On the face of it, the government announced a large amount of financial support in the form of the Corona Virus Job Retention Scheme. The scheme aims to ensure that redundancy is not the default option for employers subject to downturn in the current climate. The slight challenge with this, is that the information released to date is somewhat limited.
Under the scheme, the HMRC will reimburse 80% of furloughed workers wage costs up to £2,500 per month. HMRC are currently working to set up a system for employers to be able to make a claim under the scheme.
The scheme will be eligible to all UK Businesses and in order to access the scheme you 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)
The scheme can be backdated and employers are urged by the Government to take back anyone they had already dismissed and convert them to this leave instead. Likewise with anyone who is on unpaid leave.
How to access the scheme?
Any employees that are to be incorporated within the scheme, must be designated within the payroll. HR / Legal advice may need to be obtained as such treatment is unlikely to have been envisaged within employment contracts.
You will need to notify the employees that they are being designated as ‘furloughed workers’. They will need to be sent home from work as there is no work for them to do. It is recommended that such notification is given in writing.
Notification will then need to subsequently be made to HMRC. Currently the portal for doing so has not been launched and is being developed by HMRC. It is hoped that the scheme will start paying employers by the end of April.
What other considerations are there?
• Employees that are furloughed will remain on your payroll and will continue to accrue holiday and length of service.
• The detail provided to date does not appear to allow for a reduction in hours of staff. It appears that this is an all or nothing claim. It may however be possible to treat each member of staff on a day-by-day basis if this can be justified.
• If some staff are treated as furloughed workers, there may be resentment in other staff who are still working.
Further updates will be provided as more detail follows.