Everyone has been placed under huge strain by the current Coronavirus emergency.
In this fast developing situation, the Government announced a number of measures to assist both employers and employees get through the present financial problem.
The Government’s Coronavirus Job Retention Scheme has been announced, the purpose of which is to provide grants to employers to cover the cost of up to 80% of the wages of certain workers, up to a limit of £2,500 per month. The Scheme is being backdated to the 1.3.2020.
Government guidance states that all UK businesses are eligible for the Scheme which is to be administered by HMRC. In order for an employer to take advantage of the Scheme an employer needs to,
1. designate affected employees as ‘furloughed workers’ and notify the employees, and
2. submit information to HMRC about those employees and their earnings through a new, online portal.
A furloughed worker is someone who remains on the payroll but has been designated not to work in the short to medium term. It is crucial to consider those workers’ contracts to ensure that the transition to furloughed worker will not cause any additional contractual problems.
This is a system of reimbursement which requires the employer to first pay the employee their wages before then being reimbursed by HMRC. The reimbursement will not be immediate though as current systems are not set up to facilitate the exchange of information/payment. The online portal is currently under construction so details cannot be submitted yet but we understand that HMRC are working hard to get this in place as a matter of urgency.
A number of uncertainties remain in relation to the Scheme. Whether it can be applied to workers who have already been layed-off as a result of Coronavirus is unclear, whether an employer has to cover any amount in excess of £2,500 is uncertain and how it works for employees who have variable earnings remains to be seen. The lack of clarity is unsurprising given the speed at which this Scheme has had to be put in place and further guidance will undoubtedly be issued in due course.
If you have any queries in relation to the Coronavirus Job Retention Scheme then get in touch with our Rob Synnott on 01736 362 362 or rsynnott@cvc-solicitors.co.uk
