In the midst of a period of uncertainty for all sectors across the U.K, it was a welcome change for us all to hear the Chancellor’s announcement on Friday 20 March that the Government will cover up to 80% of employee costs if your business has no work for them.
This is an incredible and unprecedented lifeline for employers but there are obviously some conditions attached to this which we try to iron out below. This is a new scheme and new information for us all, so we will update this blog as and when further information becomes available.
Coronavirus Job Retention Scheme
This is an entirely new scheme launching today 23 March 2020, which will be administered and operated by HMRC. Because it is a new scheme, there will be teething problems as HMRC is not set up to make payments to employers, so we would advise employers should check HMRC guidance and sign up for the portal as soon as possible.
All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. At present the scheme is open to all UK businesses
To access the funds, employers must:
- Identify affected employees – establish those employees who have no work to undertake as a direct consequence of coronavirus
- Change status of employees – employees will need to be changed to ‘furloughed workers’ – this can only happen with the agreement of your employees and will result in a change to existing terms and conditions of employment. It is unlikely that an employee will not agree to this change on the basis that the alternative could mean that they receive no pay or are made redundant
- Let HMRC know – you will require to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required which is why you need to ensure that you are keeping a close watch on when this portal is up and running)
Once you have done that, then HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
Whether or not the employer has to “top up” the payment to make sure the employee receives 100% of their salary remains to be seen. However, on the basis that an employee’s salary and terms and conditions will be amended to change them to furlough workers, it is unlikely they would dispute that they should be receiving an additional 20%.
The Government has announced that this scheme will be in place for 3 months but will extend it further if required.