Given the way this scheme was built up prior to its announcement and how it has been reported, certainly in some areas of the media, employers will be forgiven for thinking that this is a scheme to financially support them by subsidising their wage costs through this difficult period. This scheme is nothing of the sort and provides no direct financial benefit to employers whatsoever. This scheme is really a device to help employees who would otherwise not be receiving an income because they have been made redundant or temporarily laid-off, with the employer acting as the middle-man to effect payment.
The reason for this is that the employees in question (known as ‘furloughed’ employees) are not allowed to actually undertake any work for the employer in respect of any period that they are paid under the scheme. Therefore, for an employer who is having to lay staff off, not because they do not have work for them, but because they just can’t afford to pay them due to a drop in demand or reduced income caused by a government instruction to shut down or not undertake certain operations, this scheme does not help them directly (indeed it doesn’t help any employer directly). This may be the situation for many administrative or head office/central overhead staff and this applies even where they are working from home.
The main benefit of the scheme for employers, therefore, is that it substantially reduces the chances of employees going off and finding employment elsewhere (staff need to remain on the books as employees under the scheme), so when things do get back to normal employers have not lost their workforce.
This scheme is in its very early stages. It’s not possible for employers to apply for it yet and many of the details are yet to be made clear, which will hopefully answer some of the many many questions that are arising. It is also possible that the scheme will change.
We are being inundated with questions about this scheme and other coronavirus related issues, and are here to help with any queries that employers have. Given the unprecedented situation, we have substantially reduced our rates by over 50% to £85 an hour plus VAT (for the next month).