COVID-19: Support for business in the Coronavirus crisis

A far-reaching plan for state intervention unfolded in the middle of March to support business and, ultimately, the workforce, in response to the COVID-19 crisis, which has seen organisations around the country suffering immediate and acute financial distress.

Key facts

• All businesses will be eligible for substantial reimbursement of wages through the Coronavirus Job Retention Scheme. Companies will need to designate those of its workers to whom it cannot provide work as ‘furloughed’. The Scheme will run for 3 months initially.
• Employees need to agree their furloughed designation, which is likely if the alternative is redundancy.
• Employers must notify HMRC of this fact and of the worker’s pay information, through a portal which is expected to be operational by the end of April.
• The state will then reimburse 80% of salary up to a maximum of £2,500, per furloughed worker, per month. The employer is not obliged to make up the shortfall.
• It is not yet clear whether employees can be forced to take annual leave during furlough and if so, whether full pay during leave must be paid.
• Furlough must last for at least 3 weeks and it is possible to rotate furlough amongst staff, in 3 week blocks.

The sheer scale of the task will inevitably mean that it will take time to be able to reclaim these funds from HMRC. In the meantime, companies can shore up their short-term cash position by accessing funds through the Coronavirus Business Interruption Loan Scheme, which loans are interest free for 12 months. We can all only but hope that these extraordinary measures are enough to minimise layoffs and long-term structural damage to the labour market and economy.