The ValPal Network’s 18 furlough tips for estate agents

The spread of coronavirus has had a huge financial impact on thousands of businesses across the UK, many of which will be estate and letting agents.

 

In response to the crisis, the government has announced a range of measures to help businesses through this tricky period. One of these measures is the Coronavirus Job Retention scheme, which allows firms to ‘furlough’ staff and keep them on the payroll while the government pays the majority of their wages. 

 

Below we have interpreted the current official government guidance and put together 18 top tips to help you understand the furloughing process. You can now access the HMRC portal and claim for wages here. 

 

1. Furloughing staff means you don’t have to lay them off

The whole purpose of furloughing, and the government’s Coronavirus Job Retention Scheme, is to prevent you losing valuable staff while it’s not safe or possible for them to do their job. By furloughing, a worker stays in your employ but they must not work. It’s a way of keeping businesses together during these unprecedented times, so that when we come out of the other side the company will be ready to bounce back quicker.

 

2. Get to know the Coronavirus Job Retention Scheme

It’s a temporary scheme designed to help employers who cannot cover employee costs due to Covid-19, preventing redundancies and the need to lay people off by using a portal to claim for 80% of your furloughed staff member’s wage. The scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before March 19 2020, have enrolled for PAYE online and have a UK bank account.

 

3. Be clear on who qualifies

For employees to qualify for the scheme, they are unable to carry out any work for you while they are furloughed. It’s essentially for staff who you want to keep on but who can’t, due to the coronavirus crisis, conduct their work safely or easily. The government is stepping in to shoulder the burden, allowing you to claim 80% of an employee’s usual monthly wage, up to £2,500 per month, plus associated NI and employer pension contributions on that wage.

 

4. The Job Retention Scheme will run until the end of June (or longer)

The government is running the Coronavirus Job Retention Scheme until at least the end of June, backdated to March 1 2020. It has, though, made it clear that it will extend the scheme further if this is required. The scheme is now officially up and running and you can claim for wages from this page. You might experience slow services during busy times. You’ll need the Government Gateway user ID and password you received when you registered for PAYE online. 

 

5. The scheme applies from a specific date and in specific circumstances

Furloughed employees must have been on your PAYE payroll on or before March 19 2020, and can be on any type of contract, including: full-time, part-time, agency, flexible or zero-hour contracts. Employees that were employed as of 28 February 2020 and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough, while foreign nationals are eligible to be furloughed, too.

 

6. To benefit from the scheme, workers will have to be classified as 'furloughed'

First, you will need to discuss with staff who you want to furlough and they will need to agree to being classified as a furloughed worker – taking on this status can be open to negotiation as it falls under employment law. Once staff are designated, you can then access the Coronavirus Job Retention scheme to organise for the government to support their wages. 

 

7. Any agreements should be in writing

You should discuss with your staff and make any changes to their employment contract by agreement. Equality and discrimination laws will apply in the usual way when it comes to deciding who to furlough. To be eligible for the subsidy, it’s important that you write to your employee confirming that they have been furloughed and keep a record of this communication.

 

8. Furloughed workers can't work for you during that period

In order to qualify for and benefit from the Coronavirus Job Retention Scheme, employees should not undertake work for you during this period. That said, staff will remain employed with you and can be kept on the payroll rather than being laid off. If the employee is working and on reduced pay or hours, they will not be eligible for the scheme and you will have to continue paying them through your payroll.

 

9. It's your responsibility to organise the payment to furloughed workers

Once you have told employees they are being put on furlough, it is up to you to contact HMRC to organise the next steps. You will need to keep staff updated on what you are doing and provide them with timescales where possible. All the information you need to apply is available from HMRC. To make a claim, you'll need the number of employees being furloughed, your ePAYE reference number, the claim period, the amount claimed, your banking details and contact details.

 

10. You don't have to furlough all staff

If necessary, you can require all of your employees to go on furlough if you need to drastically cut costs but want to keep everyone on the payroll. Alternatively, you can furlough some staff and keep on the rest or those that are deemed essential to the daily running of the business.

 

11. Communication with staff will be all-important

At times like these – especially when it comes to people’s livelihoods – you need to be as upfront and transparent as possible. Communication is key and you should make staff aware of what you’re planning as soon as you possibly can. By providing them with a clear outline of what you’re planning, you can put their minds relatively at ease. Once you have made a claim, you must inform your employees and tell them that they do not need to take any more action.

 

12. Read around the subject before taking drastic action

Furloughing is a new concept for everyone to take on board and it may not be suitable for your business, or even possible. Before taking the drastic measure of reducing staff wages and essentially prohibiting them from working, make sure you understand exactly how the system is going to work and how it will affect you in the future.

 

13. You won't be legally obliged to top up the employee's earnings

As an employer, the scheme leaves it up to you as to whether you cover the remaining 20% of your staff’s wages which aren’t reimbursed by HMRC. There is no legal obligation to do so, but if you are able to, your staff are likely to look on you favourably which could have positive knock-on effects in the future. You will be required to pay each employee the full grant you receive for their gross pay. You are not entitled to charge any fees or deductions.

 

14. Your employees could be eligible for welfare support

If any of your employees are furloughed and you can’t make up the remaining 20% of their wages not covered by the government, they could be eligible for welfare support. It's important that you keep your staff abreast of what financial support is available to them, particularly if you have had to furlough them. They could be able to claim additional benefits or Universal Credit from the government.

 

15. Understand how to make the claims through HMRC 

If you decide to furlough staff, you will need to contact HMRC to apply for the grant to cover up to 80% of their wages. A new online portal has been set up by HMRC and it is here where you need to submit the information about all furloughed employees. Make sure you know how the process works and where you need to apply so that you are ready to act quickly and efficiently. Once your claim has been received by HMRC, you’ll get a claim reference number. Once you have been deemed eligible for the grant, and HMRC have checked that your claim is correct, you will receive a payment via BACS within 6 working days. You must then pass this on to your employee.

 

16. Training and volunteering can still take place

A furloughed employee can take part in volunteer work, as long as it doesn’t provide services to or generate revenue for your business. Furloughed employees can also engage in training, if this doesn’t provide services to, or generate revenue for, your business. Furloughed employees, in fact, should be encouraged to undertake training or volunteering in their downtime.

 

17. Some agents’ commission can be included in furloughed pay

The government has clarified that some agents’ commission payments can be included in claims for furloughed pay. Agencies are able to claim for any regular payments that they are obliged to pay staff, including: wages, past overtime, fees and compulsory commission payments. However, discretionary bonuses and commission payments, and non-cash payments, cannot be included. The rules differ on how much you can claim depending on how long the employee has been employed for.

 

18. The scheme does not apply to dividend payments

As a result, director-shareholders who are paid partly or mainly in dividends will only be covered to the extent that they receive earnings through PAYE. The Coronavirus Self-employment Income Support Scheme has been created to offer a similar level of support to those not eligible under the Job Retention Scheme. The self-employed scheme provides a grant to self-employed individuals or partnerships, worth 80% of their profits, up to a cap of £2,500 per month.

 

*This guidance is provided for general information purposes and does not constitute legal or other professional advice. While the information is considered to be true and correct as of April 20 2020, changes in circumstances may impact the accuracy and validity of the information. The ValPal Network is not responsible for any errors or omissions, or for any action or decision taken as a result of using the guidance. You should consult a professional adviser for legal or other advice where appropriate. It’s also advisable to keep checking the official government guidance regularly for updates.