Our guidance on the governments salary reimbursement scheme

The government announced on Friday that it will be putting in place several measures to help businesses survive the coronavirus pandemic. The most eye-catching on these was a plan to put in place measures to allow businesses to seek reimbursement for 80% of staff’s wages in certain circumstances. The question on a lot of lips is how businesses actually go about claiming this money, as there was not a lot of detail in Friday’s speech.

Guidance on how to do this is set out here: 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-job-retention-scheme.

We have also set out below our tips on what you’ll need to take into account when seeking reimbursement:

Furloughed workers

Claims for reimbursement of salary can only be made for those employees who have the ‘furloughed workers’ status. Furloughed workers will likely only be those who are not working. There is a lack of specificity on this point, but that is the logical conclusion from the terminology used. If you have staff who you have negotiated short-time working arrangements with, you may need to enter into renegotiations with them about their working time.

Changing contractual terms

To change the status of your employees, you will be changing their contractual terms. To do this legally, you will ideally need their consent and to record the change to their terms and conditions in writing.

The alternatives are that the change is accepted by conduct or that you dismiss and re-engage your employees on the new terms. You can notify your employees of the change to their contractual terms in writing and they can be deemed to have accepted it by conduct if they comply with the new terms. If they reject or protest the new terms, you have the option of dismissing and re-engaging on the new terms. However, both of these options are risky, as the former would be a breach of contract if not accepted and the latter could amount to unfair dismissal if the employee rejected re-engagement.

Claiming from HMRC

You will need to submit a claim for reimbursement to HMRC for any furloughed workers on your books. Government guidance states that there are no current systems in place for this reimbursement to be made, and so it may be some time before any payments are made.

Please contact our HR and Employment law team for further guidance or any questions that you may have about how your business can manage its workforce during the coronavirus pandemic.