26 Mar 2020
The use of the word 'unprecedented' has risen to unprecedented levels in these unprecedented times, writes Catriona Ramsay, Employment Law Associate at Aberdein Considine.
After a week of unprecedented steps to curb social contact, firms across almost every sector of British business are facing unprecedented cashflow challenges.
So when the Chancellor, Rishi Sunak, unveiled his support package for businesses on Friday evening, it could only be one thing - unprecedented.
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 and the government will pay up to 80% of workers’ pay, up to a maximum of £2,500 a month.
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.
On the face of it, straight-forward intervention to protect jobs that would have otherwise been axed in the current climate.
However, this is not carte blanche for employers to tell staff not to come in until the virus blows over. There is a process which firms must follow.
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.
Aberdein Considine is already helping businesses deal with the consequences of Covid-19. Our lawyers are standing by to answer questions from employers looking to use this scheme to save jobs.