Job Retention Scheme – Coronavirus

During his announcement on Friday 20th March, the chancellor introduced the Coronavirus Job Retention Scheme – a further measure intended to help employers and their employees deal with the financial implications of the Coronavirus outbreak.

The aim of this scheme is to protect the jobs of employees that would otherwise be made redundant as a result of the ongoing situation with Coronavirus. Where businesses would struggle to pay staff wages during a period of possible reduced income, the government is offering a lifeline – they have pledged to pay 80% of staff wages up to a maximum of £2,500 per month.

This is available to any business in the UK, who faces/will face having to let staff go due to the Coronavirus outbreak. All employers will be eligible, whether they are a limited company, a partnership, or self-employed.

To help with any difficulties in paying wages that may have arisen prior to the chancellor’s announcement, the scheme will be backdated to 1st March 2020.

Retaining staff under the job retention scheme

If you, as a business, are contractually entitled to make an employee redundant, you will have the right to make the employee a ‘furloughed worker’. Where you are not entitled to do so, you will need to seek the permission of the employee before designating them as a ‘furloughed worker’.

The individual will still be classed as an employee, with the key distinction being that they are not undertaking any work on behalf of the business. The scheme is initially set to run for three months, but the chancellor has made it clear that he is prepared to extend this should it be necessary.

This scheme provides employers with assistance in retaining their valued staff, but also allows employees to keep their jobs and receive up to 80% of their earnings while they are not working.

We envisage that employees will welcome this measure, as it provides them with the security of knowing they still have a source of income (even if it is a reduced amount) – and the alternative of being made redundant during a period of instability in the job-market is not an ideal prospect.

Action for employers to take

If you are opting to designate employees as ‘furloughed workers’, you will be required to submit this information to HMRC via their portal. The portal is currently in the process of being set-up, and further instruction will be available once the scheme goes live.

Once they have processed your submission, HMRC will then reimburse 80% of the employee’s earnings up to a maximum of £2,500 directly to you, as the employer.

While you are under no obligation to do so, you can also ‘top up’ the remainder of your employee’s wages so that they receive their full pay.

Key Points

  • This job retention scheme is designed to help only those businesses whose employees would otherwise be made redundant/laid off. It is not for employees who need, or want, to take leave – the government has introduced other measures to assist with this (the reimbursement of SSP, adjustments to Universal Credit.)

Further information will be posted once it becomes available, however please do not hesitate to get in touch.