By Nigel Tillott, director, Davies and Partners 

The HMRC portal for claiming furlough payments is up and running.

HMRC says it is confident the system has capacity to deal with all claims and will make payments within six days of application. The proof will be in the pudding.

In advance of opening the portal, the Government issued a flurry of information in the latter part of last week, a fair amount of it on Friday afternoon.

Clarification has been added, but there remain gaps and inconsistencies.

The full amount of information is vast, but I thought it may be helpful to highlight a few points.

Length of the scheme

It has been extended to June 30 and could be extended further.

It is thought that this change was undertaken now because some larger employers contemplating mass redundancies once the scheme ends would by law have had to start mass consultation by the middle of April.

That would not have been great for morale at this very uncertain time, particularly when businesses have no inkling of the exit strategy and cannot plan effectively.

The extent of the agreement between employer and employee

In the middle of last week the Treasury issued a direction to HMRC setting out how it is required to operate the furlough scheme.

The document is not the easiest to understand, but said that in order to make a claim in relation to an employee, there had to be a written agreement between the employer and employee, which could be in electronic form and in relation to which the employee specifically agreed to cease all work in relation to their employment.

Prior to that point it had been understood obtaining written consent from employees was not essential.

The various editions of the guidance issued to employers - and we are on our fifth version - have said different things.

Friday afternoon's guidance says the agreement between employer and employee needs to be consistent with employment law and specifically envisages that this does not necessarily mean a written response is required from the employee.

Good practice must be for employers to seek confirmation of agreement in writing, but if this is not possible it would seem all is not lost.

Holiday during furlough leave

This has been one of the major omissions from earlier versions of the guidance and is still not dealt with in the Primary Guidance for Employers or the direction.

It is addressed in the Guidance for Employees for the first time and in a Supplemental Guidance document on how to work out 80 per cent of an employee's wages.

We already knew holiday accrued during furlough leave. It is now clear it can be taken during this period, but that when holiday is taken employers need to top up pay to 100 per cent, calculated in accordance with the Working Time Regulations.

The date by which an employee had to be working for an employer to be eligible

This has changed from February 28 to March 19 with a view to helping those who were employed after February 28 but before the furlough scheme was announced.

In practice a lot of new employees still will not come within this scheme as if HMRC had not been notified of their employment through Real Time Information by March 19 (which will include some late February starters) they are excluded.

How to calculate the 80 per cent

I have left the best - or perhaps the most complex - until last.

The Government has published a supplemental guidance to employers, specifically to help work out 80 per cent of employees' wages for calculating under the scheme.

The following is included:

• Regular wages
• Non-discretionary overtime
• Non-discretionary commission
• Non-discretionary fees
• Piecework payments

The following is not included:

• Tips
• Discretionary bonuses
• Discretionary commission payments
• Non-monetary benefits including company car

It is also clear salary sacrifice arrangements including pension related salary sacrifice and reduced taxable pay should not be included in the calculation.

In most cases this will assist, but there are significant situations which fall through the gap.

In this respect the direction provides some further clarity and in particular appears to rule out any payments which vary according to the performance of the business or part of it or the performance of individual employees.

Precisely what is and is not included is likely to be the biggest source of argument in years to come.

What is clear though is that anything paid by HMRC must relate to what has already been paid to the relevant employee or will very soon be paid to that employee and an employer cannot adjust the way in which it makes the payment, for example paying some of the sum into a salary sacrifice arrangement.

All clear then? The complexities of putting in the application should take minds off other things going on at the moment.

The Government's supplemental guidance on how to claim and how to calculate the 80 per cent are key reading for anyone operating a payroll.

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