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Coronavirus Job Retention Scheme: New Support For Employers Impacted by Coronavirus

The UK Government has announced unprecedented financial measures to support UK employers struggling to pay employees during the coronavirus pandemic.

Coronavirus Job Retention Scheme.

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1st March 2020. It is designed to support employers whose businesses have been adversely affected by the coronavirus pandemic.

To summarise, the scheme involves the following:

  • The Government is proposing to support businesses by paying 80% of employee salaries up to a maximum of £2,500 per employee per month. At the moment the scheme is likely to last three months at least and could be extended depending on how this current problem pans out.
  • The scheme applies where businesses are applying “Furlough” to their employees. This is not a legal term and one that the government has come up with. Effectively it seems to us that it carries the same meaning as lay off i.e. an employee remains employed but is not required to attend work on a temporary basis as there is nothing for him/her to do.
  • In these circumstances, employees will take a 20% temporary pay cut with 80% of their salary being fully paid (subject to the £2,500 maximum) which can then be reclaimed from HMRC. 
  • Employers can elect to make a voluntary top up of employees salary (i.e. pay the 20%) but this is not mandatory.

To be eligible to apply, employers will need to have created and started a PAYE payroll scheme on 28 February 2020. It is expected that refunds from HMRC will not commence until the end of April 2020 which raises issues about cashflow. If this is a potential problem you will need to open dialogue with your lenders now and investigate your eligibility for a Business Interruption loan. It is important that employers consider the available support before making any permanent decisions regarding staff including redundancies.

For more information about the Coronavirus Job Retention Scheme and how to apply please read the full press release

We can assist you in any employment matters including issues relating to the Coronavirus Job Retention Scheme. Please contact Karl Thomas, Partner and Head of Employment and Dispute Resolution at Loosemores Solicitors via ThomasK@loosemores.co.uk or call 029 2080 3112.

For more information about the coronavirus visit Public Health Wales.

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