To Coronavirus Job Retention Scheme was introduced to help protect staff from being made redundant in the economic climate created by COVID-19.
Who can use the scheme?
It is for employers who would have had to lay staff off because of COVID-19.
Rather than making staff redundant, employers furloughed their employees. The government will reimburse up to 80% of each employee’s employment costs. That's up to a maximum of £2,500 per month.
Employers can make up the difference between the government's 80% payment and what their employees would normally be paid, but that's up to them and there's no requirement to do so.
What does furlough mean?
A ‘furloughed worker’ is someone who has been temporarily asked to stop working by their boss. They're often given unpaid leave until more work is available for them. But with the furlough scheme, the government are paying part of the workers salary.
Who can be furloughed under the scheme?
Any UK based employer who has a PAYE scheme can furlough their staff under the scheme. Only employees who were on the books from 28th February 2020 are covered.
The scheme period begins from 1st March 2020 (so it will be backdated) and will last for at least 3 months.
Directors who are employed by their own limited company are classed as employees, and can be furloughed under the scheme.
Can employees work whilst furloughed?
No, workers must not actually work whilst furloughed.
How do I apply to the Coronavirus Job Retention Scheme?
If you are an employer who wants to access the Coronavirus Job Retention Scheme then you must:
- Designate affected employees as furloughed workers.
- Tell your employees about this change (formally, in writing, is the best method).
- Submit this information to HMRC, detailing which employees have been furloughed, and their earnings.
The scheme is a reimbursement, not an upfront payment, which might mean that you need some short-term cash flow support. If that’s the case, you may wish to consider the Coronavirus Business Interruption Loan.