The Coronavirus Job Retention Scheme

26 Mar 2020

Just to clarify what this scheme is.

We have been having questions coming through asking whether employers can apply for the scheme if their staff are on reduced pay.

  • The scheme is applied to people who have been designated by the employer as a furloughed employee. What this means is that the employee is still employed but they are not doing any work at all.  Also, the Government guide is that to qualify for such a scheme the employee should not be undertaking work for the employer whilst they are furloughed.
  • The whole point of this scheme is to try and stop businesses from making redundancies or laying off employees on unpaid leave. Therefore, it appears that people who have had their hours reduced and are still working will not be eligible.
  • The scheme is not applicable for self-employed people.
  • The scheme at the moment is not operational, HMRC are working tirelessly to create the online portal so that employers can make their applications to be reimbursed up to 80% of an employee’s salary up to the maximum of £2,500.
  • As an employer you really need to decide whether the business can hold out for this scheme which we understand could be operational at the end of April or beginning of May.
  • Also, we have been speaking to Banks and we understand that when businesses have been speaking about the Coronavirus Business Interruption Loan it hasn’t filtered down to some Banks at the moment. This would have been a mechanism for a business to apply for such loan to ease cash flow issues until the employer could apply under this Job Retention Scheme.
  • There is still a lot of unanswered questions about this scheme for example what happens if a furloughed worker is off ill, surely it will be SSP? What happens about the 20% of the salary, it appears that it is up to an employer to pay the 20%. What happens in the situation where monthly payments are in excess of £2,500? Also, what happens about benefits such as pensions?
  • As an employer please consult immediately with your employees because it is highly unlikely you have an express clause (a layoff clause) in your contract to change an employee’s status to be a furloughed employee. There will also be issues as to who you should furloughed and who you shouldn’t.

We will keep you informed when the online portal is open. This whole area is complex and novel, therefore employers should seek legal advice before acting and we are happy to assist. If we can help please contact Krishna Santra from our Employment Department on krishna.santra@colmancoyle.com.

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