21 Mar 2020

The Coronavirus Jobs Retention Scheme

The Coronavirus Jobs Retention Scheme

The Chancellor, Rishi Sunak, has outlined an unprecedented package of measures to protect millions of jobs and incomes as part of the national effort in response to Coronavirus.

The package was announced on Friday evening as the UK Government instructed entertainment and hospitality premises, like bars and restaurants, to close to limit spread of Coronavirus, placing even more business sectors under intense financial pressure.

A new Coronavirus Job Retention Scheme will be set up to help pay people’s wages.

Employers will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll, but are temporarily not working during the Coronavirus outbreak.

Any employer in the country, small or large, charitable or non-profit, will be eligible for the scheme.

Here's what we know so far...

The Scheme

The aim of the scheme is to protect jobs and avoid redundancies arising as a result of the crisis.

Details so far include:

  • The Government will pay up to 80% of workers’ pay, up to a maximum of £2,500 a month;
  • Employers can contact HMRC to obtain a grant to subsidise pay for workers who are not working due to Coronavirus, although further definition of this is yet to be released;
  • The scheme is stated to cover all workers paid through PAYE, so potentially not just employees; and
  • The scheme will cover the cost of wages backdated to 1st March 2020 and for at least three months going forward. In addition, no limit has been placed on the amount of money available.

The Chancellor confirmed that the scheme would apply across the whole of the UK, including Scotland.

The measures have been widely welcomed - although the government is being pressured to consider further intervention to help self-employed people.

What employers need to do

Employers will need to designate affected employees as furloughed workers, and notify their employees of this change.

They must note that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. This means that in the absence of any contractual rights to the contrary, employers would be wise to seek agreement from staff about furloughing before doing so.

They will then need to 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 in the coming days.

It is expected that the payment of grants will be made within weeks and hopefully by the end of April.

We're ready to help you

Our Employment Law team is standing by to answer questions from business owners looking to use the scheme to save jobs.

We will have extra resources in place to offer support to businesses from Monday morning.


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