Job Retention Scheme

The Coronavirus Job Retention Scheme (JRS) was announced on 20 March 2020. The Government is moving very quickly and this unprecedented announcement is hugely significant. Understandably, many of the practical points currently remain unclear, however, as we learn more we will continue to interpret the detail and provide practical guidance, along with links to the systems needed to apply.

The Government has said that the funds available for these grants will come into force “within weeks” and before the end of April. However, how wage costs are calculated will need to be confirmed and this may not be easy given the complexity of existing tax and payroll systems. It has been suggested that "basic salary" will be used as a reference point and potentially pay received in the February payroll will be used as the basis for calculating the grants, however, this remains conjecture at this point in time.

What employers need to do to designate employees as furloughed is another concern and the usual employment law principles relating to fairness, discrimination and contractual consent will of course apply. Employers will also need to consider how, what and when they communicate this too.

It is not yet clear how backdating will work, and whether the three month period could start at any point from 1 March to 31 May and other issues that need to be clarified and worked through include: managing those on zero hour contracts (and other flexible arrangements); measures already taken to manage cash flow (e.g. lay offs and short time working); how to treat new hires from 1 March; the definition of employee/worker; and the interaction with payroll.

Popular questions and answers can be found here

Download Furlough Template

Thanks to Stephen Elliot of the Endeavour Partnership for helping us put together this Furlough Template which you can download here.

Summary

Under the JRS, HMRC will reimburse 80% of ‘furloughed workers’ wage costs, up to a cap of £2,500 per month for each furloughed employee and can be backdated to 1 March. The JRS is open initially for three months and this will be extended if necessary. Employers can also top the salaries of furloughed workers further if they choose.

The JRS payment is a grant to cover most of the wages of the people who are furloughed and is open to all UK employers.

To access the scheme employers need to:

Designate affected employees as ‘furloughed workers,’ and notify employees of this change;

Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (details to follow)

Whilst the exact steps are currently unclear, changing the status of employees to “furloughed workers” remains subject to existing employment law.

HMRC are working urgently to set up the portal and underlying system for reimbursement as existing systems are not set up to facilitate payments to employers, with the intention of reimbursements beginning in April

Changing the status of employees remains subject to existing employment law and may be subject to negotiation.