Businesses all over the world are learning to cope and develop under new measures introduced to try to manage the Coronavirus pandemic. Today, many of us across the country are working from home as we enter an unprecedented lockdown period. With each phase of the UK’s response come fresh challenges and new information to absorb, which can feel overwhelming.
Many business owners will have paid particular interest to last week's announcement of the Coronavirus Job Retention Scheme which promises to pay 80 per cent of the salary of employees, up to £2500 per month, for businesses that commit to not laying their people off. The official term for workers affected by this change is 'furloughed' - people granted a temporary leave of absence due to exceptional and unforeseen circumstances which mean there is no work for them to do. The Government is keen to preserve as many jobs as possible, to enable our businesses and economy to bounce back once this difficult current situation subsides. Information about how to access funding under the furlough scheme has trickled down over the weekend. However, many are concerned that it is not coming quickly enough. In the sea of Coronavirus information, here is our Furlough Factsheet to help you fish out the key things we know about the scheme.
What is furlough leave and who can claim it?
The purpose of the scheme is to help businesses retain staff and avoid redundancies by alleviating the financial pressures of doing so for their employer.
Any UK business can claim for support under the scheme but the workers need to be identified as 'furloughed workers'. This is a new term for people who are currently on a temporary leave of absence because there is no work for them to do.
The workers must be paid through the PAYE (pay as you earn) system, and remain employed by the company during their period of furlough leave. They cannot do any work while they are 'furloughed'.
How much can I claim?
80 per cent of a worker's salary ,up to £2500 per month.
However, the Government states that this amount includes 'all employment costs', which suggests that it will also include any tax and national insurance payable. Of course, this is something we will receive greater clarification on in the coming weeks.
How long is it for?
The information available suggests that employers can claim salaries retrospectively from 1 March 2020, for a period of 3 months, but it may be extended.
What’s the difference between furlough and lay-off?
You must have a contractual right to lay off staff or reduce their hours but many contracts of employment do not have this clause. If employees are laid off they can claim a guarantee payment of up to £29 per day for a maximum of five days in a three month period.
There is no contractual right to furlough leave and, while it offers an additional option where work has diminished, it is still important to ensure you have evidence that employees have agreed to it as a change to their terms of employment. At present, this is frequently met without resistance as it is an alternative to redundancy for many but, as ever, a paper trail is still important.
Of course, in a practical sense, being on furlough leave and laid off are the same thing – unpaid leave due to a lack of work.
It would appear that there is greater financial incentive to use furlough leave as opposed to a period of lay-off at present. However, of course the devil will be in the detail when the scheme is up and running.
How can I access it?
You will be able to access this support via a portal on the HMRC website which is hurriedly being developed by the government. It is expected to be set up in the coming weeks and you should then be able to make a claim via the website for this financial support.
The best thing to do is to keep checking the HMRC website for updates but if you would like to receive a notification when the HMRC portal is up and running, please let us know and we will contact you as soon as possible.
What else can I do?
This is a difficult time for businesses and individuals alike and the situation is changing daily. We have a team of commercial experts who can help you find a solution that’s right for you.
If we can offer you any legal help or advice to get you through this challenging time, please get in touch via (01482) 225566 or info@jameslegal.co.uk. While we have changed our working practices to observe the Government's new social distancing guidelines, our team are still available via phone, email and video chat.
