Support for businesses through the Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
Eligibility
All UK businesses are eligible.
How to access the scheme
You will need to:
- designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
- 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 reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
Hi,
As I understand it the the company furlough its employees and pays them 80% of their present wage and is then reimbursed by HMRC, is this correct?
Additionally the company will have to pay its share of NI?
Thank you,
That is how I currently understand it to be, the support is in the form of a grant and therefore cashflow will be required to make the salary payment. That will be part of the reasoning behind the VAT deferral to allow the true support mechanisms to kick in.
I was expecting an NI holiday that would have benefited self employed, employed and employers but perhaps that will come later if things drag on
Good evening
As the owner of an SME, I am keen to understand further detail of how yesterday’s announcement by the Chancellor could work for a business experiencing a short-term downturn in sales due to the Covid-19 situation and with a number of staff carrying out the same role.
For example, we may temporarily need less staff across various departments due to several projects for clients, particularly in the travel and hospitality sectors being delayed or cancelled. Instead of ‘laying off’ staff, we could keep them on and claim 80% of their wages/salaries up to £2500pm. How do we decide who doesn’t work but still gets paid? Or could we outline a number of roles then job share, which for us would be more practical.
If not, we would potentially be faced with a decision on who to send home for a 12 week summer holiday and who to keep working. I maybe misunderstanding something but I have spent a long time trying to find out the details and practicalities but unable to find the answers yet. Either way, this support has to be good news as it will, no doubt, help some of our customers stay afloat which will also in turn help our business.
Many thanks
Kind regards
Andy
Andy
I totally agree that this is good news. Business owners need to take long term decisions in this regard rather than knee jerk reactions. The cost of recruiting again, re-training etc may well outweigh the cost of the Furlough period. That will of course depend on how long and how drastic the drop in sales.
As you can imagine we are all waiting for the detail but I would expect the rules to be reasonably flexible to accommodate all businesses that are struggling. I do not think you have to Furlough a worker for the whole of the period. The idea of mixing and matching staff over the working period is certainly something that we will be investigating as a way to occupy staff, keep them motivated and of course reduce the cost. The decision of who and when is entirely in the control of the business and i would expect the funding to be reasonably easy to apply for however how this is policed to avoid abuse is a sensitive point
Flexibility will be the key I am sure and as soon as we have further information we shall release more information on our website and through email
Hi , I would like to know if an employer furloughs some of its staff (not all of them) is that eligible for reclaiming 80% of the wages paid to those staff effectively laid off ‘furloughs’ ?
Also , as an alternative to furlough to some but not all staff (as some staff may prefer 80% of wages to stay off work as opposed to having to work all week for 100% wage) could the employer make all staff (let’s say in a factory) to only work 2 days per week and furlough the other 3 days per week at 80% of wage for the 3 days per week at home and 100% of wage for the 2 days per week worked in the factory ? Would the employer pay the factory staff a combined sum of full rate for 2 days and 80% rate for 3 days per week and then the employer could reclaim the 80% for 3 days per week as furlough payments ??
Hi Mike
As you can imagine there will be a lot more information in the detail but I would expect the rules to be reasonably flexible to accommodate all businesses that are struggling. I do not think you have to Furlough a worker for the whole of the period. The idea of mixing and matching staff over the working week is certainly something that we will be investigating as a way to occupy staff, keep them motivated and of course reduce the cost.
It is important to understand that the staff working at home will not be paid 80% of their salary, they will need to continue to be paid 100% with 80% of the cost funded by the government. I suspect there will still be employers NI on the 100% value. The business therefore is still funding a costs of 33.8% of the salary.
Flexibility will be the key I am sure and as soon as we have further information we shall release more information on our website and through email
Is there a minimum term of employment for the government support i.e. is it worth inviting freelancers to come on the books so they can be covered?
Hi Tim
I am afraid I do not yet have the answer to the question regarding the length of time someone has to be employed for them to qualified as available for being furloughed. I would have thought that anyone would be covered and a business that wished to support their contractor base would be exposed to 33.8% of the cost for doing so but may feel that it is money well spent to protect themselves for the future. As explained in previous responses the costs of recruitment and retraining can outweigh the cost of covering the short term – It will of course depend on the length of the restrictions.
Once we have further detail there will be further updates
Thanks David – some clarification questions if I may to this very helpful scheme and an openness to flexibility & motivation, like the ‘mix & match’ approach.
1. During any period of ‘Furlonghed time’ – would the 80% be subject to any National Living Wage minimum and would the employer only pay the 80% and not any balance of 20% ?
2. For furloughed, salaried staff, who do wish to continue to work at home or the factory, despite their status – would they be paid 100% by the employer and then have 80% reclaimable, or just the 80?
Meirion
I do not have the full answers yet but can clarify that during the furlough period, the employee will need to be paid 100% of their salary with the government funding 80% and this being the case then NMW would already have been dealt with by the pay that they are contracted to receive.
It is clear that the furloughed staff are unable to work during the period where the Government are funding the 80%. If the employee does continue to work in the business there will be no support provided.
I have read that employers on the gov website do not have to make up the 20% salary difference?
Hi Sam
I would love to hear more about what you have read as I only have the information I have found and listening to the Chancellor’s speech which I felt made it very clear that the employee needs to be paid in full. I cannot imagine how this would deal with anyone other than salaried employees if there is to be an ability for businesses to pay only the amount funded by the government – This would simply lead to 100% funding rather than 80%
Sam has very helpfully passed me the following information from the gov.uk website which clarifies things – Thank you Sam – We watch and wait for further information
Furloughed workers
If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies.
If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.
To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.
If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
We intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.
if an employee is requested to be “shielded” for 12 weeks because they are in the at risk category (being asked to stay home by the government) are they only paid SSP?
Hi Alison
The answer to your question is unfortunately not clear at this moment but is a case of putting together the other rules. If the person is able to work from home then they should be doing so as the rest of the population has now been instructed. If that is not possible then as an employer you are left with the ability to treat them as a Furlough employee and the Government will fund 80% of their salary. You will have the choice to fund the additional salary or not but there will be a cost for employers NI.