Coronavirus Job Retention Scheme

Last Monday, the new Coronavirus Job Retention Scheme opened for applications. This Scheme is part of a number of financial measures the Government has brought in to protect employees and businesses during this unsettling global pandemic. The financial measures taken by our Government will ensure that the employer-employee relationship is protected, allowing for a quicker rebound of our economy when lockdown restrictions are lifted, partly because a business will not need to go through the process of re-hiring its workforce. The measures also protect businesses in supporting cash flow through grants and or loans.

The Coronavirus Job Retention Scheme is designed to help employers whose businesses have been ‘severely affected’ by Covid-19, to avoid making employees redundant and protect their business - and the UK economy. The Scheme applies to employees on the PAYE payroll on 19th March 2020. All employers are able to claim under the Scheme. Eligible employees – those on PAYE - can be on any type of employment contract including full-time, part-time, agency, flexible or zero-hours contracts. Fixed-term employees can also be furloughed and their contracts renewed or extended during furlough. To be considered furloughed, the employees must not be working at all for the business, or any linked business, but will remain ‘on the books’. This means they must not provide services or generate revenue for or on behalf of their employer.

Government legislation facilitates furloughing, but it is the businesses themselves who make the decision as to whether or not to furlough employees. The Government has been very clear that firms should be considering this option, rather than forcing staff to lose out during this difficult time. The Scheme allows companies to keep workers on their books without incurring wage costs at this difficult time and allows workers to continue to receive a monthly income.

The Self Employment Income Support Scheme is available for self-employed people who are on PAYE and where more than 50% of their income comes from self-employment. This Scheme only extends to people who have trading profits of under £50,000 per year, so does not include high earners. Self-employed people using the Scheme can continue to work and claim Universal Credit at the same time. There is no application involved; HMRC will contact eligible people.

The financial support and measures taken to support workers and businesses is unprecedented. We all need to hold our nerve in this really difficult time for everyone and businesses must make every effort to retain their staff. Concerns over immediate cashflow and payroll challenges for businesses could be met from the 12 month-interest free business loans announced by the Government, if businesses are not eligible for the £10,00 or £25,00 grants, provided by the Government. The banks need to support our businesses in approving loans.

Covid-19 is a natural disaster. The Government has taken measures to support workers and businesses to effectively ‘suspend’ our economy to avoid recession and financial shock. We see a massive economic decline as a result – but this economic decline is not caused by long term bad policy decisions, but by a decision to make a capital injection into the economy to protect it. There has been much talk about the plan for recovery, but the Government started that plan in the financial support measures taken, by injecting – spending - money on those that need it the most, on workers and businesses, preparing the economy for recovery.


Sally-Ann Hart MP