JOB RETENTION SCHEME
On 20th March Rishi Sunak announced a major job retention scheme aimed at stopping redundancies due to the Coronavirus crisis. Full details have not been released but the government promised that 80% of wages would be subsidised by grant for employees who have been furloughed due to the crisis. (Capped at £2,500 per month) per employee.
The very basic guidance is here https://www.gov.uk/government/...
This is available to all sectors operating PAYE not just the leisure/retail/hospitality sector that has been so badly affected.
- Employer’s immediate action plan re job retention:
- Plan the next few month’s likely workload and employee time requirements
- Consider which key staff will be required when the business is back to normal, consider if you would offer to top up furlough pay
- Check employment contracts for a clause re lay-off, reduced hours, change of status
- Get advice on the contract if needed, negotiate and notify employees of any furlough
- Secure short term cashflow until the funding is received (likely mid/late April)
- Notify HMRC and claim the grant
While we await further details here is a Q&A based on what we know, we cannot advise on employment law so specific advice should be taken on this and we can refer you to WBW Solicitors who we work with.
What is “furloughed”?
This is another term for lay-off, basically it means a temporary period in which the employee is not working or carrying out any duties but is still kept on payroll.
How much is the subsidy?
Up to 80% of salary can be claimed back, up to £2,500 per employee. There are no details as yet regarding if this is including employer NI, whether tax and NI will apply as usual or whether employer pension contributions will be applicable to the salary. The employer would continue to run payroll and reclaim the subsidy later.
Can the employer top up, must they top up to 100%?
Employers are not obliged by the government to top up but they may wish to.
Can I just make someone furloughed?
Check employee contracts, if there is no provision for a furlough period/change of status you will need to consult with employees, it is expected most employees would opt for furlough rather than redundancy. We cannot offer advice on contracts so speak to a specialist if required, we can refer you.
Generally there will be no provision for sending an employee home on less pay so care must be taken so there is no unlawful deduction of wages/breach of contract/unfair dismissal.
Where the contract is silent/does not provide for furlough you may be advised to consult employees and issue a letter to employees giving their options of redundancy/unpaid leave/furlough at 80%. Redundancy pay and notice periods may apply if redundancy route is chosen, speak to us for a calculation. If employer cannot pay statutory redundancy the employee may have recourse to make a claim form the government.
How can the employer make a claim?
The claims cannot be made through the existing systems so the employer will notify employees and record them as “furloughed” and report through a new HMRC portal, Marsland Nash expects to be able to support employers in doing this, no details as yet.
I’ve already put my employee on short time, can I claim?
Employees must NOT be carrying out work, it may be better to have half the employees furloughed and qualifying for support, rather than all the employees on half time
When does it apply from?
The government indicated the support would be available from 1 March backdated, if redundancy decisions have already been made they could potentially be reversed in view of the scheme, confirmation awaited.