23rd March 2020
The past 7 days have brought about a seismic shift in the lives of both employers and employees, with businesses brought to the wall and employees left fearing for their jobs. We are already witnessing people being made redundant as entire industries such as leisure and hospitality find themselves closed overnight.
Government measures announced on Friday may have brought some comfort, with an unprecedented support package being announced by the Chancellor.
The government’s Coronavirus Job Retention Scheme is aimed at keeping employees “on the books” whilst the crisis unfolds. The package is designed to offer support to businesses unable to trade and people unable to work as a result in the hope that businesses will be ready to pick up where they left off once social distancing measures are relaxed, giving the economy a boost as quickly as possible. At current this plan stipulates that HMRC will reimburse 80% of wage costs up to a cap of £2,500 per month.
The government’s guidance is presently rather vague and further detail is awaited, how these measures be. This guidance is therefore subject to change and we will be updating it regularly as we find out more.
What we know so far:
- HMRC will reimburse up to 80% of wage costs up to £2,500 per month.
- All businesses are eligible regardless of status.
- “Furloughed workers” (i.e. those who may receive 80% of their wages whilst not working) are those who, if not for the support package, would have been laid off.
- The scheme is backdated to 1 March 2020, so those who have been laid off in the past few weeks may still benefit.
What remains unclear:
- How long it will take for the system to get up and running. HMRC are working around the clock to set up a portal through which claims can be made, this is not yet operational.
- Whether employers will be required to top up the remaining 20% of wages (the employee guidance on HMRC suggests not whilst the employer guidance is currently silent on this point)
- Whether the maximum wage can be £2,500, of which the government will pay 80%, or whether £2,500 is the maximum figure the government will pay.
Factors to consider:
- Employers will need to identify those affected (or “furloughed” employees).
- Depending on the terms of the employment contract, it is likely that the employee’s agreement to being furloughed will be required as a first step.
- In the event that employers are not required to top up the remaining 20% and they choose not to do so, agreement of the employee will need to be sought.
The scheme is subject to existing employment law and existing contractual terms. To discuss further please contact Employment Lawyer Natalie Abbott on 03456 465 465
Up to date guidance regarding the support on offer can be found at www.gov.uk/coronavirus or by using the following links:
Gov.uk guide on support for businesses: Guidance to employers and businesses about COVID 19
Gov.uk guide on support for employees: Guidance to employers and businesses about COVID 19
