On Friday 20th March the Government announced the COVID-19 Job Retention Scheme. The objective is to prevent businesses from having to lay-off the staff. The employees who would otherwise have been laid-off, are termed as “furloughed” staff.
HMRC will reimburse 80% of furloughed workers’ wage costs, up to a cap of £2,500 per month, per worker. The current guidance for employees states: “you will remain employed while furloughed. Your employer could choose to fund the difference between this payment and your salary, but does not have to. The current plan is that this will be in place for three months, at which point it will be reviewed. This will be backdated to 1 March 2020.
HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
Businesses will need to:
- designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
- 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)
Whilst the employee is a “furloughed worker” they are not to undertake work for the business. We have reached out to one of our trusted advisors, Charlotte Dean of HR consultancy, P3 People Management, who can advise our clients on the HR elements of how businesses can deal with COVID-19. Find out more here.
The expectation is the first payments will be made before the end of April. If your business requires short term cashflow support, you may be eligible for the Coronavirus Business Interruption Loan. See more here.