What are furloughed workers and what does this mean for me?

As either an employer or employee you may be trying to get to grips with the Government’s new job retention scheme announced by the Chancellor last Friday. Here’s what we know so far:

What are Furloughed workers?

Under the newly announced Coronavirus Job Retention Scheme, all employers in the UK with be able to able to access financial support, with the aim of paying part of their employees’ salaries. This is vital to employers who would otherwise have to lay off their employees during the ongoing health crisis.

The term ‘Furloughed workers’ is given to describe the employees whose salaries are, at least partly, being paid by the government scheme. They are not currently working for their employer, but they have not been made redundant either.

How does the scheme work?

The scheme is currently planned to run for an initial three-month period, starting from 1st March 2020, although extension will be possible if necessary.

All UK employers are eligible to apply for the scheme, allowing them to apply for a grant of up to 80% of each employee’s salary, up to a cap of £2,500 per month. It is up to the discretion of the employer to whether or not they wish to fund the difference between this payment and each employee’s usual salary.

Those who have their salary reduced as a result of these changes may still be eligible for support through the welfare system, including Universal Credit.

What should employers do to access the scheme?

To access the Coronavirus Job Retention Scheme, employers will need to take the following steps:

Review

Review all current employees and decide who will be designated as a furloughed worker. You will need to notify each employee of this change. N.B changing the status of employees remains subject to existing employment law and, depending on the employment contact in place, may be subject to negotiation.

Submit

Submit the employee’s details to the new online portal (HMRC will set out further details of this portal once it has been created and is functional). N.B Short term Business Interruption Loan have been made available to assist businesses with cash flow in the meantime.

Wait

Developments and updates in government policy are happening at an unprecedented speed. Wait to hear from HMRC about further actions that may be needed.

We know that it is a vastly uncertain time for all industries at the moment, with many small businesses struggling to survive. We are all hoping that taking the above measures will aid the survival of many who are going to need it at this current time.

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