8 in 10 workers in the hospitality sector have been furloughed. Research by the Office for National Statistics showed the sector had temporarily laid off the largest proportion of workers since the UK lockdown began.
That’s over 2 million hospitality employees currently furloughed. With no clear end to lockdown in sight, and many businesses estimating job losses of between 11 and 49%, the government’s Coronavirus Job Retention Scheme (CJRS) is a lifeline the industry desperately needs right now.
CJRS is designed to help employers who might not be able to keep their current workforce because day to day operations have ceased and income has dried up. By covering 80% of an employee’s wages, up to a maximum of £2,500 per month, and putting them in furlough, the scheme helps companies keep their current teams employed and also to re-recruit people previously laid off or made redundant or who have recently left the company.
Natasha Nagra. Talent Resourcing Manager at Kew Green Hotel has first-hand experience of the CJRS in operation. With 55 hotels in the group, only 20 are partially opened, having been repurposed to accommodate NHS and MOD staff. A significant number of Kew Green people have been furloughed.
“As an organisation we took a stance to be as open and honest in our internal communications as possible during this time. Our primary consideration was how to communicate with our people and keep them informed. When the CJRS was introduced, we didn’t have all the information and so we told out teams ‘this is what we know right now, and we’ll keep you informed.”
Every employer will be aware of the CJRS, but some confusion still exists over the parameters and processes. So what are the important elements that every employer needs to know?
Natasha continued, “Decoding the legislation meant working with our legal partners to ensure we got everything right. We created a 10-page guide which details what the furlough scheme means to each team member.”
Peace of mind for employers
Kate Nichols is CEO of industry body UKHospitality and actively campaigns on the sectors’ behalf. We caught up with Kate to find out about the legislation and the impact of Covid-19 on the hospitality industry.
Kate commented, “Many businesses have no revenue at present, so we are facing an unprecedented crisis. The Coronavirus Job Retention Scheme is key to ensuring that employees have some peace of mind and that jobs can remain open.”
Scheme extended until June 2020
The scheme has now been extended until the end of June 2020 – providing hospitality businesses with some level of certainty over the coming months that their people can be paid.
The scheme was originally open for three months and backdated from the 1 March to the end of May. The UK Chancellor has advised that he would keep the scheme under review and extend it again if necessary, which he has now done.
Kate continued, “The recent extension of the furlough scheme was great news for the sector and a welcome sign that the Government has listened to the sector’s concerns and those of the workforce. It will provide valuable help for employees who had missed the previous deadline, and give businesses some breathing-room, knowing that they will be in a stronger position once they are in a position to reopen.”
MacDonald Hotels and Resorts have over 3,500 employees throughout the UK. Kelly Westwood is People Director and we asked her what lockdown meant to the business. “Our initial thoughts were about our people, with the business effectively shut down. We could see what was happening in Europe. When the Chancellor announced the CJRS it was a huge weight off the industry and we decided furlough was the way forward.”
“The really important thing was to keep our workforce going and the guidance was very difficult and open to interpretation. We worked with Pinset Mason who navigated us through it. The past few weeks have been challenging but we’ve all been pulling together. The most frequently asked questions have been about employee entitlements. There was a lot of confusion about the legislation however it was easy to register once the website opened.”
Furlough – the facts at a glance
- Employers can use the scheme at any point during the initial 3-month period (note it may be longer). This means you can decide about furloughing some people now and add others later as circumstances change. The minimum furlough period is 3 consecutive weeks.
- PAYE will continue to be recorded and paid through furlough – as will Apprenticeship Levy payments – but you may request a deferment of tax payments due to COVID19.
- The scheme will run initially 4 months from 1 March-30 June but may be extended
- The scheme is open to all UK employers of whatever size, including charities and public sector, provided the company and payroll scheme were in existence on 19 March 2020.
- Companies must have a UK bank account and be enrolled for PAYE online (note this may take up to 10 days). If you do not have a e-PAYE account, you should register now.
- The Government has changed the eligibility rules to allow employees who were employed by the company on or before 19 March to be furloughed providing that they were on the PAYE payroll and were notified to HMRC on an RTI submission before that date.
- Employees who were employed before 28 February and an HMRC RTI submission by that date, but were made redundant or stopped working for the employer after that and before 19 March can also qualify for the scheme if the employer reemploys and furloughs them.
- Furloughed workers can be on any type of employment contract include full, part-time, agency and flexible or zero-hours contracts.
- You can either make use of a pre-existing furlough clause in your contract or can write to your employees now to set out the proposals for how you intend to use the furlough provisions and to seek their agreement.
- Existing employment law will continue to apply but you are allowed to make other changes to any contracted terms and conditions as part of a furlough arrangement eg contracted hours, holiday allowance over the statutory minimum, treatment of bank holiday.
Hospitality is a special case
Despite CJRS, once lockdown is eased and lifted, hospitality businesses will still face challenges as social distancing measures will very likely remain in place.
We asked Kate for her thoughts on the easing of the lockdown. “An extended period of social distancing will mean that many hospitality businesses will not be able to operate fully, and many will not be able to open at all. Hospitality is a sector built around socialising, so there must be Government support for businesses that continue to be hit by this crisis.”
“We need a plan of phased opening for our sector. For those businesses that can trade safely with social distancing measures still in place, they should be able to. For the many venues where it is not possible, support, such as the furlough scheme, must be extended to make sure these businesses stay alive and jobs kept open.”