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Furlough payments

A small business is unable to fund furlough payments before receiving the grant

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Question re a small business which is unable to make the 80% furlough payments on the usual month end salary dates. Not keen/unable to take on debt. Can the business defer paying the furlough due end March & April until the furlough grant is received? Obviously not ideal for the employees, but if the alternative is redundancy then deferred furlough pay would be preferable.

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By Duggimon
03rd Apr 2020 16:55

If I was the employee I would be quite annoyed that the business has refused to take on debt, which they will be able to pay back shortly using free government money, and are therefore unable to pay my salary that is properly due, just because they are "not keen" for some ill defined reason.

They are already taking on debt, they owe their employees. What they are refusing to do is transfer that debt from their employees to the bank simply because they have a keenness deficit.

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RLI
By lionofludesch
03rd Apr 2020 17:11

We've only had furloughing for a week.

What sort of business can't withstand a week's shut-down ?

Employees need to eat too. Really, I don't see why they should finance the employer with interest free loans. It's the business owner's job to find finance for the business.

That might sound harsh but passing the buck to the workforce irritates me.

In the long run, this is a business doomed to failure, if only because it does not value its employees.

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Replying to lionofludesch:
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By memyself-eye
03rd Apr 2020 18:19

Lots can't :
Debenhams has already warned it may go into administration.

Such is the nature of business in 2020

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Replying to memyself-eye:
RLI
By lionofludesch
03rd Apr 2020 18:22

memyself-eye wrote:

Lots can't :
Debenhams has already warned it may go into administration.

Such is the nature of business in 2020

Debenhams was already on the brink.

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Replying to lionofludesch:
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By memyself-eye
04th Apr 2020 17:26

so are many small businesses!

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By tonyaitch
03rd Apr 2020 17:36

Thanks for responses so far. Points re the business noted. I am asking on behalf of one of the employees and looking to make a constructive suggestion whereby the likely redundancy can be averted.

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Replying to tonyaitch:
RLI
By lionofludesch
03rd Apr 2020 17:43

tonyaitch wrote:

Thanks for responses so far. Points re the business noted. I am asking on behalf of one of the employees and looking to make a constructive suggestion whereby the likely redundancy can be averted.

Fair enough.

In the short term, the employee needs to be looking at his most practical option.

In the longer term, the employee needs to be looking at a new job.

This employer is not someone for whom I'd like to work.

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By Arakee
04th Apr 2020 08:41

Did you also realise that unless you've paid them the 80%, you can't claim it from HMRC? Its not a case of here's the money, do what you like!! Your only hope is the Local Authority Grant.

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By fawltybasil2575
03rd Apr 2020 18:25

@ tonyaitch (OP).

This thread may perhaps assist:-

https://www.accountingweb.co.uk/any-answers/furlough-pay-cash-flow-problems

Basil.

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By Samantha20
04th Apr 2020 09:25

I know everything is changing day to day , but I am sure that I heard on the radio that there is no problem with an employer waiting until they receive the grant to pay their employees. Obviously, it will cause the employees hardship so the employer shouldn't do it if they have a way of paying immediately.

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By tonyaitch
05th Apr 2020 08:19

Thanks Samantha20. This is the sort of solution I'm hoping to be able to propose, but I need a technical reference to justify it. If anyone has a link to back this up it would be welcome.

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Replying to tonyaitch:
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By paul.benny
05th Apr 2020 09:04

There is no formal guidance which might allow the employer to defer payment, nor which prohibits it.

Going back to your question, if the alternative to furloughing staff is redundancy, the notice and redundancy pay would be due immediately. Either way, payment is due.

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Replying to tonyaitch:
RLI
By lionofludesch
05th Apr 2020 11:59

tonyaitch wrote:

Thanks Samantha20. This is the sort of solution I'm hoping to be able to propose, but I need a technical reference to justify it. If anyone has a link to back this up it would be welcome.

You shouldn't need a "techical reference to justify it".

If you've got the money, you should pay.

If you genuinely can't pay, what use is a technical reference to employer or employee? What are you going to say to your workforce? "I've got the money but there's this paragraph on a webpage that says I don't have to pay you yet" ?

If you're potless, just admit it.

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Replying to lionofludesch:
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By tonyaitch
06th Apr 2020 16:26

I'm trying to help an employee, faced with redundancy. If I can show that furlough status is an option, with payment deferred until the grant is received, then that might be acceptable to the employer. Otherwise the employer is likely to continue down the redundancy route, which for an employee who recently joined is unattractive. Hence my desire to quote something technical to support my suggestion.

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Replying to tonyaitch:
RLI
By lionofludesch
06th Apr 2020 16:44

tonyaitch wrote:

I'm trying to help an employee, faced with redundancy. If I can show that furlough status is an option, with payment deferred until the grant is received, then that might be acceptable to the employer. Otherwise the employer is likely to continue down the redundancy route, which for an employee who recently joined is unattractive. Hence my desire to quote something technical to support my suggestion.

If you were in Government, would you publish that ?

Everybody would be on to it, which is not what the Government wants.

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Replying to tonyaitch:
Hallerud at Easter
By DJKL
06th Apr 2020 18:22

Deferring salary is a legal matter between employee and employer, but employee still being employed has no right to benefits so needs deep pockets.

Payroll will need to be run and reported and of course employee has no guarantee they will actually ever get paid- what security can employer offer employee for the arrears, a joblot of trading stock?

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Replying to DJKL:
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By lionofludesch
06th Apr 2020 18:59

DJKL wrote:

Deferring salary is a legal matter between employee and employer, but employee still being employed has no right to benefits so needs deep pockets.

Payroll will need to be run and reported and of course employee has no guarantee they will actually ever get paid- what security can employer offer employee for the arrears, a joblot of trading stock?

Quite.

The poor old employer claims he has no money but assumes his employees are wealthy enough to go without pay for a month.

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