What is the Coronavirus Job Retention Scheme?
The UK Chancellor Rishi Sunak has announced measures aimed at supporting businesses in the wake of the Coronavirus pandemic. Chief amongst them is the introduction of a Coronavirus Job Retention Scheme. This initiative will enable employers to furlough employees and keep them on the payroll, rather than make them redundant.
Many of the finer points and mechanics of the scheme have yet to be finalised. It remains unclear as to how it will work in practice but what is clear is that the scheme will see the UK government cover 80% of furloughed workers wage costs, up to a cap of £2,500 per month. This makes the scheme particularly beneficial to those earning salaries of £37,500 or less, while the amount of relief for employees earning above that level will be proportionately less.
When does the Coronavirus Job Retention Scheme become available?
The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1st March. The application process is expected to be available to all UK employers before the end of April and will remain open for at least three months, although it is expected to run for longer should the situation demand it.
How to avail of the Coronavirus Job Retention Scheme?
HMRC are currently developing a new portal where organisations can submit the relevant details regarding furloughed workers and make grant applications.
When will I be reimbursed?
Employers are advised that not to expect to be reimbursed for at least a month, and it could be as late as May before any funds are received. However, for those businesses experiencing liquidity issues, it may also be worth mentioning that organisations in need of short term cash flow support, may be eligible for a Coronavirus Business Interruption Loan. For many others the shortfall is likely to originate from the deferral of value added tax payments for the quarter until June 2020 which do not have to be paid until March 2021.
How Do I qualify?
The grant is available to all UK employers, across all sectors. The only necessary qualification is that employees undertake not to work while furloughed.
How can I Access the Scheme?
Although the scheme is not yet fully operational there are steps employers can take now in preparation for the scheme, these include:
- Designate affected employees as “furloughed workers”.
- Notify employees of this change. (Please note that changing the status of employees remains subject to existing employment law and so any change may be subject to negotiation and the issuing of new contracts)
- Submit the relevant information to HMRC through the new online portal as soon as it becomes available.
- Make the relevant payment to the employee
- Review your cash flow situation, and assess whether you need to apply for the Coronavirus Business Interruption Loan
- Move swiftly, as organisations can only avail of the grant once the employee has been furloughed.
For more information on the Coronavirus Job Retention Scheme visit:
- The Paycheck Plus COVID-19 Information and Resources page
- The Public Health England and Department for Business, Energy & Industrial Strategy’s Coronavirus support page
- The Advisory, Conciliation and Arbitration Service (Acas) Coronavirus Advice Page