In his update on Friday 20th March, the Chancellor introduced the Coronavirus Job Retention Scheme to support businesses struggling through the Coronavirus (COVID-19) Global pandemic. Furlough Leave has been introduced in place of lay-off and redundancy, where at all possible, to help individuals to keep their jobs in these uncertain times.
A business will need to identify affected employees as ‘furloughed workers’. Please note that changing the status of employees during this time remains subject to existing employment law.
The Government will reimburse up to 80% of salary/wages, capped at £2,500 monthly. This is available to any organisation and it is the employer’s responsibility to apply for this. At present, the system is not yet tested, so we anticipate that it could take a little time to apply and receive the reimbursement. Alongside this, the Chancellor announced other funds and loans available, which could assist businesses in the short term.
Furlough Leave only applies to employees and/or workers who are on a company’s PAYE that would otherwise be laid off or made redundant. An employer does not have to pay the extra 20% to qualify according to the employee guidance issued. Please note that Furlough Leave is not for those who are self-employed, there were additional measures introduced for those who fall into that category.
At this time it is not clear if the reimbursement is £80% of £2,500 or 80% capped at a payment of £2,500 (presumably subject also to deductions and pension deductions). We expect clarification on this guidance to be released shortly.
Disclaimer: The information contained in this article is for general information only and made available for educational purposes only. It is for a general understanding of the law, not to provide specific legal advice. This article should not be used as a substitute for competent legal advice from a regulated professional. You should seek appropriate legal advice for your own situation.