COVID-19 - Job Retention Scheme

For a FREE FURLOUGH LEAVE AGREEMENT, please see below.

Coronavirus Job Retention Scheme

At present, only an outline of the scheme is available and many questions remain unanswered. The government has stated that HMRC will set out further details of the information required over the coming weeks. We are monitoring the position closely and will update our advice as soon as possible as further information becomes available.

What is the scheme?

The scheme will start in April 2020 and be backdated to 1 March 2020, to enable organisations to re-employ individuals who have already been laid off and for those workers to recoup lost income

Under the scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis.

It applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’.

HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant. HMRC are working urgently to set up a system for reimbursement (the government webpage notes that existing systems are not set up to facilitate payments to employers)

The scheme will cover the cost of wages backdated to 1^st March 2020 and is initially open for 3 months, but will be extended if necessary.

How do I access it?

You will need to:

1. 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.
2. Once the new online portal is live, submit information to HMRC about the employees that have been furloughed and their earnings (HMRC will set out further details on the information required)

When can I access it?

HMRC are working urgently to set up a system for reimbursement. The first grants are expected to be paid within weeks, and the government has said that it is aiming to get it done before the end of April.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Details still to be confirmed

Aspects of the scheme which are currently not clear include:

• whether the scheme will apply only to those with the status of employee or whether it will also extend to workers
• how agency workers will be affected
• how those working under zero hours arrangements will be affected
• what costs will be reimbursed, and whether gross or net costs are covered: the details available so far refer to the employer claiming ‘a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month’, per employee
• use of the term ‘grant’ in some of the published details of the CJRS could indicate that employers may ultimately be required to repay sums reimbursed under the scheme
• whether the employee can do any work for the employer: the COVID-19: guidance for employees states ‘To qualify for this scheme, you should not undertake work for [your employer] while you are furloughed’, which indicates that undertaking any work for the employer would disqualify a worker from the scheme
• whether the employer will be required to follow a specified process: the guidance states that ‘changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation’
• how the reimbursement scheme will work: use of the term ‘reimbursement’ indicates that the employer must make the payments first: employers may therefore still encounter cash-flow difficulties while they await reimbursement
• where a business is not closing altogether, but work has diminished, so that the employer needs to furlough some workers and keep others working (possibly on reduced hours and pay), how employers will select which workers are furloughed and which are not; it may be that a selection process akin to redundancy will need to be followed
• whether the provisions regarding collective consultation will be relaxed, or whether those placing 20 or more employees on furlough will have to collectively consult and notify the Secretary of State.

If you have any further questions or concerns, please feel free to contact Amanda an email on ajj@bjcs.co.uk.