How to make the most out of furlough until April

The furlough scheme has been extended to the end of April (Photo: WILL OLIVER/EPA-EFE/Shutterstock)
The furlough scheme has been extended to the end of April (Photo: WILL OLIVER/EPA-EFE/Shutterstock)

Accountancy firm MHA MacIntyre Hudson has issued advice on how farming and rural businesses can make the most out of furlough until April 2021.

The latest lockdown announced on 4 January means employers and employees will be depending on the furlough scheme until the scheme's end date in April.

Nigel Morris, employment tax director at MHA MacIntyre Hudson, said companies can handle the complexity if they follow a few important rules.

Businesses should be aware that application deadlines and eligibility criteria have undergone changes since the scheme began, he said.

The current Coronavirus Job Retention Scheme (CJRS) scheme now covers employees on an RTI return at 23 October 2020.

"This applies to employees covered by the initial phases of the furlough scheme prior to 30 June 2020," Mr Morris said.

It also applies to new employees taken on after 20 March 2020 and before 23 October 2020, who were included in an RTI return in that period, he added.

"So if you put in a new furlough application now you need to bear in mind that more employees are potentially eligible for the scheme as the qualification criteria have changed."

There are also new deadlines that farming and rural businesses should be aware of. On 1 November 2020, the deadlines for the furlough scheme changed.

Mr Morris said: "Claims now need to be made within 14 days of the end of the month they relate to and can only be amended up to 28 days after the end of the month that they relate to. So, if you didn’t claim for November 2020 that is now ‘lost’.

"Previously you could claim months in arrears, so if the last time you submitted a claim was in July and think you still have plenty of time to put your claim in, think again."

The CJRS is also fairly flexible - it can be ‘full’ and or ‘flexi-furlough': "Full furlough allows you to furlough an employee for (say) a week where they are not expected to undertake any work at all," he said.

"Flexi-allows you to furlough an employee for a set amount of time, for example a week, but require them to work some days or hours in that set time.

"For example, instead of eight hours a day, they could work four hours and then be furloughed for four hours."

Mr Morris explained that the CJRS does not cover NIC and statutory pension contributions - it covers regular, contractual wages up to the 80%/£2,500 per month cap.

"But this is in reality a daily cap with the £2,500 divided by the number of days in the calendar month," he said.

"It does not cover the associated employer NIC and statutory pension contributions which employers must pay for themselves."

Farming and rural firms should also be aware of annual leave and furlough calculations, he added.

“Furloughed employees can take annual leave while on furlough, but you must pay them 100% of their pay in line with working time regulations that govern how much holiday pay they are due.

"This can become complex because a standard furlough claim is based on ‘reference pay’ for the period prior to 20 March 2020 (or 23 October 2020)," he said.

However, holiday pay is calculated differently and based on a rolling average: "This means an employee’s holiday pay could be higher than the reference pay and if so an employer may not be able to claim 80% of the full holiday pay back.

“If you want employees to use up accrued and unused leave you must give them notice of at least double the time you want them to take.

"So if you want them to take a week’s leave you need to give them two weeks’ notice in advance of this."

Mr Morris said that overall, CJRS is still very good news for employees, who may otherwise be formally laid off or made redundant.

"It is still quite good news for employers," he said, "Of course, how much longer employers can support the NIC and pension commitments associated with CJRS remains to be seen and only a successful mass vaccination program offers a way out.”