Coronavirus Job Retention Scheme: New Support For Employers Impacted by Coronavirus

The Government’s Coronavirus Job Retention Scheme went live today, with businesses able to claim up to £2,500 a month towards staff wages.

HMRC recently updated its guidance for employers in relation to the Coronavirus Job Retention Scheme (CJRS). 

One significant change relates to when an employer needs to have created and started a PAYE payroll scheme by – initially it was 28 February 2020, but this has since been extended to cover employees who enrolled on or before 19 March 2020.

To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers available from 1st March 2020 until 30th June 2020. It is designed to support employers whose businesses have been adversely affected by the coronavirus pandemic.

The UK Government has announced unprecedented financial measures to support UK employers struggling to pay employees during the coronavirus pandemic.

Coronavirus Job Retention Scheme.

To summarise, the scheme involves the following:

  • The Government is proposing to support businesses by paying 80% of employee salaries up to a maximum of £2,500 per employee per month. At the moment the scheme is likely to last three months at least and could be extended depending on how this current problem pans out.
  • The scheme applies where businesses are applying “Furlough” to their employees. This is not a legal term and one that the government has come up with. Effectively it seems to us that it carries the same meaning as lay off i.e. an employee remains employed but is not required to attend work on a temporary basis as there is nothing for him/her to do.
  • In these circumstances, employees will take a 20% temporary pay cut with 80% of their salary being fully paid (subject to the £2,500 maximum) which can then be reclaimed from HMRC. 
  • Employers can elect to make a voluntary top up of employees salary (i.e. pay the 20%) but this is not mandatory.

To be eligible to apply, employers will need to have created and started a PAYE payroll scheme on 28 February 2020. It is expected that refunds from HMRC will not commence until the end of April 2020 which raises issues about cashflow. If this is a potential problem you will need to open dialogue with your lenders now and investigate your eligibility for a Business Interruption loan. It is important that employers consider the available support before making any permanent decisions regarding staff including redundancies.

For more information about the Coronavirus Job Retention Scheme and how to apply please read the full press release. 

Our Partners Loosemores can assist you in any employment matters including issues relating to the Coronavirus Job Retention Scheme. Please contact Karl Thomas, Partner and Head of Employment and Dispute Resolution at Loosemores Solicitors via [email protected] or call 029 2080 3112.

For more information about the coronavirus visit Public Health Wales.

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