On Friday 20th March, the UK government unveiled a new scheme to help businesses and their employees during the Coronavirus outbreak.
The Job Retention Scheme helps employers to pay their staff’s wages throughout the crisis, without having to permanently cut jobs. Under the scheme, the government plans to pay 80% of a ‘furloughed’ employees’ wages.
In response to this, we have put together a template agreement for employers and their employees to sign, to avoid any claims being made for breach of an employment contract.
Click here for more details and to download the agreement.
Unsure of what the Job Retention Scheme entails? Below we answer some of the most frequently asked questions.
A ‘furloughed’ employee is given a temporary leave of absence by their employer. While on furlough, the employee remains employed by the company, but must not undertake any work on the company’s behalf.
If an employee is still working for the business, even on heavily reduced hours, they are not considered furloughed and will not be eligible to have their wages covered under the scheme.
Any UK organisation can claim under the Job Retention Scheme, including businesses, charities, recruitment agencies, and public authorities. Note that it is the employer who must claim under the scheme, not the employee.
To be eligible, the furloughed employee must be on PAYE (Pay-as-you-earn) and must have been on PAYE on 28 February 2020. The employee can be on any type of contract, including full-time, part-time or contract.
The government has said it will cover 80% of furloughed employees’ wages, up to a maximum of £2,500 per month. There is no obligation on the employer to pay the additional 20%, however, some employers may choose to.
While on furlough, the employees wage will still be subject to the usual income tax, national insurance, and other deductions.
You can apply for the scheme via an online portal which will shortly be set up by HMRC. Employers will need to provide information about the furloughed employees and their salaries.
More details can be found via the gov.uk website.
The scheme is expected to run for at least 3 months from March 2020, with extensions if necessary.
Once HMRC have received the claim from the employer and confirmed that they are eligible for the grant, they will then make payment via BACS to a UK bank account.
It is then the responsibility of the employer to pay the employee.
We have produced a Job Retention Agreement template, designed to help employer and employee reach an agreement so that the employee may be appropriately furloughed. It will help the business to receive the monies required to pay their employee, safe in the knowledge that they are not storing up trouble for the future.
For more details and to download the agreement, click here. Or for any further questions, please just get in touch.
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