The beginning of 2020 demonstrated positive figures for employment in the UK, with the Office for National Statistics (ONS) estimating that between November 2019 and January 2020, 32.99 million people aged 16 years and over were in employment, demonstrating a growth of 271,000 more citizens than just one year prior. However, with the introduction of strict self-isolation measures due to the outbreak of Covid-19, redundancy has suddenly become a prospect for a large percentage of the UK workforce.
On Friday 20th March 2020, the UK Government announced an initiative for businesses across the country which would support all UK employers to continue paying part of their employees’ salary for those who would have been otherwise paid off during the crisis. This is known as the ‘Coronavirus Job Retention Scheme’.
Coronavirus Job Retention Scheme
As of writing, there has not been a full disclosure of what this scheme will mean for employees in the long term. However, the UK Government have announced that they will be funding 80% of employee salaries up to a cap of £2,500 per month.
The employer will continue paying the salary directly to the employee, hoping that they would cover the additional 20% of earnings, with 80% being claimed back by the employer through HMRC. Employers will likely have to register their employees through a government portal.
The Job Retention Scheme is available to all UK businesses and will require employers to designate affected employees as ‘furloughed workers’ and make employees aware of participation in the scheme and the fact that their status has changed.
The Government has indicated that the status of employees remains subject to existing employment law and may be subject to negotiation (depending on the employee’s contract).
Employers are required to submit information to HMRC about the employees that are in this position, including their earnings. This will be done through an online HMRC portal, which is in the process of being set up.
For businesses currently experiencing cash flow issues, application to the ‘Coronavirus Business Interruption Loan’ is available. More information is available on this is available by visiting https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/
What do employees need to do?
The responsibility is with the employer to apply to the scheme, and employers have been encouraged to communicate changing employment status with employees.
Employees who have not received communication from their employer should speak to their line manager / HR department to gain an understanding of their personal circumstances.
What if I am on a zero-hours contract?
The full details of the government scheme are still to be announced, but it is thought that allowances will be based on an average from a previous period of earnings. This has yet to be confirmed by the government, and employers should confirm what is being paid to the individual employee.
What if I have coronavirus / have been deemed unfit for work?
You will be entitled to Statutory Sick Pay (SSP) as a minimum, but contracts of employment should be consulted to see if you are entitled to contractual sick pay through your employer.
Those who cannot work from home and have been told to self-isolate should still receive their contractual sick pay / SSP and are encouraged to contact their employer for more information.
What if my employer is not participating in the scheme or advises me that my redundancy / layoff is definite?
Further information is yet to be announced, however many citizens will have statutory rights under the guidance on layoffs and short-term working (including redundancy). More information on this can be found by visiting https://www.gov.uk/lay-offs-short-timeworking
What if I have recently left a job for another, but never got the chance to start before all of this happened?
In this instance, people are encouraged to contact the previous employer to see if they will reinstate them (re-hire them) and designate them as a ‘furloughed’ employee. This would mean that you should receive 80% of your salary from the Government.
The Government are yet to announce if they will be paying 80% of earnings for those who are self-employed. Self-employed people cannot claim SSP, however, there are options still available to draw some income.
There has been relaxation by the Government on the rules for claiming Universal Credit. The ‘minimum income floor’ (the earnings threshold used to work our whether someone can receive benefits and how much) has been suspended. The amount they can receive is equivalent to the statutory sick pay rate.
Employment and Support Allowance (ESA) will be paid to those eligible from the first day they are sick (rather than the usual 8th day).
There are options available for those who are self-employed, whether they own their own home or rent from a landlord.
Self-employed with mortgage
Lenders will introduce three-month ‘mortgage holidays’ for those experiencing financial difficulty due to coronavirus. Individuals should contact their lenders to discuss this in more detail, but this would mean a break of three months in payments. The ‘missed’ payments would then be worked out across the remaining duration of the mortgage, with slightly higher amounts to be paid each month.
In contrast, some lenders are offering the option to extend the mortgage by the duration that it would take to cover the deficit as an alternative to increased payments. Contacting the lender as early as possible is the best course of action when you realise that you are in, or may end up, experiencing financial difficulties.
Self-employed who rent
Those who rent may be able to get contributions towards their rent from local housing allowances. More information on local housing allowances can be obtained by contacting the housing department for the local authority in which you reside.
Payment of self-assessment tax (Payments on account)
These payments have been deferred until January 2021. Help may be available from HMRC if coronavirus has impacted a self-employed person’s ability to pay taxes. HMRC have a tax helpline for more advice, which can be contacted by calling 0800 0159 559 (Monday to Friday, 8am-4pm).
More information is available at https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19
Smaller businesses (with less than 250 employees) will be able to claim statutory sick pay paid for COVID-19 absence from the government. This will cover up to two weeks’ sick pay per eligible employee.
There is also the option to apply for the coronavirus business interruption loan scheme which will allow businesses to access bank lending and overdrafts. More information on this is available at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-business-interruption-loan-scheme
For those who pay VAT, there will not be a need to make any VAT payments from 20th March to 30th June. Any work conducted in this period that is subject to VAT won’t be due for payment until January 2021.
For more information, which is updated regularly on rights in relation to COVID-19 and the coronavirus, you can visit www.advice.scot/coronavirus
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