Coronavirus Job Retention Scheme and what mobility companies need to do to access it
On the 20th March, the government announced its most significant intervention to date to support companies through the COVID-19 epidemic by confirming it will pay the wages of furloughed workers.
A collective small sigh of relief could be heard from business leaders and employees across the country facing an unprecedented fall in income, providing a short respite from what was a difficult week for almost all sectors of the economy.
For many, however, the question is now how will the scheme work and, more importantly, how can businesses access it?
To help mobility companies understand more about the new scheme, THIIS has outlined details regarding the Coronavirus Job Retention Scheme to help retailers and suppliers alike save their businesses.
What we know
With companies facing cash flow problems in the immediate and employees being laid off, the government moved to prevent mass unemployment from breaking out with its latest measure to support businesses through the coronavirus crisis.
The Coronavirus Job Retention Scheme will be distributed in the form of government grants to reimburse employers for 80 per cent of workers’ wage costs if companies place employees on ‘furlough’ rather than dismissing them.
The government confirmed it will only cover up £2,500, with chancellor Rishi Sunak stating in a press briefing that employers could top-up pay, with employers having the option to top up the remaining amount.
The scheme is set to cover all employees paid through PAYE and is set to be backdated to the 1st March 2020 and will last for a minimum of three months.
What should companies do?
To be eligible to benefit from the scheme, employers will need to designate those employees affected as furloughed workers and, importantly, notify the employees of this change in their employment status.
How to change employees to furlough workers?
For some of the smaller companies in the industry, this may be the first time having to furlough staff so it will be important for companies to consider the employment contract in place with their employee.
Guidance from the government states: “changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.”
For example, some employee contracts will allow employers to make certain changes without the agreement of the worker, whilst others require changes to contracts to have the consent of the member of staff.
Global law firm Dentons suggests that in either case, the change should be “documented by letter or email where practicable.”
Once furloughed, employers and employees should note that “furloughed workers must carry out no work for their employer,” states Dentons.
Notify HMRC of the change in status and earnings
HMRC will manage and administrate the scheme, with the chancellor announcing that a new online portal will be created in the coming weeks.
Once live, businesses will need to submit information about furloughed employees and their earnings.
Guidance from the government notes: “[Companies should] submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)”
The Coronavirus Job Retention Scheme is a reimbursement scheme, which means companies must continue to pay their furloughed workers and then be reimbursed by HMRC at a later date – it is hoped the first payments will be issued by the end of April.
Other important information for business leaders to know
With details still being released regarding the scheme, one noteworthy feature is that there is no requirement for mobility companies to close their doors in order to access the scheme, which means companies can continue to trade whilst being able to furlough some workers.
In addition, furloughed workers who may receive a lower income due to the 80 per cent salary may also be entitled to make claims through the welfare system to top-up incomes.
If shorter-term support is needed
For many in the sector, the promise of wages being reimbursed will mean many companies will be able to avoid costly redundancies and retain valuable skills and knowledge in a sector that has been disproportionately hit by the virus.
The delay setting up and accessing the system however may be too much for some companies to bear for companies, particularly mobility retailers, that have seen revenue almost disappear in the space of two weeks.
For companies facing drastic and urgent cash flow problems, the government’s Coronavirus Business Interruption Loan Scheme (CBILS) is now available through participating lenders – check out THIIS’ outline of how to access the loan scheme.https://thiis.co.uk/coronavirus-job-retention-scheme-and-what-mobility-companies-need-to-do-to-access-it/https://i0.wp.com/thiis.co.uk/wp-content/uploads/2020/03/Payslip-Calculator.jpg?fit=900%2C551&ssl=1https://i0.wp.com/thiis.co.uk/wp-content/uploads/2020/03/Payslip-Calculator.jpg?resize=150%2C150&ssl=1Government & LegislationInvestments & FundingNewsroomRetailer NewsSector NewsSupplier NewsTrade NewsOn the 20th March, the government announced its most significant intervention to date to support companies through the COVID-19 epidemic by confirming it will pay the wages of furloughed workers. A collective small sigh of relief could be heard from business leaders and employees across the country facing an unprecedented...Calvin BarnettCalvin Barnettcalvin@thiis.co.ukAdministratorTHIIS Magazine