The Coronavirus Retention Scheme – Furloughed Worker
‘Furloughed workers’ – payments to employers to cover 80% of employee wages Fast on the heels of the Coronavirus Bill being published, the government followed up with an announcement today, Friday 20 March 2020 about the Coronavirus Retention Scheme.
This will provide employers with funding to enable them to continue to pay employees up to 80% of their wages rather than laying them off. All businesses will be eligible, regardless of number of employees and turnover.
The information for employers provided so far states that to access the scheme, employers 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.
Employers will still need to get the employee’s agreement to designate them as ‘furloughed’ and take a 20% reduction in pay if there is no provision in the contract for employees to be temporarily laid off. Employees might otherwise face redundancy with no job at all so it is likely that many employees will accept this change to their contracts.
The guidance that has been issued to employees makes it clear that in order for employers to access the scheme, employees will need to have ceased working i.e. employers will not be able to claim payment for employees who are still undertaking some work.
What has not been made clear at this stage is whether the scheme will extend to all workers on an employer’s pay roll – and temporary workers.