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Get help paying your staff with the Coronavirus Job Retention Scheme

Tools on bench. Photo by Hunter Haley on Unsplash

Information last updated: 25 March 2020, 16:00

What is the Coronavirus Job Retention Scheme?
Is your business eligible for the Job Retention Scheme?
What does being ‘on furlough’ mean?
What do you get with this Scheme?
How do you use this Scheme?
If you have more questions about the Coronavirus Job Retention Scheme…
What other help is there?

What is the Coronavirus Job Retention Scheme?

The UK Government will reimburse you for part of the wages or salary for your staff if you’d otherwise have to lay them off during the coronavirus crisis. 

Instead of laying off employees, you put them ‘on furlough’ and the Government will help by reimbursing you.

The Government expects this Scheme to run for at least three months and to extend it if necessary. 

Full details of this Scheme aren’t yet clear. When the Government publishes more information, we’ll update this post.

Is your business eligible for the Job Retention Scheme?

If you’re based in the UK and you have employees, your business is eligible. 

What does being ‘on furlough’ mean?

Putting your employee(s) ‘on furlough’ isn’t the same as terminating their contract or making them redundant. 

In fact, you keep the furloughed staff on your payroll. And we believe it means that you agree to have your furloughed staff back to work as normal when the coronavirus crisis is over.

To qualify for the Scheme, any employees you put on furlough must not take on other work while they’re furloughed. We believe this means they would be able to volunteer, but not do paid work. 

What do you get with this Scheme?

HMRC will reimburse you – the employer – for 80% of the wages for your furloughed employees, up to a maximum of £2,500 a month. We believe this is net pay and not gross.

The reimbursement is to cover the cost of wages/salaries backdated to 1 March 2020. 

You can choose to pay your furloughed staff 80% of their normal salary – which is the amount the Government will reimburse you. Or you can pay more, up to their full normal salary, which means you’d make up the difference (up to 20%) from your company’s funds. 

How do you use the Scheme?

  1. Decide which employees will be ‘furloughed workers’
    The Government hasn’t yet set out guidelines about how to do this. Because you’ll need to get consent from your employees, it makes sense to use a fair and objective selection process.
  2. Inform your staff and get their consent
    You must get each individual’s consent to being furloughed. This is because the change in their status is subject to normal employment law and depends on their contract of employment. It might be open to negotiation – if possible, check with your lawyer or HR advisor.
  3. Submit information to HMRC
    HMRC are creating a new online portal where you can give them the details of your furloughed employees and how much you pay them. To find out if the portal is ready, check the HMRC website.
  4. Wait for reimbursement
    Currently, HMRC’s systems aren’t set up to make payments to employers but the Government assures us that they’re working on this as a priority.

If you have more questions about the Coronavirus Job Retention Scheme…

So do we! When the Government publishes more information, we’ll update this post.

For example, we’re wondering:

  • Do employers have to pay 80% of the wages/salary gross or net?
    Should you take off tax and NI by PAYE as you would do normally?
  • What does the Government mean by ‘wage costs’?
    What about benefits such as pension contributions, commissions, bonuses, overtime payments and other payments? 
  • If your staff are on furlough, do you have to set an end date for the furlough and are you allowed to call them back to work if you need to?
  • Does the Scheme apply to self-employed people, contractors and agency workers?
    We believe it doesn’t apply to the self-employed but we have no clear information about agency workers.
  • What happens after the furlough?
    Do you go back to paying your staff their normal wages/salary?

What other help is there?

You might be able to get help from other UK Government schemes set up to help businesses during the coronavirus crisis. You can read more in these other posts on our blog:
Coronavirus grants for small businesses
Coronavirus loans and finance – coming soon

Have your say

How is the coronavirus affecting you and your small business? We’re keen to hear from you – get in touch with us on LinkedIn, Facebook or Twitter.

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Photo by Hunter Haley on Unsplash

Suzanne Worthington

Senior Writer

Tide Team

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