On 20 March 2020, the chancellor, Rishi Sunak, announced the Coronavirus Job Retention Scheme (the Scheme) as part of the UK government’s measures to help support businesses through the current COVID-19 pandemic. Brief guidance followed after the announcement, with more detailed guidance released on the evening of 26 March 2020. There is a lot we still do not know, but here is the updated position.
About the Scheme
- What is the Coronavirus Job Retention Scheme? It is a temporary scheme announced by the UK government on 20 March 2020 as part of its package of measures to help support businesses through the current COVID-19 pandemic. The aim of the scheme is to protect jobs and avoid redundancies in organisations whose operations have been severely affected.
- What does the Scheme do? The Scheme allows an employer to designate certain individuals who are paid wages via the Pay As You Earn (PAYE) system as “furloughed”, keeping them on payroll as an alternative to terminating their employment. The employer can then seek reimbursement of some of their labour costs from the government (see #2 under “Payments under the Scheme”).
- How is the Scheme accessed? Reimbursement is via an HMRC portal. In guidance released last week, the suggestion was that employers must notify HMRC which individuals have furloughed status, along with details of their earnings, although the updated guidance suggests a more general approach to claiming under the Scheme (see #1 under “Payments under the Scheme”). We expect to understand more about the process once the portal is launched.
- When does the Scheme start? It will be back-dated to start from 1 March 2020 and will run for an initial period of three months, but may be extended. Employers can use the Scheme at any time while it is open. As HMRC is having to build its IT infrastructure from scratch to administer the Scheme, there may be a delay in funds being available. It is expected to be operational by the end of April.
- Is the Scheme compulsory? It does not appear to be a compulsory scheme; employers are not obliged to make use of the Scheme, and workers will need to consent to be furloughed if it means a change to their terms and conditions (see #2 under “About furloughs” below)