ABC Finance’s Gary Hemming explains: Paying staff through the crisis can be a major concern and cause immense pressure on cash flow. In this article, I will break down the two recent changes that have been introduced to help prevent these issues.
Payments for ‘furloughed’ staff
The Coronavirus Job Retention Scheme was announced on Friday 20 March to ensure employers are given an alternative to placing staff on unpaid leave. The scheme is available to all UK businesses, so everybody in the industry will be eligible – so long as each is a UK business.
Staff who are not currently needed but will be once more when the business begins to function normally again can be designated as a ‘furloughed worker’. These workers are those who have been granted a leave of absence.
Once staff are notified that they are to be furloughed, HMRC must be notified through an online portal. The portal has not yet been built but is expected imminently. As soon as the portal is live, we will update this article to provide further detail on the process.
Once accepted by HMRC, you will be reimbursed for 80% of the workers’ wages – up to a maximum of £2,500 per month.
In its briefing on the scheme, the Government points business owners to the Coronavirus Business Interruption Loan Scheme, suggesting that a business loan may be a faster solution – which may mean the portal for grants won’t be available as quickly as we’d all hope.
Support for those who are paying sick pay
For employees who will be remaining in their role throughout the crisis, but then take time off through illness, you can now reclaim statutory sick pay (SSP) paid for sickness due to Covid-19.
This applies to all businesses that had fewer than 250 employees as of 28 February 2020.
The new rules allow you to reclaim up to two weeks of SSP per employee.
Again, as this is a new scheme, the rebate process is not yet set up (we will provide more details once it’s live). In the meantime, make sure you keep records of all employee sickness and SSP payments ready for when you can claim.
As things continue to develop at an unprecedented rate, legislation is, for once, developing faster than the technology allows. As such, the schemes announced aren’t yet available to claim from. As Government support for UK SMEs has ramped up so quickly, these rebates will certainly be a priority, but may not be available in the very short term.
Gary Hemming also offers his advice on grants and loans available.