The government announced on Friday its Coronavirus Job Retention Scheme, to help safeguard employment in businesses affected by the Pandemic. Full details are not yet available. We have asked a local employment expert to provide initial comments and would urge businesses seeking the assistance of the CJRS to utilise their advisers to ensure as far as possible its effectiveness. If you do not have a specialist adviser we can refer you to independent sources.
“The Scheme is unprecedented and supports up to 80% of worker wage (subject to a cap of £2,500/month) who would otherwise have been laid off. It appears that employers will only be able to claim this for employees who have ceased to work either partly or completely.
The scheme is open to all employers for at least 3 months and payments will be backdated to 1 March.
It covers all workers who are paid via PAYE and systems are being built from scratch to release grants to employers. The first payments are promised in weeks, with the system fully operational by the end of April.
In order 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 shortly).
“The Scheme offers unprecedented support to employers to meet their wage bills. However, businesses will need further details before they can establish whether it is suitable for them. Whilst it has been clarified that the employer is not obliged to top up the government payment, it is not clear if the 80% contribution will cover employer NI or pension contributions. If the employer still has to bear these costs then it will not be a viable option for those who are seriously financially distressed.
Employers may also need to be slightly cautious as the announcement was clear that this will not override employment law protections. Many employees will be happy with 80% of their pay especially in the current times, but more highly paid employees who do not have a lay-off clause in their contract could still present a challenge”.
We are hoping that full details will be published on Monday or Tuesday as time is now of the essence for many employers.
For those employers for whom the scheme isn’t sufficient to prevent job losses we would remind you that the Insolvency Service’s redundancy Payments Scheme operates the Financial Difficulty Scheme. This was set up to provide assistance to employers in making statutory redundancy payments while at the same time avoiding additional job losses if the employer became insolvent. More details about making staff redundant can be found here: https://www.gov.uk/staff-redundant/redundancy-pay.
The above should be utilised in conjunction with the other measures of support announced by the government, and we would urge again that a short term business plan is prepared, if necessary with the assistance of your current advisers.
If you require any further information please don’t hesitate to call one of us on the numbers below;
Paul Ellison 07967 471211 / firstname.lastname@example.org
Robert Keyes 07500 933 022 / email@example.com
Gareth Roberts 07979 706 392 / firstname.lastname@example.org
David Taylor 07855 231 103 / email@example.com