CORONAVIRUS - 23.03.2020

Government to pay 80% of salaries

The finer details are yet to be published but what we know so far is that you will need to:

• designate affected workers who are temporarily not working during the coronavirus pandemic as “furloughed workers”. Note. Placing employees on “furlough leave” requires an express term in their employment contracts which would permit this or you will need individual employees’ express consent to this change of status (preferably obtained in writing by letter or email), but in the current climate employees are highly likely to agree
• submit information to HMRC about the workers that have been furloughed and their earnings through a new online portal that is being set up. HMRC will set out further details on the information required shortly.

Furloughed workers must carry out no work for their employer. HMRC will then reimburse 80% of furloughed workers’ wage costs provided they remain on the payroll, up to a cap of £2,500 per worker per month. This is a grant, not a loan. HMRC is working urgently to set up a system for reimbursement.

The scheme will cover the cost of wages backdated to 1 March 2020 and will be open initially for at least three months but the government will extend the scheme for longer if necessary. Payments should be available from the end of April 2020 at the latest.

Other key points are:

• it will cover workers who have already been laid off, made redundant or had their contracts terminated because of the coronavirus, but it’s likely you will need to re-engage them first
• there’s no requirement for your business to be closed to access the scheme, so you should be able to furlough some workers and not others
• furloughed workers aren’t entitled to receive a top-up of their wages from you. It’s up to you whether you wish to top up their wages further, e.g. from 80% to 100%
• employees and workers remain employed/engaged during the furlough period.