Flexible Furloughing – The Challenges for Payroll

From 1st July 2020 businesses will have the flexibility to bring furloughed employees back to work part-time, with the government still paying 80% of wages for any of their normal hours they do not work up until the end of August. Employers can decide the hours and shift patterns that employees work. This means that employees can work as much or as little as businesses need them for, with no minimum time that staff can be furloughed for. Furloughing has presented payroll with challenges, however.

For Payroll, Flexible Furloughing is Challenging

The calculations for flexible furlough in July were very complex because they involved calculating pay, Employers’ NI and Employers’ Pension proportionately based on the number of hours worked. It also involved topping up pay proportionately for those that were being paid 100% whilst on furlough, or on holiday. In addition, it was necessary to ensure that employees had their furlough pay calculated at their February pay rate and their worked hours at their current rate of pay. This is because the current rate of pay will differ from the February rate for all those employees who had a pay rise in April due to the minimum wage increase or an annual contracted pay rise.  

These calculations have to be done manually because the payroll software that is available right now is not programmed for this sort of work.

It seems that flexible furlough will continue to be of use to those businesses who do not have the trading income they did before but want to retain staff for when business starts getting back to normal.  

So, whilst payroll will continue to be challenging for a few months longer, as we continue to deal with flexible furloughing, it is likely that when we get to November, the current end of the scheme, that things will return to normal for us. Unless of course furloughing is continued in some shaope or form for longer. We can only wait and see what happens. Whatever happens, we will be ready for it.

Contact us for help and advice on all matters payroll.

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