If Covid19 has meant that you have had to close your business, or lay employees off due to lack of trade, here is our advice on the Government’s Corona Virus Job Retention Scheme
The Government advice is to Furlough your employees , in very simplified terms, this sort of means put the employee on short time. Furlough is an American term and isn’t defined in UK employment law. Martin Lewis has cleverly explained this as like putting your TV on standby, it’s still there ready to work when you need it to, but it’s currently doing nothing.
This does represent a change in their employment contract and therefore it is very important that the worker does agree to this course of action. However, the alternative would be redundancy or statutory guaranteed pay, so it’s unlikely any employees won’t agree as it is in their best interests. You must follow correct employment law procedure here and we would urge you to speak to an employment law specialist or ACAS as this is beyond our skill set.
HMRC need to be informed that the worker has been furloughed through an online portal, although that portal has not yet been set up. The employee must remain employed with you.
The Government will reimburse the employer 80% of the cost of the wages for a furloughed employee, up to a maximum of £2,500 per month. Calculations will be made by reference to February’s pay. It is up to the individual employer whether they chose to pay the worker 100% of their usual pay, the remaining 20% will be at the employer’s own cost.
Currently we have no details as to how HMRC will reimburse this 80% to the employer. We also have no details of how long it will be before the online portal is set up. We believe that for now that it is a case of the employer paying the wages and reclaiming it from HMRC when this portal is live. This is not ideal, as we know it could cause cashflow problems. HMRC are pointing people in the direction of their Covid19 cashflow loans, which you need to contact your bank about.
We will update this page as further information becomes available.
Last updated 12pm, 24 March 2020
The above is our understanding of this policy and how this will work based on the information published so far. It should not be relied on for advice at this stage but is intended to give an indication of how the scheme will work.