COVID-19: Key considerations for rural businesses using the Job Retention Scheme

Rural estates and farms with diversified enterprises adversely affected by the coronavirus lockdown may want to take advantage of the Job Retention Scheme, which is also known as the Furlough Scheme.

The availability of the scheme has proved to be a lifeline for many rural businesses, which have seen trade for wedding venues, holiday lets and visitor attractions disappear as a result of movement restrictions.

The scheme is designed to avert job losses arising from the COVID-19 outbreak, by underwriting an employers’ staffing costs.

The basic principle is that the government will reimburse employers 80% of the wages of furloughed workers, up to a figure of £2,500/month per employee.

 The headline aspects of the scheme are:

• The scheme is open to any UK employer running a PAYE scheme which started on or before 19 March, in respect of any staff member employed on or before that date
• There is no limit to the size of business or sector that is eligible.
• The furloughed worker remains on the employer’s payroll and continues to be paid by the employer, who claims reimbursement from HMRC via an online portal.
• The scheme will run until 31 July (from 1 March) in its current format. However, the final date you can furlough an employee for the first time will be 10‌‌ June.
• Furlough is an all or nothing decision until 1 July. There is no scope at present for placing workers on reduced hours and a furloughed worker is not allowed to carry out any work for the employer during the furlough period.
• From 1‌‌ July, employers can bring bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. Employers pay for the hours that are worked.
• The scheme will taper from 1 August. This means that during August the government will continue to pay 80% of wages up to a cap of £2,500, but employers will need to pay National Insurance and pension contributions (these are being covered by the government for the period 1 March to 31 July).
• From September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay National Insurance, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500. The government contribution will drop to 60% in October, with the employer obliged to top this up by 20% to reach the 80% target.

Key considerations for employers considering furloughing workers include:

1. Whether to ‘top-up’: Some employers are reducing wages to pay furloughed staff 80% of their normal salary, whereas others are choosing to pay staff as normal which is good for staff morale and employer/employee relations, but this may not be possible for struggling businesses.
2. Who to furlough: This can be challenging where some limited trade is continuing and employers have to decide which employees should be furloughed and which should continue to work. Some workers, for example those with young children or family members with health conditions, may actively welcome being furloughed, but this may not be the case. To avoid adverse reactions and allegations of discrimination, employers should identify fair and objective criteria for deciding which employees to furlough.
3. Whether to rotate: It is technically possible to rotate furloughed workers, provided that the minimum furlough period of three weeks is met. However, it may prove to be overly complex administratively.

Get in touch with your local Strutt & Parker contact if you would like further guidance on how the Job Retention/Furlough Scheme works.

This article was last updated on 30/05/20. However, policy is changing quickly so please contact a member of our team for the latest position.