The Coronavirus Job Retention Scheme – Furloughed Workers

March 23, 2020

On Friday 20 March 2020, the Chancellor Rishi Sunak announced significant support for businesses in the UK to deal with the effects of COVID-19.

The most significant from an employment perspective is the Coronavirus Job Retention Scheme. The details of this scheme can be found here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

The scheme will be available for all employees currently paid via PAYE and will be backdated to 1 March 2020. he scheme will be open initially for three months but the period may be extended if needed.

As a business, the guidance states that you will need to:

1. Designate affected employees as ‘furloughed workers,’ and notify your employees of this change. We consider that ‘furloughed workers’ means keeping the employees on the payroll rather than laying them off or making them redundant. Changing the status of employees to ‘furloughed workers’ is subject to existing employment law, therefore, you would need to agree to any changes with your workforce (unless you have set lay off, etc provisions in your contract of employment). The workforce would be likely to agree to any changes if the alternative is redundancy or lay off. If you have more than 20 employees affected by any changes to terms and conditions or proposed redundancies, our team would be happy to speak to you about collective consultation obligations.

2. Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required). HMRC will then reimburse 80 per cent of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC is working urgently to set up a system for reimbursement. Although it is not clear yet, it is likely that the £2, 500 per month will be a net figure to be placed into the hands of employees and include pension etc. However, we will need clarity on this point.

Please note that it will be the employer’s decision on whether to designate employees as ‘furloughed workers’ therefore employees cannot just be given this status without the agreement of the employer.

Further information
For specific advice for your business, please get in touch with our specialist Employment Law team through this website or by calling 0330 404 0778.

For all of our COVID-19 (Coronavirus) advice, please visit https://www.ashtonslegal.co.uk/coronavirus/

Our partners at Ashtons HR Consulting may also be able to assist you.

This information is correct at 10.30am on 23 March 2020.