After much anticipation, this evening we finally received some clarity on the Government’s Scheme to pay 80% of staff wages (CJRS), and we are now in a position to advise you more fully on your HR strategy.
CJRS, Staff Furloughs and Salary Reductions
Unfortunately, despite lobbying from pressure groups, the furlough scheme only applies to staff that are ’laid off’ and therefore not available to do any work for their employer. It doesn’t provide any flexibility around ‘part-time furloughs’ for employers that are looking to reduce hours worked per person rather than headcount. Government technical update can be found here. Consequently, most businesses will now need a more complex HR solution that includes furloughing some staff and reducing the hours worked of other staff via a consultation process.
For staff you have chosen to furlough you will need to:
- Obtain written consent from the staff you have chosen to furlough so that you can begin implementation.
- Prepare letters confirming the position to inform them immediately of the situation and your decision.
For staff who shall continue working, you will need to:
- Consider the level of wage reduction you will need to implement;
- Begin a consultation process preparing the staff for what is to come;
- Obtain written consent from the staff and prepare letters confirming the position.
Contact the TC team at your earliest possible opportunity if you need any assistance with your HR strategy or delivery. We are anticipating that this process will continue for some time as the legislation develops and there might also be scenarios where staff move in and out of ‘furlough’ depending on the business’ performance. As always, TC Group will be on hand to support you through this difficult time.
Aid for the Self-Employed
Also announced today was support for the self-employed and it mirrors somewhat the relief for employees. 80% of earnings capped at £2,500 per month. Frustratingly, the support will not be available until June, although it is back-dated to 1 March 2020 and therefore will be paid as a lump sum.
If you qualify, HMRC will contact you and supply a form to complete and once completed will transfer the payments directly to your bank account.
The key qualifying criteria are:
- You will need to have completed an income tax return for the business;
- Your earnings from the business need to be less than £50,000 per year last year or on average for the last 3 years;
- The amount will be based on average monthly earnings over the past three years.
Contact us immediately if you have not already filed your 2019 tax return, as this is a critical step in gaining the benefits. The return needs to be filed by 23rd April 2020 for you to qualify for this support.
Unfortunately, this scheme does not apply to directors and business owners that pay themselves via a mixture of salary and dividends.
There is more support available to help the self-employed, including VAT deferrals, Universal Credit and the Business Interruption Loan Scheme. More information is already available via our website.
TC Group is here to guide you through this challenging period
Contact us today to discuss the points raised in this email or any other concerns you have as a business owner, about your personal finances, or, as an employer now on 0330 088 7111.