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The Coronavirus Job Retention Scheme
- AuthorIan Barnard
Every business we speak to at the moment is seeking ways to mitigate the disruption caused by the Coronavirus pandemic. Of particular importance to our clients is protecting their workforce, and trying to avoid the need for lay-offs, wage reductions, and redundancies. We have listed below the questions which we have most frequently been asked this week.
What is the Government doing to support businesses?
On 20 March 2020, the Government announced a range of unprecedented fiscal relief measures, including the Coronavirus Job Retention Scheme. We believe that further measures will continue to be announced.
What is the Coronavirus Job Retention Scheme?
The Scheme essentially gives eligible employers access to grants which will cover a large proportion of their employees’ salaries. In order to be eligible for reimbursement under the Scheme, an employee needs to have been “furloughed”.
Furlough is a new concept in general employment terms. A furloughed employee is one who has been placed on a leave of absence and is not carrying out any employment duties.
The Government is initially keeping the Scheme open for three months (backdated to 1 March 2020), but will consider extending it if necessary.
Is my business an eligible employer?
The Scheme is open to all UK businesses. At the time of writing, we understand that employees will be covered, but that the Scheme will not extend to other workers or the self-employed. The position changes on a regular basis, however, and we can advise further as the situation develops. If you are unsure whether the people you engage to work for you are employees or workers, please contact us for further advice.
There is no limit on the number of employees in respect of which businesses can claim under the Scheme.
What will the employees receive?
The Scheme will allow furloughed employees to receive 80% of their wage costs, up to a maximum of £2,500 per month. As things currently stand, we understand that wage costs will include employees’ salaries, pension contributions, and employer National Insurance Contributions.
What do I need to do?
Firstly, businesses will need to establish which of their employees are going to be furloughed. As furlough is a new concept, employers will want to reassure their employees that the decision to furlough them is in order to protect the workforce and, as far as possible, to avoid the need for lay-offs, salary reductions, or indeed redundancies at a later date. Of course, nothing is certain at the moment and employers will want to adopt a cautious stance in offering sweeping reassurances.
Employees who are going to be furloughed should then be contacted individually by telephone (if possible), and our advice would be to follow up any such conversation with confirmation in writing, and a request for written acknowledgement of the change in employment status.
Employers will be able to make an application under the Scheme through a Government online portal. At the time of writing, the portal has not yet been established, but we can advise further and assist you through this process in due course.
Please feel free to call any of the solicitors in our Company and Commercial Team, Employment Team, or our specialist Agricultural Law department at Crombie Wilkinson if you need assistance at this challenging time.