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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