Coronavirus Update: Employee Retention Scheme

Dylan Loughlin

Copacetic welcomes the employee retention scheme introduced by the UK Government on Friday March 20th. The information provided so far is sparse, but effectively the Government has committed to paying up to 80% of the wages of employees who have been effected by the Coronavirus. Here’s what we know so far;

What is the scheme?

The government will pay 80% of the wages of employees who have been affected by Coronavirus. This is up to a maximum of £2,500 and for a period of three months with the option of being extended if necessary.

Who is illegible?

All UK businesses with employees effected by CV-19 can apply to the scheme.

What if I have already laid employees off?

The money can be claimed back from the 1st March 2020 on employees who were employed before 28th February 2020. 

What do businesses have to do?

There have been no changes to employment legislation, therefore businesses need to consult with our team as to what procedure is to be followed.

A form should be signed by the employee to obtain written agreement they are a “Furloughed worker.”

If employees have been laid off or placed on short term working, the business can apply directly to HMRC for payment of monies. These will be paid directly to the employer and should be paid to the employee, after deductions for National Insurance Contributions, Pension and Student Loan (if applicable). 

As far as we are aware at the time of writing, the £145.00 Statutory Guarantee Payment must still be paid.

The exact method for obtaining monies is being developed by HMRC and we will notify once the portal has opened, “HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.”

What happens after three months?

After three months, the scheme will no longer apply, however the Chancellor has stated that this my be extended if he deems necessary.  

What if my employee works variable hours? Normally in an employment law context, we take the average hours worked/monies received over a 13 week reference period. Please note that any absences which are related to pregnancy or disability should not be considered as these are protected under the DDA 1995 and Pregnancy/Maternity/Sex Discrimination legislation.  What if I can give the employees one day of work here and there? This is not permissible at all. It effectively renders the lay of or the furloughed status as unfulfilled and businesses will be liable for salary payment.  What about the other 20%? Employers may chose to fund the difference, but this is not compulsory.  What if an employee wants to be on furlough leave, get 80% of wages and to stay at home? This is entirely at the business’ discretion. Note- If the employee is working from home completing their existing roles, functions and responsibilities, they should be paid full salary. If not, and it is “business as usual,” furlough leave will not apply and there is no need for lay-off. 

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