On Friday 20 March 2020, the Chancellor announced a new “Coronavirus Job Retention Scheme” to help pay people’s wages. Employers are able to access a Government grant, via HMRC, to reimburse them for specific employment costs for eligible employees and workers where they are unable to maintain their workforce because its operations have been severely affected by COVID-19.
Originally, the Scheme was only open to employees who were on the Employer’s payroll on or before 28 February 2020. Many people who had recently moved jobs fell outside the protection of the Scheme. The Treasury announced yesterday the Scheme is being extended to people who were employed on 19 March 2020, provided the employer had submitted real time information payroll data by that date.
To preserve jobs, employers can furlough employees (a type of paid leave) and apply for the grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrollment employer pension contribution).
The Coronavirus Job Retention Scheme will be an important lifeline for many businesses. Employers will need to think carefully before implementing the Scheme, as it is subject to existing employment laws. Many employers will need to seek the agreement of employees and workers to be placed on furlough. Each employer will need to take detailed financial and legal advice in the light of its unique circumstances.
This note is a generic briefing and is not a substitute for detailed legal advice on the specific circumstances employers are facing. Employers should therefore take legal advice.