Here are some questions and their answers to clarify some uncertainties surrounding the Job Retention Scheme. The scheme was launched to provide 80% of income to employed staff who have been furloughed due to Covid-19 closures.
Who is eligible for the scheme?
All UK businesses are eligible.
What does the scheme involve?
The Coronavirus Job Retention Scheme, is designed to help employers if they cannot cover staff costs due to Covid-19. Its aim is to avoid redundancies, and the scheme can offer grants of up to 80% of an employee’s wage for all employment costs, up to a cap of £2,500 per month.
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salaries for those employees that would otherwise have been laid off during the crisis.
Does the scheme cover for employees working on reduced hours?
No, the scheme only covers those employees who are laid off or their jobs are at risk.
How can my business access the scheme?
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 and is working urgently to set up a system for reimbursement.
What do employees need to do?
If the employer intends to access the Coronavirus Job Retention Scheme, they will discuss with the employee becoming classified as a furloughed worker. This would mean that the employee is kept on the employer’s payroll, rather than being laid off. To qualify for this scheme, the employees should not undertake work for the employer while they are furloughed.
When can my business access the grant?
The government is in the process of setting up an online system to enable employers to apply. This is expected to be ready by April and the payments are expected to be dispensed by the end of April.
How long is the scheme for?
The scheme is for three months and will cover March to June 2020, although this may be extended if the government deems it necessary. The application will be open in April but the claim can be backdated to March 2020.
Does the employer have to pay a full salary while the employees are furloughed?
The employer can choose to fund the differences between the 80% grant and employee salary, but does not have to.
Does the employer have to fund March’s salary until the government grant is accessible in April.
Yes, the employer has to pay March salary as normal (whether it is full salary or 80%) until the grant is accessible.
What if the employer has cashflow problems?
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan which has been made available through the banks.
Are Directors who are on the payroll covered by the 80% job retention grant?
Currently there is no guidance available to suggest whether directors can be furloughed.