Covid 19 – Job Retention Scheme – How does this apply to businesses?
Many businesses will have been affected as a result of the various measures imposed by the UK Government over the last few weeks to try and stop the spread of the virus.
Quite rightly the Government acknowledged that this would have an immediate financial impact on a large proportion of businesses across the UK.
As a result, the Government has introduced the Covid 19 – Job Retention Scheme.
It is a temporary scheme open to any UK businesses with employees and will be open for at least 3 months from the 1st March 2020. It is open to all UK employers who have created and started a PAYE payroll scheme on or before 28 February 2020. It will not apply to employees who started after the 28th February 2020.
Under the Scheme employers can ‘Furlough’ employees placing them on leave from work. If an employee is furloughed under the Scheme, they cannot carry out any work for the employer during that period.
If an employee agrees to being placed on furlough the employer will be able to reclaim from HMRC through a portal costs to cover 80% of the employee’s usual monthly wage costs, up to a cap of £2,500.00 a month. Employers will be able to include within the claim employers National Insurance contributions and minimum automatic enrolment employer pension contributions.
The portal is yet to be created but it is expected to be up and running by the end April 2020.
Although the Scheme is welcomed to assist businesses through the current uncertainty employers need to appreciate that the Scheme does not override current Contracts of Employment or general employment rights. If an employer is looking at placing employees on furlough leave there either needs to be a contractual provision for a lay off in the Contract of Employment or an agreement with the employee for them to be placed on furlough leave.
Guidance continues to be issued on the Job Retention Scheme and employers have many questions regarding how this works for their business and employees.
If your business has been affected as a result of Covid 19 and you wish to understand more about how the Job Retention Scheme works please do not hesitate to contact our Employment Team on 01270 212000. Although the office is closed to the general public our team is working remotely to ensure that all clients needs are serviced during this time.
