COVID-19 UK Employee Sick Pay rules Newsletter March 31, 2020

March 31, 2020        – by Daliah Sklar, UK Immigration Solicitor

UK Wages, sick pay and time off explained

Employees who are paid by the Company are eligible to receive up to 80% of their salary paid by the Government. This program is called “FURLOUGH” and the UK Government is permitting “layoff” employees to apply for a Government grant for temporary leave due to the special needs of a company, which has been caused due to economic conditions of the economy as a whole. The idea is to secure workers from being redundant. On 26th March 2020 – The UK Government has introduced the new scheme called Coronavirus Job Retention Scheme

The scheme has introduced a number of predominant issues related to UK businesses:

This includes a package of measures to support businesses including:

  • a Coronavirus Job Retention Scheme
  • deferring VAT and Income Tax payments
  • a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
  • a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • the HMRC Time To Pay Scheme

Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis, but who are being kept on the pay roll – “Furlough employees”. HMRC will reimburse 80% of their wages, up to £2,500 per month.

How to access the scheme

You will need to:

  • designate affected employees as ‘furloughed workers’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

How does this affect my Foreign employees who are on a Tier 2 Work visa or a Tier 1 Entrepreneur Visa? 

If you are a salaried employee working for a UK Company who is reporting your monthly employment through the PAYE scheme each month, and you have no option to work today – your employer should report you as a FURLOUGH worker. As a UK employee, you shall cease to receive your monthly salary since you are not permitted to work – however you are not considered redundant. Your employer shall be reimbursed 80% of your salary, by HMRC, and your employer is obligated to pay your reduced salary. This solution will last for up to 3 months and may be extended if necessary by the Government. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March 2020.

DRSI LAW can assist in guiding you through the legal process of updating your employee.

HMRC are diligently working in having the reimbursement system being operational as soon as possible. Existing systems are not set up to facilitate payments to employers.

If your business is in need of short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

DRSI LAW is obligated to the safety of our team & our clients at this time. 

Read more on our website


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