There are so many changes coming thick and fast during this COVID-19 pandemic. One of the important issues for employers is that they have done the relevant paperwork to back up their claims.

If you furlough an employee, this is a change to their employment and therefore you must have something in writing to confirm that this has been done in agreement with the employee.

Employers should already have evidence of formal re-negotiation of their employees’ contracts of employment if they have already furloughed employees from 13th March 2020.

As the furlough scheme is changing from 1st July, employers will need to again re-negotiate terms of employment contract with employees and have evidence to show this formal re-negotiation.

When furloughing an employee there is no requirement to report furloughed pay through RTI, although it is possible to show the furlough pay as a separate pay element on the payslip. Therefore HMRC does not necessarily know that the employee has been furloughed and what dates they were furloughed. When the furlough claims are processed, although they list the employees names and NI numbers who are furloughed, the furlough pay is just shown as a total amount, rather than the amounts specific to each employee. This information is held by the person processing the furloughed pay claim, and for many of our clients, NATA has this information on file, ready to show as evidence for HMRC.

So when it comes to auditing all these Coronavirus Job Retention Schemes in the future – and such an audit is of course inevitable – the employer must be able to show the HR paperwork to evidence that they have formally re-negotiated employment contracts, so as to back up what they have claimed through furlough.