How does the Coronavirus Job Retention Scheme work?
On Friday (20th March), the Chancellor, Rishi Sunak, announced the Coronavirus Job Retention Scheme. The stated purpose of the scheme is to enable employers to ‘furlough’ employees (grant a leave of absence) rather than to lay those employees off or make them redundant. Those employees who are granted that leave will receive 80% of their salary, up to a maximum of £2,500 per month.
How do I know if my employees are eligible?
This employment retention scheme will be run through HMRC and all employers are eligible. We have limited details of the scheme at the moment, however, from the guidance published by GOV.UK for employers and employees so far, it seems that the scheme will include the following elements:
- The employer must elect those employees that it wishes to furlough (rather than make redundant or lay off)
- The employee must agree to be furloughed (although it seems unlikely that they would refuse if the alternative would be redundancy or being laid off)
- The government will pay the employer a grant equivalent to 80% of that employee’s salary, up to a maximum of £2,500 per month
- The employer can top up the additional 20% if they wish
- The scheme will run for at least three months, from 1st March 2020 (which raises the prospect of applying the rules retrospectively)
At first glance, it does seem that it will be in an employer’s interest to furlough less effective staff thereby, in effect, granting them an extended period of paid leave (albeit subject to the financial limits above). This would appear unfair on staff who are retained.
We anticipate that more details will come out in the coming days and we will update you as this happens.
How we can help
If you’re an employer and are in a position where you may need to make redundancies or lay staff off, and you’re wondering how this coronavirus employment retention scheme may affect that, our specialist Employment solicitors are here to help.