Businesses can apply for a grant of up to £2,500 a month
The Government has announced the scheme to protect jobs during the Covid-19 outbreak.
Businesses can apply for a grant of up to £2,500 a month per employee to cover 80% of salary for those retained but not working.
This scheme aims to protect staff and is an alternative to layoff.
The scheme will be available for at least three months and that there is unlimited funding available through the scheme.
The first grants will be paid within a matter of weeks and will be backdated to 1 March 2020.
To access this, employers must designate affected employees as ‘furloughed workers’ and notify your employees of this change.
How do I do this?
Speak to any affected employee.
You are changing their employment status so you can’t just enforce.
But, this is a similar communication to imposing lay off without a contractual right.
Explain to your employee that you want to do this to safeguard their job and that if they don’t agree to this change of status then you will have to look at redundancy.
On this basis, employees are very likely to agree as 80% of salary is better than not having a job.
What do I do once agreed?
Employers must submit the information on furloughed employees to HMRC through a new online portal.
This isn’t operational as yet but should be soon.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month per employee.
HMRC are working urgently to set up a system for reimbursement.
Q & A
It’s not yet clear whether the £2,500 cap is the maximum wage and you can get 80% of that, or whether the maximum of 80% is £2,500.
Employees can’t work whilst furloughed.
This raises questions about how to fairly implement this.
For example, you have 5 staff and need just 1.
You want to furlough 4 and retain 1.
The 4 get to sit at home and receive 80% of their wages but the 1 has to attend work full time for 20% more salary!
Employers can voluntarily choose to fund the additional 20% of wage costs (or any additional top up over and above the £2,500 cap), but don’t have to.
It is worth noting that an employee can’t say that they are furloughed.
The employer determines who is affected and seeks the employee’s agreement.
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A working director is still an employee so can they be designated a furloughed worker. If there are only two working directors in a company can they both be designated furloughed workers.
Thanks for your question Roger.
Unfortunately, specifics are not 100% clear at the moment but this will depend on whether the business continues in some operation.
If it does, then both are unlikely to be able to furlough because one of them will need to undertake functions for the business.
You can only be furloughed if there is no work being carried out by the individual.
Hope this helps.
What about café staff that are under the NI threshold and appears that they will not qualify for the 80% pay, should they be laid off instead of being changed to furloughed. What is the option for these low income workers that are often in the 18 – 21 year age group that would not qualify Universal Credit.
Hi Barb
Thanks for your question.
We have not seen any information as yet that states you need to meet the lower earnings limit to be eligible for the job retention scheme.
Yes, this is the case for SSP but there remain a number of unanswered questions on the furloughed scheme which we are hoping for further clarification this week.
could you advise the 80% of the staff wages would this be paid to the company or the employee direct
Hi Jill
Thanks for your question.
The wages are paid to the employee by their employer and the employer reclaims this from the Government.
Hope this helps.
Hi, I resigned from my current employer in early March as had a new job. The Offer Letter and Contract of Employment are both jointly signed and dated by myself and my new employer. However, with the recent events, my new employer will now not confirm a start date a start date. My ex-employer will not retain me, I have no income and I can not start at my new employer. Would the Coronavirus Job Protection scheme cover a new employee who had not start at the company by had a signed contract and offer letter before the scheme was announced???
Hi David
Thanks for your question.
Unfortunately, we still do not know whether there is a length of service eligibility requirement for the job protection scheme.
I would speak with your new employer to ask them to put you on this scheme from your original start date providing that they are permitted to do this.
The Government have not yet published details on the mechanics of the scheme so we remain unclear.
Hope this helps.
Can employees be furloughed, brought back to work and then furloughed again dependent on the work loaf for a business?
Hi David
Thanks for your question.
You can do a 3-week cycle. The guidance has now been published on Gov.uk.
Read more here > Guidance for employers on the coronavirus (COVID-19) Job Retention Scheme.
Hope this helps.
Do staff who are furloughed still accrue holiday during this period of not working?
Hi Graham
Thanks for your question.
At the moment there is no definitive guidance however we suspect that because you are pausing the employment that holidays should not accrue.
Hope this helps.
Can my employer make me redundant while on the government job retention scheme?
Thanks for your question.
Yes, technically they could – but the scheme is in place as a means to safeguard jobs and mitigate redundancies so there would need to be very specific circumstances that result in a redundancy at this time.