Coronavirus Job Retention Scheme
The UK government has announced that people should leave home only to exercise once a day, travel to and from work where “absolutely necessary”, shop for essential items and to fulfil any medical or care needs. Any non-essential shops and businesses have been advised to close until further notice.
These restrictions are unprecedented and will present a significant risk to business. In advance of the restrictions, the government announced the Coronavirus Job Retention Scheme; here’s a summary of how this scheme will operate.
All UK employers are eligible to use the scheme.
How to access the scheme
It is important to note that the scheme is not automatic – employers must take the following actions:
• Designate affected employees as ‘furloughed workers’ and notify employees of this change – employees will be unable to carry out ANY duties for the employer throughout the furlough period – furloughed workers are “workforce who remain on payroll but are temporarily not working due to the Coronavirus outbreak”
• Employment law advice may be required as changing the status of employees remains subject to contract and 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 publish information required as soon as possible).
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. This will be a government grant and does not have to be repaid. HMRC are working urgently to create a system for reimbursement as existing systems are not set up to cope with repayments to employers.
The term “furloughed workers” is one most will not have encountered before and there is no provision in employment law around this.
Businesses should obtain consent from staff to designate them as ‘furloughed workers’ to ensure compliance with employment law, it is not as simple as saying you are putting your employees as ‘furloughed workers’ to claim the 80% grant, you must actually follow proper employment law procedure and consult with employees. It is unlikely that employees would object to being designated as ‘furloughed workers’ if the intention is to protect their jobs and earnings.
However, I must reiterate that ‘furloughed workers’ should not carry out any duties for the employer whatsoever, otherwise the grant will not be available.
The employer may fund the difference between the payment (capped at £2,500 per month) and the actual salary, but does not have to. The scheme will run from 1 March 2020 for a period of 3 months, but the government will extend it, if necessary.
The HMRC portal may not be available until April 2020, but HMRC has agreed that claims will be backdated to 1 March 2020, provided that proper procedure has been followed to designate employees as ‘furloughed workers’.
We will provide further advice once detailed guidance has been published by the UK government, in the meantime if you have any questions email firstname.lastname@example.org