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COVID-19 Job Retention Scheme

23.03.2020 Employment

Laura Livingstone

Laura Livingstone Partner, Head of Employment

On 20 March 2020 the UK Chancellor announced the launch of the Coronavirus Job Retention Scheme. Under the scheme, all UK businesses regardless of size or sector will be able to access support to continue paying part of their employees’ salary for employees that would otherwise have been laid off during this crisis. The details of the scheme are still forthcoming and will be more apparent in the near future.

Can we use the Coronavirus Job Retention Scheme?

Almost certainly yes.  The scheme is expressly stated to benefit employees “who would otherwise have been laid off”.  In employment law terms, a lay off is a temporary suspension of all work.  The scheme describes recipients of this benefit as ‘furloughed workers’.  Furlough is a word, hitherto largely fallen into disuse in the UK, but still commonly used in the United States, that means leave of absence

Details are still being worked out at the time of writing, but under the outlines of the scheme, HMRC will reimburse 80% of furloughed workers (employees who would otherwise have been laid off)  wage costs, up to a cap of £2,500 per month, which it appears will mean them up to £2,500 of each furloughed worker’s wages. 

In summary employers will need to:

  • Identify and designate certain employees as potential ‘furloughed workers – i.e. workers who would otherwise have been asked to take some form of unpaid leave of absence;
  • Employers will then need to notify those employees of the proposed change in their status to furloughed workers.   The Government has specifically said that this scheme is subject to normal employment law rules – changing the status of employees is a matter of negotiation and agreement.  In the first instance the best way of achieving this is through consent – emailing employees and ask for their consent as an alternative to lay off, unpaid leave or even redundancy. Employers also need to be mindful of discrimination law if they are choosing within teams.
  • The detail has yet to emerge but employers will have to submit information to HMRC about the furloughed employees and what they are paid online through a portal that will be established at the Gov.uk portal.  We would imagine this portal will be rolled out in the next few days - this is a complex task.

Furloughed employees will not be able to do work for employers Detail is yet to arrive but we consider it likely that there will be penalties for employers who take advantage of the scheme and do not lay off/furlough employees by asking them to continue to perform work.  

What other government support is available? 

Government guidance also provides details of support available to businesses including, an employer should be aware of potential support systems including:

  • statutory sick pay relief package for SMEs
  • a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance

To find out more, read this article on government aid and directors’ duties.

Article authors:

Laura Livingstone