fbpx
Client Portal
What is the cheapest way to liquidate a company?
21 April 2020
Category Guest Blogs

The issue 

As we continue to delve into the detail of the furlough scheme we are noticing more and more seemingly strange rules. One such rule is that a furloughed employee is still allowed to work for another employer and this has been unambiguously confirmed in the guidance. 

Example

John earns £37,500 a year working for a corporate events company and is furloughed by his employer. Contractually they still need to pay him his full salary although they will claim £2,500 per month (and NI) back under the furlough scheme. This reclaim by the company would be unaffected if John were to get a temporary job at Asda for the period of his furlough. Counterintuitively, John could end up doing less work for more money!

More detail

In the above example John would still need to check that he is contractually able to work for another company under his employment contract. If he is not then it is difficult to see why his employer would not make an exception because he would not be able to do any work for it as a condition of the furlough scheme.

Forbes Dawson view

 It is perhaps not surprising that the rules work like this given that the focus of the scheme has always been to prevent companies laying employees off rather than to secure a fair income for the employees in question. Perhaps a more sensible approach would have also been to introduce measures whereby any furloughed employee can be required to provide services to the Government if required to do so.

Employers should however be aware of these rules when deciding whether to continue to pay furloughed employees their full salaries. In certain circumstances it will be reasonable for them to agree a reduced salary with their employees on the basis that they will be able to undertake paid work in the interim. For many this is a preferable proposition to sitting at home watching Netflix, even ignoring any increased income that they derive from a second job.

Forbes Dawson are an independently owned, tax-only firm offering specialist tax consultancy services to private clients, businesses and professional advisers.

Get in touch to see how we can help

  • This field is for validation purposes and should be left unchanged.

Forbes Dawson - Another Entrepreneurs’ Relief blunder!

If you are worried about your business or just want a (free) no obligation chat, contact Clarke Bell on 0161 907 4044 or info@clarkebell.com today. Our Licensed Insolvency Practitioners will provide you with the best professional advice for your situation.

For your free expert advice 0161 907 404

Or just enter your details below

Contact Us

  • This field is for validation purposes and should be left unchanged.