Coronavirus Job Retention Scheme & Sick Pay Relief

 

In an unprecedented measure not previously seen in our nation’s peacetime history, the Chancellor has unveiled a huge employment protection plan for those affected by the coronavirus outbreak.

 

With the advent of the Coronavirus Job Retention Scheme, the government has pledged to cover 80% of the salaries of employees, up to £2,500 per month, who are not working due to the coronavirus outbreak.

 

The employer may choose to top up the salary with the remaining 20% but there is no obligation for them to do so.

 

The employer is required to gain the consent of employees to enter into this scheme and must be mindful of attendant employment law matters.

 

The government have confirmed that all business types are eligible, including both profit-making and non-profit making organisations.

 

The scheme is designed to help those employees who are not working due to the coronavirus outbreak and hence are classed as ‘furloughed’ and thus are not working during the outbreak.

 

The aim of this intervention is to prevent such staff, unable to work during this situation, from being laid off and made redundant.

 

Initially, this scheme applies for up to three months. It is possible to bring back any staff that have been laid off, since 28 February 2020, if these employees are brought back into the workforce.

 

It is also possible to rotate staff or indeed to vary staff, bringing them into and out of the scheme, as business needs dictate, but employees must be on furlough for a minimum of three weeks at a time.

 

HMRC is working to set up the application scheme for those employers who need to access this support with an initial aim to start to make payments by the end of April. 

 

We expect that the application process will be administered via another HMRC portal, similar to the current PAYE portal. 

 

The scheme includes company directors and those on zero hour contracts and variable hours, with a set procedure for determining the level of pay to be as fair as possible.

 

In terms of directors, this means that 80% of the director’s salary as at 28 February 2020 will be funded by HMRC for directors put onto the scheme, up to £2,500 per year. Please note this does not include dividends.

 

Regarding variable and zero hour employees, those who have been employed for over a year, the salary will simply be a monthly average of their earnings for the past 12 months OR the same month’s earnings from the previous year, IF this is higher.

 

If the employee has only been with the employer for a shorter time period, an average of the earnings so far this tax year will be calculated.

 

For those joining an employer in February 2020, a pro rata average will be calculated. Such employees must have been with the employer before 19 March 2020 in order to qualify.

 

 

Statutory Sickness Leave and Pay

The government have also agreed to provide Statutory Sick Pay relief for all employees who are self-isolating – for either seven or 14 days – due to coronavirus symptoms, either manifest in themselves or their family with whom they live.

 

The sickness pay will be paid to employees for the entire period, removing the usual three waiting day routine, and there is no need to provide a medical ‘fit note’ in order to qualify for this leave.

 

If employees are advised to self-isolate for 12 weeks, as those who are venerable are being counselled to do by their doctor, statutory sickness pay would be made available for the full period. The employer, as described above, would be able to reclaim the first two weeks of this relief.

 

It is important to note that this guidance only applies to those who cannot work form home or of course are too ill to work. An employee who works from home should be entitled to be paid their wages.

 

The government is establishing a scheme through which these statutory sickness payments may be reclaimed. 

 

 

Ask Us For Help

 We are here to help and have set up a dedicated team to help you during this crisis. 

If you are considering taking advantage of any of the above measures, please email coronavirus@switchaccountants.co.uk and we will contact you to discuss your exact situation.

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