Coronavirus job retention scheme

Some of the key details of the Government’s major new coronavirus job retention scheme, announced on Friday 20 March, have been questioned by leading engineering services trade body ECA.

ECA’s Director of Employment and Skills Andrew Eldred said: “The Coronavirus Job Retention Scheme surely represents one of the most extraordinary products of these times. An effective 80 per cent state subsidy for wages in the private sector, in a previously liberal free-market economy. However, ECA believes that a more flexible approach needs to be designed into the scheme from the start. First, employers should be given the option to share work more equitably between their employees. In addition, employers and their employees should be free to agree other reduced hours working arrangements, whilst still enjoying the security offered by the Government’s 80 per cent pay guarantee.”

ECA believes that sharing work more equitably between employees could be achieved by them moving between working and ‘furloughed’ status according to a structured pattern – for example, one week ‘on’, followed by one week ‘off’. Arrangements of this sort are quite common for ‘furloughs’ in the USA, and there are similar arrangements for short-time working arrangements in the UK.

Secondly, ECA believes employers and their employees should be free to agree other reduced hours working arrangements, whilst still enjoying the security offered by the Government’s 80 per cent pay guarantee. This extra flexibility should help encourage businesses to continue servicing customers – for example by carrying urgent or safety-critical work – without putting their own survival and the economic security of their employees at risk.

More widely, ECA expressed some concern about the possible impact the new scheme might have on those who continue to be employed and working, compared to colleagues who would not be required to work.

The Government’s coronavirus job retention scheme is open to all companies regardless of size. They can apply to HMRC for a maximum of £2,500 per ‘furloughed’ worker per month, worth 80 per cent of their wages, with a grant paid direct to the business.

Other measures announced by the Government on Friday to support businesses included an extension of the business interruption loan scheme to 12 months, and the ability to defer VAT bills until the end of the year.

ECA has a freely available coronavirus industry hub, with an array of updates and guidance, available at http://www.eca.co.uk/coronavirus.

This article was originally published by ECA as ‘Coronavirus job retention scheme requires greater flexibility’ on 23 March 2020.

--ECA