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COVID-19: Job Retention Scheme

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In the midst of all the despair being faced by many businesses, the Government announced a vital measure on Friday 20 March 2020 in the form of the Coronavirus Job Retention Scheme (“the Scheme”).  The devil will be in the detail and there are many questions in relation to how the Scheme will operate.  Further information is expected in the coming days however for now, what we know so far is that:

  • The Scheme is available to all UK employers
  • The Scheme requires you to designate employees as “furloughed” employees.  What this means is that employees will remain on the employer’s payroll as opposed to being laid off or being made redundant, but they cannot work
  • An employer must then notify employees of this change in status, which is subject to existing employment law
  • A new online HMRC portal is being set up and employers will submit information about the employees that have been furloughed
  • HMRC will reimburse 80% of furloughed wage costs up to a cap of £2,500 per month
  • The Scheme will run for 3 months initially, backdated to 1 March 2020 and may be extended
  • Further information in relation to the Scheme will be released soon.  It is expected that the Scheme will be up and running by the end of April 2020

For businesses that need immediate assistance with cash flow then you may be eligible for a Coronavirus Business Interruption Loan.  The Loan is being delivered by the British Business Bank and is designed to assist small and medium sized businesses access bank lending and overdrafts.  Loans of up to £5 million in value will be available starting week commencing 23 March 2020.

The Scheme is a very attractive option to many employers however there are many questions that we can’t currently answer.  For instance, what if you need some level of work input from employees and so you are operating short time working.  On the basis of the Scheme announced it is not possible to claim salary for employees on short time working.  Can you move employees from furloughed leave back to working and then off again if you need to rotate and have a certain level of staffing?  Who knows.  We will update this note when further details are announced, hopefully soon.

An update to this article can be found here.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Employment team at Cleaver Fulton Rankin for further advice or information.


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Aisling Byrne

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