Coronavirus Job Retention Scheme
Posted on 23rd March 2020 at 11:44
William Hughes has been doing some more investigative work on the new 'Coronavirus Job Retention Scheme' for all our clients, and our local business community.
Businesses probably need to break the thought processes down into stages:
➡️ Employees that you can't afford to keep on need to be classified as ‘furloughed workers'. [The Oxford English dictionary defines ‘furloughed’ as “(of a worker) laid off, especially temporarily]. In designating the employees as furloughed workers the employer is laying them off, i.e. sending them home as there is no work, for a period whilst retaining them as employees.
➡️ If you are an employer and intend to use the scheme, you will need to discuss with the relevant employees that they will be reclassified. This change remains subject to employment law and depending on the employment contract, may be subject to negotiation.
➡️ The employee must be kept on the payroll rather than being taken off, but will no longer work for you.
➡️ A HMRC online portal will be set up, which will require further information on employees that have been furloughed – more detail on this will be released shortly.
The advantages of the above scheme is that it allows employees to keep their jobs. They are not being made redundant. Employers that are now under temporary pressure can claim a grant to cover employees’ wages that they will need once the coronavirus crisis passes but are currently unable to provide work for.
➡️ Under the Coronavirus Job Retention Scheme HMRC will reimburse employers 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
➡️ Please note - it is up to employers if they choose to top up the salary so that the employees obtain their full salary during the period they are laid off.
➡️ The scheme has been backdated to 1st March – so any employers already affected can claim back the salary costs of any “furloughed workers” to date, and at present the scheme is to run for three months.
Now the questions I believe that you will all ask:
🔴 When will the first payments be made?
At present HMRC do not have a mechanism for making repayments and are setting up a system for reimbursement, but it is expected the first payment of the grants will be in April.
🔴 What if I need short term cash flow support immediately to pay the payroll this month?
To bridge the immediate gap, the recommendation from government is to consider a Coronavirus Business Interruption Loan. (Opens tomorrow - 23rd March via the banks).
We hope this information is of use, and helps everyone in your local communities. Please get in touch if you need our help and guidance. www.ashmole.co.uk
Share this post: