To avoid redundancies and layoffs the government has introduced a coronavirus job retention scheme. Businesses are able to agree with employees that they will take ‘furlough leave’ and be paid not to work until such time as their role becomes viable again. This will allow the employer recovery of 80% of wage costs up to £2,500 per month per employee. The remaining 20% can be paid at the employer’s discretion. Full details on the scheme can be found on the HMRC website by clicking here.
The farming industry employs key workers who are, on the whole, able to keep working. However, we have already seen this valuable relief actioned for rural and diversified businesses such as wedding venues, riding schools, farm parks and cafes.
The scheme is available from 1 March 2020, initially for three months. If this is a step you are looking to take, then every day counts because the longer decisions are delayed the more wages will need to be funded by the employer.
The furloughed worker details will need to be uploaded onto a HMRC portal which is being urgently set up. March wages will have to be paid by the employer and potentially not be recovered until late April so this will have cashflow implications. You may be eligible for a coronavirus business interruption loan to assist with this – for more information click here.
The steps to take to furlough employees are as follows:
- Decide which staff to furlough and consult with them.
- Decide if the 20% discretionary top up will be paid.
- Notify effected employees. We would suggest this is put in writing in a letter or email setting out the date the furlough starts, when it will be reviewed and how to keep in contact.
- Submit month end payroll detail in the usual manner and pay staff.
- Submit detail to HMRC when the portal is live in order to reclaim the qualifying costs.
As with all the new coronavirus support schemes this is a work in progress. The above is our best interpretation of the limited information available at the time of writing.
Please get in touch if you would like to discuss this further.