Furlough and cash flow

1. Employers should wait as long as possible to process payroll to allow time for further information on the scheme but we advise that they should still process payroll by the normal date

2. Process payroll for furloughed employees at the rate of 80% of basic pay (if the employee is zero hour then there is no contractual obligation to pay them if no work was undertaken so employers may want to delay payroll until the scheme details for zero hour workers are known)

3. Pay what you can afford to of the net pay due to the employee and record details of the amount paid. The letter here. can be issued with the employee’s payslip to explain the situation.

4. You should, as a matter of urgency, seek additional funding to cover the shortfall and in particular, are advised to make an application for a Coronavirus Business Interruption Loan to cover the cost of at least one month’s furlough pay. This is the Government’s recommended course of action and the Government is covering the first 12 months’ interest of any such loan.

Government advice can be found here.

The Coronavirus Business Interruption Loan scheme is overseen by the British Business Bank and their information on the scheme is here.

5. Once you have the funds from either the loan scheme, Job Retention Scheme or any other source of funding you should pay any outstanding payments to the employee as soon as possible

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