Xero now has the ability to calculate 80% of employee’s regular earnings if they have been furloughed.
Below are the steps on how to do this when processing your payroll:
- Check the employee’s start date – You will need to make sure that employees have been on the payroll since before 19 March 2020 to be eligible for the scheme as Xero is unable to do this.
- Holiday Groups – If an employee is assigned to a specific holiday group that this needs to be temporarily set to none to ensure that public holidays are included in the furlough period. You can find this under the employment tab on each employee record.
- Regular Earnings – This needs to reflect 100% of the regular earnings for the furlough leave pay to be calculated correctly. If you have any employees that left the company before the 28th February 2020 and you want to re-instate them you can do this by clicking the history tab under employees and select the employee record. Under that employees record the employment tab has a button at the bottom of the page to reinstate employee.
- To complete furlough leave:
- Go to ‘Time Off’ tab under Payroll. Click green New button and select ‘Furlough Leave’.
- Start to type the name of the employee and select one that you would like to add furlough leave to.
- Enter the start date of the furlough period, the end date will automatically go to at least 3 weeks from the start date as this time period is required when furloughing employees.
- This will then calculate the number of hours of furloughed leave the employee is entitled to during the furlough period.
Any employees who are on zero hours contracts, the average hours they are entitled to, will need to be calculated and entered into the boxes next to each month during the furlough period. The rate of pay will also need to added to the payslip after manually working out 80% of the gross pay.
The furlough leave will show on a separate line to the regular earnings and the pension will also show separately on the payslip.
If the furlough period starts within a pay run that has already been posted on Xero then this will need to be reverted and reposted. There is a button on the pay run to ‘Revert Pay Run’ and take it back to draft. The payslips for the affected employees can then be reset and the furlough leave will then be included at 80% of the gross pay up to £2,500 per month. Once you are happy with this pay run you can repost (ensure you select H: Correction to earlier submission).
Please remember if you have reposted March 2020 pay runs and you had already processed year end payroll, this will need to be done again.
Xero are in the process of creating a report to enable you to use when claiming back the pay through the HMRC portal. This will be available at the end of April.