It is the first time in our history that such a support plan has been put into action by our government and therefore it is going to take some time for all the details to be in place. We thought it would be useful to set out exactly what we do know as of today and indicate what we don’t to give you as much clarity as we can at this stage.
What we do know: 1.The scheme will be open to all UK employers to access financial support to continue to pay part of the Furloughed Worker’s (the new term) salary who would otherwise have been laid off from work during this crisis.
- We are taking ‘laid off’ in this context to mean those who would be made redundant, put on layoff/short time working/unpaid leave in connection with an express agreement
- This will apply to all private sector businesses with staff on PAYE, be they ltd/sole trader/LLPs/partnerships/charities etc.
2. We will need to designate the affected individual as a Furloughed Worker and tell them of this change, subject to the normal provisions of employment law
- We are taking it that this means that this will need to be agreed with the individual unless there is a contractual layoff provision.
3. This will be subject to providing HMRC with information about those furloughed and their earnings via a new online portal
- It will be backdated to 1 March and is expected to be available before the end of April
- It is open for an initial three month period, and this could be extended.
4. HMRC will then reimburse up to 80% of the furloughed worker’s wage costs, to a cap of £2500/month
- The employer can choose to top up the remaining 20%
- We are taking it that this would need to be subject to a contractual provision to do this
- We are taking it that wage costs include employee’s tax/NI and pension contributions.
5. Furloughed Workers cannot undertake any work for the employer whilst furloughed
6. The individual cannot trigger becoming a Furloughed Worker, this has to be driven by the employer.
So that is what we know at this stage and some working assumptions. Guidance and a draft bill will be published and we will scrutinise these as they appear.
This is what we do not yet know:
- Whether this is solely for employees or whether will it cover workers too
- If it does cover workers, the mechanism to be used to work up earnings to be paid
- Whether the maximum capped salary is £2500/month and the individual gets 80% of that, or whether the 80% is £2500, thus giving a maximum capped salary of £3125/month
- The specific criteria for an employer to trigger the payments
- Whether it will be flexible enough to recognise short periods of being furloughed – even just a day, however this is looking likely
- How it interplays with current redundancy consultation exercises triggered by the Covid-19 crisis
- How it will work for those who have already lost their job or been laid off due to the crisis – however it is likely that they can request to be re-engaged, but with no right to enforce this
- Whether it could be used to assist those individuals who are currently on indefinite unpaid dependent’s leave due to school closures, should an employer otherwise have needed to lay staff off
- Likewise, those with underlying health conditions who, it is reported, will shortly be receiving notification that they must self-isolate for 12 weeks (if they cannot work from home).
We’re currently all working from home, landline calls now diverted to my mobile number and we have full access to our systems allowing us to fully service your requirements. We’ll be in touch again soon.Keep safe