21/03/20

Lifeline for UK businesses – Kitsons

The announcement from the Chancellor, Rishi Sunak, yesterday evening represents a lifeline for UK businesses, saving many of their employees who were on the brink of redundancies and salary cuts.

There are a number of support packages in place, outlined in full here:

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
In short, the Coronavirus Job Retention Scheme will provide that employees who would otherwise be laid off during the crisis can be furloughed, a concept whereby they do not provide work but can be paid by the employer who then is reimbursed by the Government.  HMRC will reimburse up to 80% of their wage costs, subject to a cap of £2,500 per month.

In order to qualify, and employer will need to:

1. Designate affected employees as “furloughed workers” – note that you will still need to comply with employment law principles, such as consultation and agreement.

2. Submit information to HMRC on a new online portal

It is hoped that this scheme will preserve the employment of the affected employees whilst the country weathers this crisis.

Whilst the announcement itself will have brought an immediate feeling of comfort to the many employees who were facing being laid off or redundant, employers will no doubt be anxious to understand how this scheme will operate in practice and how they can benefit from it as soon as possible.  There are many questions arising from this, such as how will an employer who is not totally closing their business choose which employees to furlough and what information will be required for HMRC to assess a claim.  It is hoped that once the portal is announced then further detailed guidance will follow to allow us to advise you in relation to this measure.

What we can be certain of, is that whilst this headline suggests a blanket protection being offered to employers and employees, the devil will be in the detail and it is invariable that you will each have cases where you will need to seek specialist advice as to the application before proceeding with the steps.

We will be in touch further on Monday once the guidance is available.

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21/03/20

About the author

Jayme NicholsonPartner and Head of Employment

Jayme is a Partner and Head of our Employment Team

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