In a massive boost for employers and employees the government has announced direct funding for employers to retain their staff on the payroll the Coronavirus job retention scheme, and this includes bringing back people already laid off or made redundant. The measures are as follows:
- It is for any employer small or large and from all sectors
- Employers will need to contact HMRC for a grant
- This will cover upto 80% of the salary of employees upto a maximum of £2500pm, and employers can top up if they want to
- It can be backdated to 1 March for anyone already laid off or affected
- It will be in place for at least 3 months initially and will be extended for longer if necessary
- No limit on amount of funding has been made
- This also applies to directors on minimum salaries
This will mean that if there is a lock down and employees cannot work or are unable to due to the outbreak, employers will be able to retain the staff ready for when the “all clear” is given and the economy can get straight back on where it left off. The wording implies employers will have to pay 20% of the bill for the 3 months, but that is much better than laying staff off then having to re-employ them or others in due course.
How to secure the funding and how it is processed for payroll will be clarified in due course, but the Coronavirus job retention scheme is a welcome boost for worried staff and their employers. You should seek professional advice before taking any steps based on these contents. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend, Kent – Accountants who “speak your language”
Very confused. This Job Retention Scheme (JRS) is all very good for those who have been temporarily laid off, but what about workers who have seen their hours reduced?
Example 1: We have a worker originally on 24 hours a week, and have had to reduce her hours to 16. Do we therefore reduce her hours to 0, so she receives JRS to the equivalent of 19.2 hours (80%). Better for the employee, but means the business loses out. Or do we pay her for the 16 hours – we are out of pocket and the employees receives less pay.
Example 2: We have 2 admin workers. We now only have enough work for 1 admin worker due to coronavirus. Do we furlough 1, who now gets paid 80% to do nothing. The other gets paid 100% and works a full week. How is that fair to either of them?
No explanation of how this JRS supports any business other than those who have had to lay off staff to 0 hours. It makes no logical sense!
What am I missing?
Hi Simon
The intention is that staff are retained who would otherwise be laid off, and I agree it does not help in the scenarios you have laid out but these are imperfect times I am afraid. I believe we may have a full lockdown at some stage so no one may be able to work except dedicated homeworkers who can continue with no changes like myself. Sorry not to be more helpful.
Alastair
Thank you Alastair. There will be millions of workers who are on, or will soon be on, reduced hours, but not furloughed. This is not a unique set of scenarios here, but will account for a high proportion of the population. There will be tens of thousands of businesses with staff working reduced hours from home.
This is more than imperfect, this is just illogical and makes no sense, and extremely damaging to business. As it currently stands, it essentially forces those businesses to furlough their staff, despite there being work available. No worker is going to want to work reduced hours on reduced pay, if the Government can offer 80% of their salary if they choose to do 0 hours. That is madness and forces us to move our staff to 0 hours and move our business to complete lockdown.