The article below summarises:
- the key points relating to Coronavirus Job Creation Scheme
- a few practical considerations if you’re going to use the scheme
- a sample temporary termination/furlough letter that you can copy
The Coronavirus Job Retention Scheme was announced in the Chancellor’s update on Friday 20th March as part of the ongoing package of measures to support businesses through the COVID-19 outbreak. Here are the key points:
- If you were/are considering laying staff off to reduce your costs this scheme is intended to help your staff and maintain the viability of your business.
- Instead of permanently laying them off you will be encouraged to “furlough” them which in essence means they are temporarily terminated.
- It provides all businesses and charities with grants of up to 80% of a furloughed employee’s wages (capped at £2.5k/mth)
- It will come in the form of payments delivered via HMRC, which is unprecedented and is going to require HMRC to set up:
- a portal for you to register details of the furloughed employees and their earnings
- a system to make payments to employers
- To participate in the scheme:
- Formally notify employees that they are being furloughed and not laid off – see sample letter below. Keeping in mind that this does not in any way change their employment rights and these must be complied with at all times.
- Make sure that you keep furloughed employees on your payroll.
- Submit their details on the HMRC portal when it becomes available. I’ll keep track of this and provide an update when it goes live
- The scheme will run for a minimum of 3 months
As HMRC doesn’t currently have any mechanism to make payments to employers it would seem unlikely that this will available for this month’s payroll (if you pay salaries at the month end) payroll cycle so I’d focus on two things in the very short-term:
- Getting the grants/funding that are immediately available – refer to this article -> What grants and funding are available to small businesses? [Updated]
- Issue temporary termination/furlough letters to relevant staff members in readiness for when HMRC submission portal is operational. Here’s a sample temporary termination letter that I’ve drafted but please bear in mind that I’m not an employment lawyer or HR specialist. This is just my best guess at what should be in there based on common sense, compassion and clarity.
Also, bear in mind that this scheme is being administered by HMRC so I wouldn’t try anything cute. I’m sure some less scrupulous people will attempt to “game” the system but I suspect (just my opinion) that any companies taking advantage of the scheme will get a knock on their door at some point.
I’m only using official government sources to pull this information together but just trying to making it easier to read and more actionable. Here are the sources for this article: