How to Process Employees Returning from Furlough in Payroll?  

29th September 2020

As Britain reawakens from a sleepy period for businesses both domestic and international, the aftermath of Covid-19 on its economy is still finding clarity. But one certainty remains true: the workforce is returning to a new normal.  

The UK Government’s job retention scheme, formally known as furlough, has gradually changed from a full working benefit, replacing staff wages through proxy funds, into a staggered return to push the workforce out of the slumber of an economically slow period during the pandemic. The last few monthsincluding September, have been defining how payroll has adapted to the challenges of the moment. The scale of support has slowly wound down, returning the accountability of payroll back in the hands of business.  

As formal support subsides, Chancellor Rishi Sunak has confirmed that the furlough period is meeting its certain end this coming October. For many firms, this signals a return to business as usual.   

Business As Usual: Preparing Payroll  

As furlough lessens its supporting role, an optimistic Government sets the mood to return to a hopeful Britain finding its way back to economic bliss. The road may be a long one, but the first step in moving away from furlough is a big one.  

From October, the role of furlough will pay out to the sum of 60% of employee wages (or up to £1,875 per month). Firms are expected to pay the remaining 20%. Yet, when October ends, this benefit will end too.  

The return of employees to the familiar scenery of their workplace, though socially distanced, marks a change in how payroll has been delivered throughout the pandemic. Indeed, the confusion over funding has meant that more than ever payroll has been open to error and disorder.  

Once informed by writing, businesses can start to reintroduce employees to a new, though mindful, office environment. In terms of payroll, businesses will need to continue ongoing assessmentsmostly concerning the safety and regulation of the office. Consider, for example:  

  • Any jobs that are mission-critical to an efficient business operation and introducing those back into the office 
  • The personal requirements for staff that might be shielding still, or temporarily caring for vulnerable people. This is, essentially, a judgement about risk (Read the Government Guidance here). 

Once the furlough period ceases, fully withdrawing financial aid, firms will carry the expectation to deliver their payroll and pay all staff outside of external funding. Yet, for those businesses that manage this transition successfully, there is another Government-led incentive on the horizon. Pithily summed in a headline, the Government’s “a plan for jobs 2020”, is intended as a bonus for businesses, another style of economic stimulation, that comes in the form of a £1,000 bonus for every employee a business returns safely to work. This benefit is accessible in February 2021.  

Until then, many of those firms planning a full return will be in mid-transition, scaling their business operation back to its fullest height. Given the confusion of furlough’s wind-down, it can help to seek guidance and delivery of your payroll from a specialist like IRIS FMPA third-party operator can take on your payroll effectively and help your operation find clarity again.  

Returning Employees from Furlough: What It Means for Your Payroll   

We’ve compiled a list of FAQs for employers using the coronavirus job retention scheme (CJRS) to help guide your safe return.  

1. We have employees still on furlough – when do they need to be in work for? 

Employees can remain on furlough until this additional support is withdrawn at the end of October. Employers have the option to slowly introduce their workforce through a “flexible furlough” programme until then, which enables a staggered approach to employees re-entering the workforce.  

This means, for employers, you should adjust your payroll for a flexible workforce. Some employees may only be entering into the office on a part time basis and are, therefore, still rotating. 

2. What is the furlough claim period now?  

Since July 1st, there has been no minimum number on days or weeks that an employee must be on furlough for before a claim can be made. However, you need to carefully consider where this falls in the calendar month, as claims against 7 days have special rules 

3.How will changes in the CJRS affect employer contributions in the future months?  

From October 1st, employers are required to contribute 20% of employee wages (on anything up to £625). This includes national insurance (NI) and pension allowances. Thereafter, employers may be eligible for a new incentive that helps them return their employees to the workforce. 

4. Who can return to work and with what pay?  

The CJRS is intended to deliver staff back to work, avoiding redundancies where possible. At the close of October, all staff should be safely working full time with their employer, where the role of payroll resumes normally under the employer.  

Still a bit confused?  

It’s reasonably confusing trying to navigate the HMRC’s stance on furlough and what the workforce looks like thereafter. If you’d like to take the pain out of payroll, then get in touch with us today about managed payroll services.  

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