The coronavirus pandemic has been a major source of financial uncertainty among employers, with a lack of activity and the danger of having to close down completely leading to the need to place some employees on the job retention scheme.
A substantial bulk of small and medium-sized businesses in the UK (44%) believe that the recent extension of the job retention scheme would be the most important measure in helping them through the current pandemic, according to a recent edition of an SMB tracker study from Sage.
How your IT team can support small business during the coronavirus lockdown
In response to the pandemic, the enterprise software company recently introduced a module to help companies get the best out of the furlough scheme and understand exactly what they can claim from the government.
“We decided to build a tool that could be embedded in our payroll products that would help customers with the calculation, so that they could accurately determine the amount of money that they were going to be able to claim for using the job retention scheme,” said Lindsay Phillips, executive vice-president, product engineering at Sage.
“We prototyped it to start with, we built some models, and we also talked to customers, in terms of what kind of things would help them, and came up with a solution that was a very straightforward, step by step process that would allow the customer to use the data that’s in their payroll system to determine the amounts that they could claim.”
In the development process, there was much to ponder in regards to the challenges that companies encounter in this respect.
UK government coronavirus Job Retention Scheme — advice for employers
Nigel Morris, tax director at MHA MacIntyre Hudson, explains how employers can access the Job Retention Scheme (JRS) to continue paying 80% of the salary for employees that would otherwise have been laid off or made redundant, the practical next steps and potential complications of the scheme. Read here
“The complexity of this wasn’t actually making the claim per se, but calculating what you could claim,” Phillips explained.
“So the claim is through the HMRC portal, so a relatively straightforward process, however, the tricky bit you like, is actually calculating the amount of money that can be claimed.
“There’s a lot of complexity in making that calculation, from National Insurance, pension contributions, and the deductions and historical earnings, and all of those have to be computed together to determine what we’re actually allowed to claim.”
The development process
Phillips went on to explain that developers at Sage kept the importance of putting the module together at pace in mind, given the current climate, stating that they put in over 1000 hours of development time in order to get it ready.
“I think the big learning for us actually has been that the support to customers is actually really critical,” he said.
“By support, it’s not just the software itself, but also the surrounding assets that could complement that in terms of guidance on webpages, what kind of support they could expect when they call us, because we took an awful lot of calls on the job retention scheme, as well as providing materials to train on and learn how the solution works.
“We’ve worked quite closely with HMRC in terms of understanding what their portal is going to do, how they’re going to collect the claim, but also some of the nuances in the calculations to help customers make sure that they can claim the right amount of support through the scheme.”
Using the module
The new job retention scheme module comes as an add-on to the Sage 50 payroll product, and operates via a seven-step process.
Users begin by entering a desired timeframe for furloughing employees, before choosing which employees in particular they would like to furlough, and whether this would be on a fixed or variable basis.
Then, employers can select which payments they want the module to take into account when making its calculations, such as salary, net payment costs and bonuses, and after this, any deductions they wish to make, such as unpaid leave.
These selected variables allow the module to calculate how much employers can claim and subsequently generate a preview letter to employees.
Lastly, users can file a report to HMRC via their portal, or if a large amount of employees was selected, an Excel file is generated that can be applied to the portal.
“One of the things that became apparent, was there was a lot of complexity in this,” said Phillips, when discussing the module. “There are seven different variables, which you can compute together to determine the amount of payment, and those seven different variables mean that there are potentially 5000 different computational routes you can arrive at to get to the amount you can claim.”
What to know about software development security — why it’s still so hard and how to tackle it
This meant that the company needed to carry out substantial rigorous testing in order to ensure that the module would be as beneficial as possible for employers.
“This was particularly the case for some of the more edge type cases where customer complexity, or ways that they pay their employees, meant that they were getting into some of the more complex types of claims,” said Phillips.
With the furlough scheme in place in the UK until October, following a recent extension, employers in various industries are bound to welcome access to modules such as what is offered by Sage over the next five months.