As one of the additional measures to support businesses affected by the Covid-19 outbreak, Rishi Sunak announced last week that HMRC is to step in and pay up to 80% of furloughed staff wages up to a monthly maximum of £2,500 per employee.
Initially, this sounded as if HMRC was going to underwrite 80% of our salaries bill; let’s be clear, this is not what is on offer. What is on offer is the Coronavirus Job Retention Scheme. (CJRS) The following notes cover the basic terms and conditions.
What does “furloughed” mean?
Our first observation is that the word furlough has no legal significance. After reading the GOV.UK notes it is clear that this refers to staff that are laid-off as they cannot work during the current disruption to trade.
Ordinarily, business owners would probably be faced with offering these staff redundancy.
A furloughed worker is not someone who has been directed to work from home.
Furloughed can be defined, therefore, as an employee that is retained on your payroll but is unable to undertake any productive work.
What is on offer?
As noted above, HMRC will reimburse 80% of furloughed employees’ wages costs up to a maximum of £2,500 a month – this is the level of the national median wage.
Employers can make up any differential at their discretion, this is not compulsory.
The aim is to provide a basic income such that, when matters return to normal, staff can be recalled, resuming their normal duties.
How do we claim?
HMRC are building an online portal where employers can disclose the details of furloughed employees and make a claim under the CJRS scheme.
This is not presently available and best guess is payment will not be forthcoming from HMRC until towards the end of April 2020.
Action to take now
This scheme is a welcome addition to the other supportive grants and reliefs announced by the Chancellor in the past two weeks.
Business owners that were considering redundancies or more drastic measures may be able to use CJRS to retain their staff until the worst of the COVID-19 disruption has passed.
A word of caution. The details about the way in which the scheme will operate are sketchy at the time this update was written. As more information becomes available you will be the first to know. In the meantime, please call if you need our support to work through your options.