Government Pledge to Cover up to 80% of Staff Wage Costs During Coronavirus Outbreak

By Joanna Sutton

Senior Associate

There was some very welcome news for businesses and their staff in the Prime Minister’s press conference on Friday 20 March 2020, with the Chancellor confirming that a new Coronavirus Job Retention Scheme would be created.

The new scheme will provide for grants for businesses to pay up to 80% of the salary of workers (up to a maximum of £2,500) if they are kept on the pay roll rather than laid off.

The scheme will be available to all employers regardless of size, including limited companies, LLP’s, partnerships, charities etc. They will be able to access the scheme if they have staff who are classed as ‘furloughed’, namely they are not able to work, for reasons other than sickness. For example they are not able to work from home or the company they work for no longer has enough work available for them to do. Ordinarily it is likely that such employees would be made redundant or have their employment terminated, but the new scheme is designed to prevent this and will ensure that workers throughout the UK are able to keep their job and continue to receive a regular income, even if their employer can no longer afford to pay them.

The scheme will be administered by HMRC and backdated to the start of March. It is expected to be up and running within weeks, for an initial period of 3 months, with the potential to extend if longer. It is hoped it will save hundreds of thousands of jobs.

The move is unprecedented, with the Chancellor telling businesses “the Government is doing it’s best to stand behind you. And I’m asking you to do your best to stand behind our workers.”

Other announcements unveiled include the fact that from Monday 23 March 2020 the coronavirus loan scheme will now be interest free for 12 months, rather than the 6 months originally proposed. In addition, VAT payments for the next quarter will be delayed until the end of June 2020.

Hopefully these announcements will reassure both businesses and employees that there is a way through the uncertain times ahead. Finer details of the new furloughed worker status are due to be announced and we will continue to keep you updated.

We can provide further advice on assistance on any employment related issue, please contact our Employment Team on 0345 646 0406 or fill in our online enquiry form and a member of the Team will be in touch.