Extract from Gov.uk published 20 March 2020:
How to access the Coronavirus Job Retention 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.
Steps to take
- Designate affected employees as ‘furloughed workers”. This is not a general term used in English employment law. The Oxford English dictionary defines ‘furloughed’ as “(of a worker) laid off, especially temporarily”. In designating the employees as furloughed workers the employer is laying them off, i.e. sending them home as there is no work, for a period whilst retaining them as employees.
- Normally when an employee is laid off it is without pay, under the Coronavirus Job Retention Scheme HMRC will reimburse employers 80% of furloughed workers wage costs, up to a cap of £2,500 per month. It is up to employers if they choose to top up the salary so that the employees obtain their full salary during the period of lay off.
- Need to notify the employees that they are being designated as ‘furloughed workers’ being sent home as there is no work. Unless the employment contract allows for the employer to lay off employees the employer will need to obtain the employee’s agreement to this change in their employment status. Employers should consult on the change with their employees including detail of the payments to be made. It is strongly recommended that such agreement is obtained in writing.
- Notify HMRC. At time of publishing the new HMRC portal had not been launched. In the Chancellor’s speech on 20 March 2020 he stated that the aim was to start paying employers under the fund by the end of April.
- The Chancellor also stated on 20 March 2020 that the refund of cost of wages for furloughed workers will be backdated to 1 March 2020 and the scheme is expected to run initially for 3 months.
Our specialist teams can help advise you on all aspects of the points listed above.