October 21, 2021

Volume XI, Number 294

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Coronavirus Job Retention Scheme: UK Government Announces Significant Financial Support for Employers

The UK Government has announced unprecedented financial measures intended to support UK employers that are struggling to pay employees during the COVID-19 pandemic.

It is introducing a Coronavirus Job Retention Scheme through which it will provide a grant to those employers of up to 80% of an employee’s wages (subject, that is, to a maximum grant of £2,500 per month). 

The scheme will open to all UK employers before the end of April and will cover the cost of wages backdated to 1 March 2020. It will be open for at least three months, though longer “if necessary”.

The move is intended to enable employers to lay off / furlough employees and keep them on the payroll, rather than make them redundant, so that they can readily return to work in due course.

Full details of the scheme are awaited and have been promised “shortly.” 

UK employers whose revenues are being adversely affected by the pandemic will wish to factor this development in to their financial forecasting from now. 

Given the proposed £2,500 per month contribution cap, it appears that this scheme will be of most benefit in relation to those employees earning a salary of £37,500 or less, in respect of whom an affected employer ought to be able relieve itself of 80% of monthly pay. The amount of relief for employers will be proportionately less, however, in respect of employees earning above that level. For instance, in respect of an employee on an annual salary of £60,000 who is furloughed under this scheme, the relief will cover only 50% of their £5,000 monthly pay. In addition, the 6 week roll out period will still mean that there is a likely to be a significant cash flow hurdle for affected employers to overcome before money can be recovered under the scheme. 

For some employers, therefore, the new scheme may still not be enough to avoid more drastic or additional measures needing to be considered.  

© 2021 McDermott Will & EmeryNational Law Review, Volume X, Number 82
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About this Author

Katie Clark, McDermott WIll Emery Law Firm, Labor employment attorney
Partner

Katie Clark is a partner in the law firm of McDermott Will & Emery UK LLP, based in its London office.  Her practice focuses on contentious and non-contentious employment matters. 

Katie is recognised as a leader in her field in Chambers UK 2011.  She is described as a “recognised force for her advocacy and commercial employment advice”, Chambers UK 2010 and as “very knowledgeable, superbly responsive, and no-nonsense…” Legal 500 UK 2011.

Her clients include global corporations, financial institutions, FTSE 100 companies, manufacturing companies...

+44 20 7577 3492
Paul McGrath, Employment Law Attorney, McDermott Will Emery Law firm
Associate

Paul McGrath is an associate in the law firm of McDermott Will & Emery UK LLP, based in its London office. His practice covers all areas of contentious and non-contentious employment law in the UK.

44-20-7577-6914
Chris Lynn Associate London Employment
Associate

Chris Lynn focuses his practice on employment law. He advises clients across a wide range of contentious and non-contentious employment matters, such as redundancy, performance management, disciplinary, TUPE transfers, sexual harassment, managing long-term sickness absence and discrimination. He has regularly delivered training to clients in both group and one-on-one sessions.

Chris has experience in advising on employment aspects of corporate transactions, including share sales, asset sales and initial public offerings.

+44-20-75773466
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