I was going to lay XX and YY off so guess gov’t will compensate me for keeping them on.

XX is his wife and YY is a part timer.

He wants to ‘furlough’ his wife and the part timer and arrange for HM Gov’t to pay 80% of their wages.

Furlough is a new term for most of us, from the Dutch ‘leave of absence’ according to Wikipedia, and when using this term HM Gov’t is referring to workers, who would otherwise have been laid off because of the virus, remaining on the payroll and retaining their employment rights.

Workers who are furloughed cannot do any work at all for the employer who has furloughed them.

Details on how the furlough scheme will work in practice are still sketchy and all we know for sure is that our client will be able to submit info to HMRC about his furloughed employees through a new online portal (no details yet) and HMRC will subsequently reimburse his company for 80% of their costs, subject to a £2500 cap.  There is a lot of advice and guidance out there now, but it’s still largely a case of interested parties joining the dots as best they can as the word from Nos. 10 and 11 is largely silent aside from this published guidance.

– How long before those furlough reimbursement grants arrive?
The HM Gov’t ambition is for these start to be ‘paid within weeks’ although the magic money portal wasn’t even a twinkle in Boris’s eye until last week.
– Is there a process to go through?
Probably.  We would certainly suggest that furloughed staff are informed in writing.  You may need to demonstrate fair selection if work will still be done by some employees.  HR stuff really, best speak with them.
– Can he furlough his wife? 
Yes, so long as he would have laid her off anyway because of the virus.  We’re not sure of the position should she be a director.
– Can he furlough himself?
Pass, and refer to director point above.  Plus, if he intends to do even a small amount of admin work then he probably cannot.  Unless he can argue that this admin work is in his capacity as an officer of the company rather than as an employee.  In summary, who knows?
If our consultant was self-employed rather than being a director then there is no furlough option. A self-employed person cannot furlough himself. We are hoping that measures for the self-employed are going to be announced this evening.
– Can he up salaries before he furloughs himself and his wife?
Doesn’t pass the sniff test.  The word on the street is that the basis of furloughed wages will be that person’s Feb-20 salary figures, but this is not definite.  Having Feb-20 as the baseline would also prevent our director putting all his kids on the payroll at the last minute; but then what about genuine new employees? So many questions and so few answers.
Dividends are very unlikely to count.
– Is the £2500 cap inclusive of Employers NICs and pension costs?
Maybe – published guidance refers to ‘80% of all your employment costs’.
– Is the £2500 cap based on the salary (i.e. £30K pa) or 80% of the salary (i.e. £37.5K pa)?
Not clear (but most likely £30K).
– Does the employer have to make up the other 20%?
No – the guidance says ‘your employer could choose to fund the differences between this payment and the salary’.  However it is likely that employee consent in writing is required if the employer does not intend to pay the other 20% (unless there is a clause in the employment contract that allows the employer to reduce or stop pay where there is no work to be done).
– What salary figure goes through payroll if the other 20% isn’t being paid? So, if someone’s gross pay is £1000, do you process £800 or £1000 through payroll?
Or, to put this another way, does the employer reduce pay to 80% and HMRC pays 100% of this, or does the employer process 100% and HMRC pays 80% of this? Not sure, but likely to be the 80% figure
– Does it apply to employees who are put on reduced hours?
Probably not, as a worker is either furloughed and doing nothing, or working, however minimal that work might be. This means that if you are thinking of putting the  team on reduced hours then you should reconsider.  It may make more sense to furlough certain workers and have others continue to work full time.  But remember, we don’t know the details for sure yet.
– Talking about hourly paid employees, what goes on their payslips if they are furloughed part way through the month?
Not sure.  It seems likely that the furloughed hours will probably be based on the previous 12 week’s average as per 1996 Employment Rights Act.  Or perhaps based on the previous 52 weeks as some are suggesting.  Others are saying base it on the February payroll, so take your pick.
– Can you alternate employees? 
i.e. Furlough an employee this week and employ again next week, whilst the chap who was working this week is furloughed next week.  Don’t know, although bear in mind that this scheme is about who the employer would otherwise have laid off because of the virus and can that be reconciled with chopping and changing furloughed staff.
– Can you furlough staff if they can’t work because of the need to look after the kids?
See point above – this scheme is about who the employer would otherwise have been laid off because of the virus and is looking at employer rather than the employee needs.  But how would you police this?
– Can you backdate furloughing workers?
Yes – this scheme is treated as starting 1st March, which means that staff already laid off can be retrospectively furloughed.  However our client above cannot treat his staff as furloughed for most of this month as he has only just decided to lay them off.
– Isn’t this measure open to abuse?
++silence++