The Coronavirus Job Retention Scheme – What you need to know about ‘furlough’

24 March 2020 - Reading time: 4 Minutes

Health

The government has announced new measures to stop the spread of Coronavirus in the UK, by temporarily putting residents into ‘lockdown’. The measures state that people will only be allowed to leave home for basic shopping necessities, once a day exercise, medical need and necessary work travel. Following the closure of pubs, gyms, bars and restaurants, most non-essential shops have also closed, causing many UK businesses to come to a halt.

The government has stepped in to support UK businesses, charities and not-for-profit organisations who are struggling to pay their employees during this period of uncertainty. Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

The scheme states that businesses will be reimbursed by HMRC 80% of ‘furloughed’ workers wage costs, up to a cap of £2,500 per month. The scheme will run for three months as of 1st March, however it could be extended due to the rapidly changing situation.

How do you access the scheme?

Step 1: Employers must designate affected employees as ‘furloughed workers’ and notify their employees of this change immediately, rather than advising them to claim sick pay. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

Step 2: Employers must 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 are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers. We will provide more detail on this as soon as we can.

Step 3: Employers are advised to pay staff wages as usual, businesses will be reimbursed from around the 21st April through a grant which is to be used to cover the wages cost. Business that are struggling with cash flow, may be eligible for a Coronavirus Business Interruption Loan.

If you have any more questions about the Coronavirus Job Retention scheme, then our Statutory Sick Pay webinar which is available on-demand might answer them. Our payroll expert, Simon Parsons, answered questions from the webinar audience around COVID-19 sick pay, furlough and more.

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