Live: The Coronavirus Job Retention Scheme – An explainer

With Government support and advice for businesses changing all the time, the team at Gordon Brown Law Firm have helped us put together this explainer on the Coronavirus Jobs Retention Scheme

What is it?

The Coronavirus Job Retention Scheme is part of a package of measures announced by the Government to provide income support to the UK labour market at a time of unprecedented financial strain.

This particular scheme is a grant which will enable all employers, no matter what their size, to access financial support while still paying the salary of an employee who would otherwise have been laid off or furloughed.

At present, the particular details of the scheme are still being finalised and HMRC are urgently working to provide further guidance to employers.

The scheme guarantees a proportion of an employee salary for three months, with a possible extension to be applied. It will commence from April 2020 but will be backdated to March 1.

Can a furloughed worker continue to work?

No. A furloughed worker cannot undertake any work duties during a furloughed period.

What does the scheme provide for employers?

The scheme will allow employers to access 80 per cent of each employee’s salary up to £2500 a month, plus employers NIC and a minimum pension contribution.

Will employees be taxed?

Employee will continue to be taxed as normal. Whether the grant is taxable or not will be irrelevant as the treatment will be consistent so it will net.

What do I do once I have identified the furloughed workers?

Employers who wish to access the scheme, need to identify affected workers. A furloughed worker will need to be notified of the change in their employment status.

The employment status of employees is subject to existing employment and depending on the wording of an employee’s contract, subject to negotiation and variation.

The Government will announce further details in due course, but as it stands it seems like an employer cannot simply say that an employee is a furloughed worker. They will need to consult with affected employees and get their consent to this variation.

Once employees are identified, employers need to submit information to HMRC on which employees have been furloughed via the new online portal.