From 1 September 2020 employers have to contribute at least 10% of salary for those benefitting from the furlough scheme (adding to the payments of employer’s National Insurance and minimum statutory pension payments which employers had to contribute last month). The cost of retaining employees on the furlough scheme is therefore rising for employers, and we expect to start to see use of the scheme tailing off.
Given the potential for HMRC audits of furlough claims, it remains imperative that employers keep a copy of all records relating to furlough. There is a requirement to retain a written record of all communications with an employee regarding the furlough arrangements, including the furlough agreement, for five years, and an obligation to retain further details (including the amount claimed, the claim period for each employee, the claim reference number, the calculations used in case HMRC need more information about the claim, details of any overclaim and associated notification to HMRC, and records of any agreed training undertaken by furloughed employees) for six years. Given the discrepancy in the retention periods we recommend everything is retained for six years. It would also be prudent to keep a written record of reasons why the pandemic necessitated putting employees on furlough such as details of any downturn in work, or the closure of the business. While audits might not take place for some time, we recommend that employers use this time to collate their records to get these into good shape now so that they are audit ready.