There has been some confusion over the past week following the Government’s announcement that employees would be entitled to 80% of their wages. Here’s a breakdown of who is entitled and how employers can apply on behalf of their employees.
As the economic effects of the ongoing coronavirus pandemic continue to be felt, the UK government has introduced a number of measures to help businesses both large and small to stay afloat during these most uncertain times.
One such initiative is Coronavirus Job Retention Scheme, designed to help employers if they cannot cover staff costs due to Covid-19.
So how does the Coronavirus Job Retention Scheme work?
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salaries for those employees that would otherwise have been laid off during the crisis. All UK businesses are eligible for the scheme.
To access the scheme you will need to:
- 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
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month and is working urgently to set up a system for reimbursement.
Existing systems are not set up to facilitate payments to employers.
What do employees need to do?
- If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker.
- This would mean that you are kept on your employer’s payroll, rather than being laid off.
- To qualify for this scheme, you should not undertake work for them while you are furloughed.
- This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
- You will remain employed while furloughed.
- Your employer could choose to fund the differences between this payment and your salary, but does not have to.
- If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
How long will the Coronavirus Job Retention Scheme run for?
The intention is for the Coronavirus Job Retention Scheme to run for at least three months from 1 March 2020.
This time frame will be extended if the government deems it necessary.
For more information on the Coronavirus Job Retention Scheme, head to the government’s website.
The Government website also has more information on deferring VAT and Income Tax payments. It also contains information on support for businesses who are paying sick pay to employees.