Protecting Jobs: Support for businesses through the Coronavirus Job Retention Scheme
On 20 March 2020, the Chancellor, Rishi Sunak announced the government would support businesses in paying their staffs wages for the first time in history. It was confirmed that the Government will help employers pay wages via 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. There is no limit to the amount of funding from the government on this scheme.
Please note that this is not just to boost your cashflow for employees who are still undertaking work on a regular basis for you. This will cover employees’ salaries who are not working, either because of lack of work or due to your company closing temporarily over the period. This will assist in continuing to make payments to staff without letting them go. If you need support in covering cashflow during this time you will need to apply for a Coronavirus Business Interruption Loan to cover employees who are still working on a day to day basis.
What’s on offer?
Employers can claim 80% of the salary for up to £2,500 per employee, per month and backdated from 1 March 2020, and open for at least three months. If the employer can afford to, they can top up the wages as desired. To claim Coronavirus Job Retention Scheme, employers will need to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. What is a furloughed worker? Furloughed is when employers ask employees to take a temporary leave of absence due to the needs of an employer but kept on the payroll.
What to do next:
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.
When will you receive the money?
HMRC are currently working to setup the scheme and the government plans to get the first grants paid out within weeks, the aim is by the end of April.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.