others interpretations

Replies (12)

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By Paul Crowley
08th Apr 2021 16:35

All of your clients will have received it as well
Just tell them to read the screens
Claim must not be abusive
If worked Thursday and Tuesday then Good Friday and Monday as furlough is putting them on furlough just for paid holiday

If flexi then the hours of expected working reduce if people would not be expected to work those days. So no claim at all for the bank holiday furlough,

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Replying to Paul Crowley:
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By Bill Sykes
08th Apr 2021 16:47

Thanks, so if i understand your advice, for the normal hours instead of 22 working days per month (Mon-Fri's in April), then use 20 (to exclude the bank holidays), then on the claim just calculate the worked hours?

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Replying to Bill Sykes:
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By Paul Crowley
08th Apr 2021 17:00

That would be how I would do it based on my understanding
But no guarantee that I am correct.
Wait out a couple of days and more replies may appear

BTW
Aweb warns that Anon questions get less helpful responses for a very good reason
Lots of regulars ignore them, of are less helpful

To avoid doubt
I had assumed you were a freeloader pretending to be an accountant.

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Replying to Paul Crowley:
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By Bill Sykes
08th Apr 2021 17:09

Thanks for the heads up Paul, i'll try to make the post not anonymous,

Sometimes, with the amount of time we spend on client advisory / furlough / all things covid related and the reduced time spent on accounts prep, tax returns over the last few months it sometimes does seem like we all are pretending to be accountants. After the last year, we'll never complain again about preparing one set of accounts after another again!

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Replying to Bill Sykes:
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By Paul Crowley
08th Apr 2021 18:33

In the last 12 months less proper accounting than any year to date for me.

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By Hugo Fair
08th Apr 2021 17:48

Forgive the slight sigh of exasperation, but furlough doesn't equal CJRS ... so:

Q: "My interpretation of this is if an employer has flexi furloughed their employees .., even though they would have the day off on bank holiday anyway, the employer can claim furlough for these days anyway?"

A: The employer can never claim furlough.
The employee can (by mutual agreement with employer) be put on furlough.
The employer can then (subject to several criteria) make a CJRS claim for the furloughed hours.

Therefore, in order for your suggestion to work, the first thing that would have to happen is for the employee to agree that the bank holiday is to be taken from her/his annual leave entitlement - which they may or may not be happy about.
Next, if the bank holiday is deemed to be part of the 'usual' hours for which this employee is furloughed, then the employer will have to ensure 100% of holiday pay (and ER NICs etc) is paid via payroll.
Finally, the legitimacy of the related portion of the CJRS claim may at best be dubious (as Paul has already mentioned) ... depending on the particular company's normal working patterns & policies (as well as the need to justify the furloughing itself).

FWIW the logic behind the apparent 'generosity' being shown by HMRC (or rather by the Treasury) is that employee's have shown a marked reluctance to take their annual holidays during lockdown (or even the tiers system as was), but it's in no-one's interest (employer or govt) for holiday entitlement to be 'saved up' indefinitely.

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Replying to Hugo Fair:
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By Bill Sykes
08th Apr 2021 18:02

Thanks for your detailed answer Hugo
Yes, I agree i didn't use the correct terms in my original post. So I'm assuming my clients have proper furlough agreements in place with their employees, before calculating these we updated our engagement letters accordingly to get our clients to agree to this. (we used the updated ACCA template)
I would think 100% of my clients would normally give staff their usual bank holidays as days off anyway.
So my question when calculating the monthly CJRS claim whether we put the usual hours worked as based on 22 days (Mon-Fridays in April) or 20 to exclude the bank holidays as Paul so correctly pointed out earlier? From there I guess its quite simple in that we just then enter the days that were usually worked.

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Replying to Bill Sykes:
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By Hugo Fair
08th Apr 2021 18:18

If "my clients would normally give staff their usual bank holidays as days off anyway" then, by definition, the bank holiday cannot be deemed to be part of the 'usual hours worked' for this employee - which I think resolves your conundrum.

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By garystirling
08th Apr 2021 20:07

Usual hours worked for April would be contracted weekly hours divided by 7 multiplied by 30 would it not? Not counting up 20 or 22 days? You would then count up the hours actually worked which of course would not include the bank holidays so you would definitely be claiming CJRS, you then need to find out if you need to pay at 100% or not based on if the employee is taking it as holiday or is able to keep for another time.

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Replying to garystirling:
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By Paul Crowley
09th Apr 2021 10:27

Interesting point
You would consider bank holidays to be usual working hours, even though the worker would not work them?

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Replying to Paul Crowley:
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By Hugo Fair
09th Apr 2021 11:43

Interesting as in "may you live in interesting times"!

It's the sloppy wording used by HMRC (particularly on GOV.UK) that causes all the confusion (a neat trick for something that purports to be 'guidance'):
* the phrase they use is 'usual worked hours';
* but maybe they meant 'usual paid hours'?

A day taken by the employee as holiday (whether a bank holiday or not) can hardly be described as 'worked', but it definitely is 'paid' (at least in this context).

So whilst I stick by my earlier interpretation (which uses the wording provided by HMRC), I concede the possibility that they meant the latter definition. If that's the case, then the employer could possibly treat the bank holidays as furlough days (if they are 'usually' taken out of employees' leave entitlement) ... but NOTE:

"Employees should not be placed on furlough for a period simply because they are on holiday. This means that employees should only be placed on furlough because your operations have been affected by coronavirus and not just because they are on paid leave."

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Replying to Hugo Fair:
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By Bill Sykes
09th Apr 2021 12:24

I 100% agree the wording used by HMRC I actually interpret as contradictory, so have the feeling there's no correct answer and no wrong answer. Would be far simpler if HMRC simply said you can't claim furlough for employees on annual leave. or better still if the employees claimed directly from HMRC for their own days not worked.

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