Employer Reimbursement for Furloughed Worker Wages

COVID 19 News and Updates – UK | Prager Metis | Mar 25, 2020

Coronavirus Job Retention Scheme

Summary of Government Support produced by Prager Metis LLP – Last Updated 23 March 2020

What We Know

The Government will set up a scheme so that all UK employers, regardless of size, will be eligible for assistance where an employee has been designated as a “furloughed worker.”

In this context the term “Furloughed workers” applies to those workers whose employers cannot cover staff costs due to coronavirus and as such they have been asked to stop working but have not been made redundant.

HMRC will reimburse up to 80% of “furloughed worker” wage costs of up to £2,500 a month.

The scheme will run for at least three months from 1 March 2020 and there is a scope of extending the scheme longer if necessary.

How does the Scheme Work?

Although we are still waiting for details we believe that if the employer intends to access the scheme they will need to discuss with the affected worker(s) about becoming classified as a furloughed worker.

This would mean that the worker is being kept on the employer’s payroll, rather than being laid off.

To qualify for the scheme the furloughed work should not undertake work for the employer.

Workers will remain employed while furloughed, and the employer could choose to fund the difference (i.e. twenty percent) between the rebated amount from HMRC and the salary due.

What should employers do to access the scheme?

To access the Coronavirus Job Retention Scheme, employers will need to take the following steps:

  • Designate affected employees as ‘furloughed workers,’ and notify employees of this change (changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation).
  • 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).
  • HMRC are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Who to contact

The Scheme will be operated by HMRC but details of the new system are still to be published.

We would recommend that you consider obtaining advise from either an Employment Lawyer or HR specialist.

Anticipated Availability

Details of when the new system will be available is yet to be published.

Further information

Please see the Government Publication “Covid-19 Support for Business”

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