Recording furlough leave and statutory sick leave in Xero Payroll

In response to the UK government’s Coronavirus Job Retention Scheme, we’ve been working hard to respond to a rapid pace of change. With new and frequent updates from government, our focus has been on working quickly to find the best solutions to help you and your business navigate through this challenging time.  

We were pleased last week to be able to launch new functionality enabling businesses to record furlough leave for eligible employees in Xero Payroll. We’ve also added COVID-19 self isolation as a sick leave option for employees who are required to self-isolate, so they can earn sick pay from day one instead of the usual four consecutive days.

Furlough leave in Xero

Furlough leave is now available through Time Off, giving businesses a simple and accurate way to comply with the Job Retention Scheme. HMRC will provide a grant to cover 80% of furlough employee pay, up to £2,500 per month.

The scheme also covers associated furlough costs for the employer’s national insurance and minimum pension contributions. Furlough employees won’t be able to work, but they’re free to do training, volunteer for frontline services or support those in need during COVID-19.

To manage furlough leave in Xero Payroll, we’ve added the following features: 

  • the ability to support 80% of an employees’ regular earnings, further calculating and storing the employer claim values for national insurance and minimum pension contributions
  • flexibility to record furlough periods as and when they occur
  • the opportunity for payroll managers to top up an employee’s wage without including it in the claim value.

See our FAQs on processing furlough leave in Xero Payroll

Updates for furlough leave coming soon

The information prepared within the pay run to determine the scheme claim value will be stored in readiness for the scheme claim report.

While this feature is not yet available, Xero’s product team is working hard to have this live by the end of April.

See how to record furlough leave in Xero Payroll

To learn more about how to record furlough leave in Xero Payroll, see below to catch up on the recording of our demo last week with Xero Payroll specialist Jane Mitchell.

Or check in on our Xero Central guidance on how to record furlough leave step by step. 

Statutory sick leave now available

We’ve also added COVID-19 self isolation as a sick leave option for employees who are required to self-isolate, so they can earn sick pay from day one instead of the usual four consecutive days.

HMRC is currently working on a process to help small and medium-sized businesses reclaim two weeks of self-isolation sick pay – once this is ready, we’ll help you capture these records and support the reclaim process.

See our guidance in Xero Central to learn more about setting up statutory sick leave.

Learn more about Xero Payroll

If you don’t yet use Xero Payroll, you can learn more about it on our website and get three months free for up to five employees as part of your Xero Business Edition subscription. 

Or join our webinar to learn about the key features of Xero Payroll and answer any questions you might have. 


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