Coronavirus: Government Help for Employers
In what will come as a relief to many employers, the government has announced that further help will be made available with a Coronavirus Job Retention Scheme being launched.
Under this scheme 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 or made redundant during this crisis. In brief, the scheme will see grants from HM Revenue and Customs to cover 80% of salaries up to £2,500 a month to assist employers.
It is early days yet and we don’t have full details of how the scheme will operate, however the government has said that:
- It will apply to employees who are designated as ‘furloughed workers’. That means they will remain employed but won’t be carrying out any work.
As changing the status of an employee to a furloughed worker will remain subject to existing employment law requirements, this will usually mean that employers and employees will need to agree that an employee is to be ‘furloughed’. In most cases, we would expect that this would be relatively straightforward, as the majority of employees who are faced with the prospect of being made redundant – or if the employer has the correct contractual clause – laid off either with no pay except statutory guarantee pay – are likely to see being ‘furloughed’ as a far more attractive alternative.
- If an employee is ‘furloughed’, the employer can claim a grant from HMRC to reimburse them for 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Government guidance for employees currently says that an employer could choose to fund the differences between this payment and the employee’s salary, but does not have to do so. If an employee is to be furloughed and they will not be receiving 100% of their salary during that time it will be important to ensure that this is covered as part of the furlough agreement with them.
- The scheme is being backdated to 1st March and initially will run for a period of three months. It will cover workers who have already been laid off or dismissed. We are not clear at this time how in practice the scheme will work where an employee has actually already been made redundant.
- HMRC are urgently working to set up a system for reimbursement.
We expect further details of the scheme and draft legislation to be released by the government in due course. We will keep you updated with the latest developments as we know how important such a scheme will be to many employers.
In the meantime, if you are considering ‘furloughing’ employees in your organisation, please contact us to discuss your situation prior to taking any action.
Kingfisher Professional Services Ltd is here to help if you require assistance with any employment law matter.
- 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)
In brief, in retaining employees whom they would otherwise have needed to lay-off or make redundant. The scheme would be backdated to 1 March and all organisations including charities and non-profits would qualify for funds.