On Friday 20 March, Chancellor Rishi Sunak announced a series of emergency actions in the fight against coronavirus, including a notice that the government to cover 80% of the wages of millions of workers. It means that furloughed workers will now get government support and continue to get part of their wages.
What are furloughed workers?
Prior to the coronavirus, furloughed workers generally meant any worker who has been asked to go on temporary leave. Furloughed workers in present times are those whose employers cannot afford to cover staff costs due to coronavirus, and therefore their staff have been asked to stop working for a temporary time, but have not been made redundant.
These employers who are unable to afford to keep their staff on due to the coronavirus are now able to access government support to continue paying part of their staff’s wages, to avoid redundancies.
What is the Job Retention Scheme?
The government is setting up a new Coronavirus Job Retention Scheme for furloughed workers. In this scheme, the government plans to intervene and help pay the wages of people who would otherwise be without a job, without pay or made redundant as a result of the Coronavirus crisis.
The Chancellor, Rishi Sunak said the government will cover up to £2,500 per month – with all employers able to apply to HMRC to pay the wages of people who are furloughed.
Job Retention Scheme Announcement for Furloughed Workers
The government published Coronavirus guidance for both employers and employees, both of which provide a summary of the government’s Coronavirus Job Retention Scheme on their website.
However, the available information is currently short and absent in detail, perhaps not surprisingly given that it was announced very quickly. We anticipate additional detail to be announced soon and will provide an update and guidance if you require legal assistance during that time.
But what do we know so far?
- So far, we know that the aim of the scheme is to offer funding to UK businesses by continuing to pay part of the salary for those employees who would otherwise be laid off during the Coronavirus crisis.
- Every UK employer is covered by the Job Retention Scheme for furloughed workers which means, it includes small, large, charitable or non-profit businesses.
- For employers to be eligible for the scheme, employers will need to label the employees who would have been laid-off as “furloughed workers”. This has no special significance in UK law, and so should be reserved to cover employees who would otherwise be laid off or be made redundant.
- The government has said that designating someone as a “furloughed employee” is “subject to existing employment law and… maybe subject to negotiation”. This means that if the employment contract has a lay-off clause then this must be abided by. However, from our experience, we notice most employee contracts do not contain a lay-off clause, so in such circumstances, an employer should agree with their employee(s) what they wish to do. The options employers can give to their staff is to either offer redundancy, being laid off or ask them to agree to take the scheme.
- The employer will need to submit the information on furloughed employees on the HMRC website.
- HMRC will reimburse 80 percent of the wage for furloughed employees and cap the amount payable at £2500 per month.
- Although employers are able to make up the difference in the full wage, they are not going to be required to do this if they do not want to.
- Employees will continue to be employed while furloughed. Nevertheless, to be eligible for the scheme they must not initiate any work at all for the employer while furloughed. This is why some employers revoke the employee’s access to emails and work-related devices so the employee is not tempted to complete work during this time.
- The Coronavirus Job Retention Scheme covers salaries and wages backdated from 1st March until the end of May. However, it may be reconsidered if an extension is necessary.
Contact JMR Solicitors for help making an application for Government’s job retention scheme
This is a worrying and challenging time for employers, and the government’s Coronavirus Job Retention Scheme is an essential move that will hopefully provide welcome relief to many businesses.
Marium Razzaq, partner solicitor at JMR Solicitors said: “Although in this current world crisis, this is a good initiative taken by the government for employers to help retain their employees and for many people in the UK to be paid at least 80% of their wages.
If you require further assistance in making an application for the Government’s job retention scheme from a legal advisor then contact JMR Solicitors on 0161 491 3933 or email email@example.com