The End of Furlough
Thu, Oct 21, 2021
30th September 2021 marked the end of the UK’s Coronavirus Job Retention Scheme, more widely known as furlough.
Boris Johnson’s daily briefing slots to keep us updated on coronavirus seem like a distant memory now. But payrollers across the UK will never forget Rishi Sunak’s first mention of the furlough scheme that saw the Government helping to pay the nation’s wages while businesses had to temporarily close or adapt during the pandemic.
When was the furlough scheme announced?
Furlough was first announced on 20th March 2020. Employers and payroll bureaus were told they could claim a grant for 80% of the wages employees are not working, aka ‘on furlough’.
During lockdowns this came as a lifeline for many businesses who were forced to close or had to reduce their service until the Government deemed it safe for them to operate again.
“When Rishi first announced the introduction of the furlough scheme, my initial feeling was one of shock. It seemed like such a monumental step for the government to be paying 80% of people’s wages.
It made it really hit home how serious and very real covid-19 had become and how far-reaching the effects would be. The realisation that this was going to be a task that we would be intrinsic in operating was daunting. However, it was very motivational to know that we could support our clients through such a difficult time.” Katy, Head of Payroll
Despite being announced on 20th March, it was to be backdated from 1st March 2020, meaning that those responsible for submitting the claims had to bring themselves up to speed pretty quickly.
“It was definitely a juggling act having two school-aged children suddenly home and needing to be schooled, as well as trying to get my head around a brand new furlough scheme.
My priorities shifted; overnight we had a second desk set up in my home office so I could help my children with their work whilst doing my own. While they got on with work, attended live classes and had PE with the nation’s favourite PE teacher, Joe Wicks, I would be reading up on the guidance, making spreadsheets to calculate everything and doing my normal payroll work.
Payroll and ensuring employees are paid is one of the most important aspects of a business and the furlough scheme became the backbone to this for many companies. We wanted to make sure that what we could advise and process for our clients was correct and as up-to-date as possible.” Jenna, Senior Payroll Processor
How many people has the furlough scheme helped?
Since the beginning of the pandemic, it’s thought 11.6 million workers in the UK. The Office for National Statistics (ONS) predicted that nearly one million workers were still ‘on furlough’ and benefiting from the scheme when it closed at the end of September.
For many of our clients, the furlough scheme was a lifeline, helping them to navigate the rapid changes to their business without having to consider making redundancies.
When lockdown was announced, Olives Et Al Ltd’s trade almost came to a stand-still and they were forced to furlough just over 70% of their workforce. The majority of these employees remained on furlough for a full year and were able to receive 80% of their usual pay throughout that time.
Olives Et Al were also able to make use of the flexible furlough scheme when it was introduced on 1st July 2020; as the nation navigated its way in and out of various lockdown restrictions, they were able to phase some employees back to work on part-time hours.
Learning how to calculate flexible furlough pay for employees that work variable hours was another challenge that payrollers had to face. This resulted in implementing another procedure to ensure the job could be done accurately and efficiently.
The calculation involved establishing the employee’s ‘usual working hours’ by comparing their average hours worked across the whole of the previous tax year and comparing it with the hours worked in the same pay period in the previous tax year. This needed to be re-calculated each month as the number of hours worked each month would vary. The complexity of these calculations made it extremely hard for business owners to plan ahead and it was practically impossible for employees to understand how their furlough pay had been calculated.
Extra telephone and email support was provided to our clients during these times, alongside video recorded messages from our Head of Payroll Katy, explaining the legislation in a way that was easier to understand. This was not only beneficial for our clients, but also assisted them in supporting their employees.
“Furlough was a lifeboat for our company as sales dropped by 60% virtually overnight in lockdown. The flexibility and longevity of the scheme allowed us to avoid making any redundancies and maintain our loyal and close-knit workforce.
Portt & Co took all the worries of processing furlough away from us. We avoided having to deal with any complexity and could focus on the survival of the business. Katy in particular was always available and very helpful whenever we had any queries – of which there were many in those first few months!” Viki Jackson, Olives Et Al
At Portt & Co, we’ve helped our clients to claim £3,269,382.74 through the scheme to pay their employees, with numbers of employees on furlough fluctuating from almost 250 to our last claim for just 23 in September.
Outsourcing your payroll
Submitting furlough payments would have opened many business owner’s eyes to the complexities that processing payroll brings.
Outsourcing payroll is not only less time consuming for business owners, but also more cost effective and means you can stay compliant with HMRC.
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