Updated 9th April 2020
As more information comes to light there are questions business owners and managers need to ask to be sure if the furlough is a sensible option.
If you are looking to keep staff and after the lock down you will likely return to revenue generation reasonably rapidly then furlough seem like a very sensible option.
However, If you are able to operate with less staff and it’s likely that recovery after a lockdown will take months to achieve then you may need to think a bit harder about using the furlough scheme.
The pros:
- You get to retain your team and help people keep income in a very uncertain period of history.
- The employee cost to you is significantly reduced.
- When you are ready to ramp up you have your team there ready and waiting to go full power.
- Saves recruitment fees if have to staff up – if you had let people go.
The cons:
- If you decide to top up then you would have to cover the additional Ni and pension contributions resulting from that top up. The government will only cover the costs linked to the max wage of £2,500.
- If at the end of the furlough period (currently in place until end of May, expected to be extended but not confirmed) you don’t have enough work or income to pay for the furloughed employees to return to work and you have to lay them off, you will have to pay them for their notice period at full pay.
- The first payment from the government is expected around 30th April but the business needs to pay all employees as usual on the usual payroll date. IF your business will not have the cash to pay until the government funds come in then you could change the standard payroll date to 30th. However you need to do this for all employees, you need to notify the employees you are doing this and this may still cause issues if the funds don’t arrive as intended on the 30th (this is a new system for HMRC and some glitches are to be expected). You need to consider having to make the payments to employees before the funds are received from HMRC.
- It is important to note that the employees who are furloughed cannot work for you during this period – this included company directors.
Decision time
It’s a good option to have for sure, but each business needs to consider the cost implications and what things might look like in a few months time, to decide if furlough is really as helpful as it looks at first glance.
Either way a decision needs to be made soon if not already done, as until employees are informed and stop work – you cannot claim.
Decision time
It’s a good option to have for sure, but each business needs to consider the cost implications and what things might look like in a few months time, to decide if furlough is really as helpful as it looks at first glance.
Either way a decision needs to be made soon if not already done, as until employees are informed and stop work – you cannot claim.
