Unprecedented state support to help pay the wages of staff left unable to work due to the coronavirus outbreak has been announced by the Chancellor.
Rishi Sunak said on Friday that the Government would step in and pay up to 80 per cent of furloughed staff wages up to a monthly maximum of £2,500 per employee.
Initially, this sounded as if HMRC was going to underwrite four-fifths 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), which has some basic terms and conditions.
What Does “Furloughed” Mean?
Our first observation is that the word furlough has no legal significance.
A furloughed worker is not someone who has been directed to work from home. The Government’s notes make clear this scheme is for staff who cannot work during the current disruption to trade.
Ordinarily, business owners would probably be faced with offering these staff redundancy.
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 per cent 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 is 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 so currently our best guess is payment will not be forthcoming until towards the end of April 2020.
We Can Help You
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.
If you need more information about the Coronavirus Job Retention Scheme give one of the Bracey’s team a call today.