Full details are not yet released from Government, but the ICAEW has today provided us with guidance based on their more detailed understanding so far.
All UK businesses are eligible for the Job Retention scheme. HMRC will reimburse 80% of the wage costs (so including Employers NI and Employers Pension costs) of those workers who you are genuinely unable to temporarily provide work for (who are ‘furloughed’), up to a cap of £2,500 per month. Its important to recognise this is a grant from HMRC, not a loan.
The ICAEW understands single director companies and agency workers are eligible for the scheme, as long as genuinely there is no work is undertaken during the furloughed period.
You must prepare a letter to each worker advising them of their furloughed status (which is a variation of their employment contract) and offering to pay either 80% of their wages, or advising you will be topping up to 100% full pay. You must get their written agreement to this. We hope to be provided with draft wording for such letters in due course. If the employee refuses to accept the change in status or the 80% pay offer, then redundancy proceedings can commence in accordance with employment law.
The employees must undertake absolutely no work for the business during a furloughed period. The furloughed period and reimbursement claim can be backdated to 1 March 2020 (if that was genuinely the timing). We understand that furloughed periods may begin and end, for example as furloughed staff return to work to cover for someone who is taken ill. We also understand there may be provision for circumstances where shift sharing between employees is undertaken for example in nursery or school settings.
The relevant wages to be used in the calculation will likely be taken as an average of the previous 12 month period, or less for a new employee. Specific guidance is expected for oddities such as seasonal workers or those on maternity leave, where perhaps the wages earned over the same season last year or pre-maternity period will be used.
HMRC are urgently setting up a portal and process for us to claim this reimbursement on your behalf. Please contact us immediately if you have any workers you need to temporarily send home, so that we can make the applications when it is available.
In the intervening period, hopefully the employers has sufficient funds to pay the staff, before the reimbursement from HMRC is received. If not, the official advice is to apply for a government backed loan under the Coronavirus Business Interruption Loan Scheme (details on our webpage), to provide sufficient cashflow until the reimbursements arrive.
Finally, please note Hanley & Co are accountants, not legal or employment lawyers. The information provided above is our understanding but we cannot be responsible for the above advice. If you are in any doubt, please take separate legal advice or await official guidance.
Remember Dean and Gina would be delighted to talk through your individual circumstances and how any of the Covid reliefs (detailed on our dedicated webpage might apply to you. We’re all working remotely at the moment, but are available on our usual contact numbers and emails during normal office hours.