On Friday evening, the government announced an unprecedented package of support for UK businesses in the form of the new Coronavirus Job Retention Scheme. While there is currently limited information in relation to the scheme, we are able to provide the following outline of the scheme.
- This scheme will provide government grants for up to 80% of employees’ salaries with a limit of £2,500 per month where the employee is not working. While further details are awaited, we do not believe that the scheme covers employees with reduced hours of work. Employers can top this up, although are not obligated to do so.
- The payments will be made by the government to employers, not directly to employees.
- The scheme is backdated to 1 March 2020 and will be open for at least three months.
- All UK businesses are eligible (regardless of size).
- To access the scheme employers will need to designate employees as “furloughed workers” and notify their employees of this change. This change will be subject to existing employment law, which will therefore involve employee consultation and/or agreement, even if this is done remotely given the circumstances of office closures having become common. Given it may be a choice of being furloughed or being dismissed on grounds of redundancy, the vast majority of employees are likely to agree;
- Employers will then need to submit information to HMRC about the employees that have been furloughed through a new online portal, which is in the process of being set up.
- We still await details of how the reimbursement will be made to employers as the current PAYE/NIC system is not set up to facilitate payments to employers. The government expects the first grants to be paid “within weeks”.
We anticipate that the scheme will be most useful when offices have to close completely bearing in mind certain staff (e.g. reception) won’t be able to work at all. However, it is likely that even if businesses have a large number of staff who are able to work remotely, there might well be some employees who are unable to work because of their physical presence being required. The scheme is therefore likely to offer considerable support to such employees (and their employers), who might otherwise have been subject to unpaid layoff periods or redundancies. We remain hopeful that these measures will help to limit the number of redundancies required to a bare minimum by allowing businesses to retain employees to whom they are temporarily unable to provide work.
Further details of the scheme can be accessed via the government web page.
We would also remind you that a number of other measures have previously been announced to support businesses, which include the following:
- A new Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will enable businesses to apply for a loan of up to £5 million, with the government covering up to 80% of any losses with no fees. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
- For businesses with fewer than 250 employees, the cost of providing 14 days of Statutory Sick Pay per employee will be refunded by the government in full. The size of an employer will be determined by the number of people they employed as of 28 February 2020. This will provide 2 million businesses with up to £2 billion to cover the costs of large-scale sick leave. This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19, with the government allowing employers to reclaim expenditure for any employee who has claimed SSP for this reason.
This is an unfolding situation, and we will provide updated and more detailed information on our website as soon as it becomes available.
If you need any additional information on the new measures or help in managing staff through the coronavirus crisis, please contact us by emailing firstname.lastname@example.org.