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30th March 2020

Coronavirus Job Retention Scheme: further guidance published by the Government.

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The government has finally issued official guidance for employers on the Coronavirus Job Retention Scheme (CJRS). The scheme is designed to support employers affected by the COVID-19 crisis by paying a proportion of the salary of those employees who would otherwise have been made redundant. Below we answer some of the key questions being raised by employers. Summary of the scheme

  • Employers can claim 80% of “furloughed” employees’ usual wage costs, up to a cap of £2,500 (gross) per month per employee, plus the associated Employer National Insurance contributions (NICs) and minimum automatic enrolment employer contributions on that wage.
  • The CJRS applies to all employees who were on the payroll on 28 February 2020 and on any type of contract, provided they were paid under PAYE.
  • Employees cannot do any work for employers whilst they are on furlough. However, they can do volunteer work or training if this does not provide services to or for the employer or generate revenue for the employer.
  • It is expected that the CJRS will be operational by the end of April 2020 and it will be backdated to 1 March 2020. The Government intends for the scheme to run for at least three months but has said that it will be extended if necessary.

What does “furlough” mean and how do you put employees on furlough?


A furlough is essentially a temporary lay-off from work, i.e. where an employee is provided with no work or pay but they remain an employee.

The essence of the CJRS, therefore, is that staff remain employed but there is a temporary suspension of their obligation to work while the employer is assisted in paying the employee and keeping them on the books.

To access the scheme, the affected employees’ must be designated as furloughed. Unless there are specific and clear terms in the employees’ contracts of employment regarding lay-off, employers will need to obtain their employee’s express agreement to being furloughed. The guidance states that employers may need to seek legal advice on that process and that ‘it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment’.

Any agreement should be recorded in writing and should contain details of the agreed period of furlough.

Who is eligible?

The CJRS is open to all UK employers with a UK bank account and PAYE payroll scheme in place on 28 February 2020.

An employer can furlough any employees who were on the PAYE payroll on 28 February 2020 (whether full-time, part-time, on agency contracts or on zero hours or flexible contracts).

The CJRS also applies to employees who were made redundant on or after 28 February 2020, provided that they are re-hired by the former employer.

Employees who are on sick leave or self-isolating should get statutory sick pay (SSP) for that period but can be furloughed after this. Employees who are shielding in line with public health guidance can be placed on furlough (although it is not clear if this still applies if these employees are receiving SSP).

Employees taking paid family leave (maternity, paternity, adoption or shared parental) will be eligible. Employers can already reclaim the majority of statutory pay for these types of leave from HMRC and would be able to reclaim any enhancement through the CJRS (subject to the limits set out below).

Although the CJRS is clearly aimed at employees who would otherwise be made redundant as a result of the COVID-19 crisis, there is no explicit requirement for an employer to demonstrate this as a condition of obtaining the grant.

How should an employer select which employees should be furloughed?

Those who cannot work from home and who currently have no work will be the obvious candidates. Otherwise, employers may need to consider a process for calling for volunteers, pooling and selection (as with a redundancy process).

What costs are covered?

HM Revenue & Customs (HMRC) will reimburse the lower of:

  • 80% of an employee’s regular wage; and
  • £2,500 per month.
The grant will also cover the associated Employer NICs and minimum automatic enrolment employer pension contributions on that subsidised wage (i.e. 3% of income above the lower limit of qualifying earnings (£512 per month, rising to £520 per month from 6 April 2020)).

For full or part-time salaried employees, “regular wage” is the actual gross salary as at 28 February 2020, excluding any fees, commission or bonus.

For employees on variable pay, the employer can claim for the higher of either:

  • the same month’s earning from the previous year; or
  • average monthly earnings from the 2019-20 year.
If an employee has less than one years’ service, the employer can claim for an average of their monthly earnings since they started work. If the employee only started in February, a pro-rata approach should be taken.

Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt out.

Do employers have to top up the subsidy?

No. Employers can choose to provide top-up salary (i.e. the remaining 20%), but any such top-up (and related employer NICs and pension contributions) will not be reimbursed.

What is the process?

Claims will be made by the employer through an HMRC portal which is expected to be up and running by the end of April. The guidance explains what information an employer will need to provide. Once HMRC have received the claim, they will pay it via BACS payment to a UK bank account nominated by the employer.

The employer should make its claim in accordance with actual payroll amounts at the point at which it runs payroll or in advance of an imminent payroll.

Employers can only submit one claim every three weeks, which is the minimum length an employee can be furloughed for.

Can employees do odd bits of work while being furloughed?

Absolutely not. Employees cannot undertake any work for or on behalf of an employer that has furloughed them and the written furlough agreement with the employee should make this clear. If an employee does any work, then the employer may risk having to repay the grant to HMRC.

Notwithstanding the above, a furloughed employee can do training if it does not involve providing services or generating revenue, and they can do volunteer work.

The guidance is silent on whether work for other employers is permitted during furlough, but most employment contracts would not permit this (without consent). If an employee does have more than one job, they can be furloughed by each employer and the cap would apply separately.

The employer guidance says employees can be placed on furlough more than once, which suggests that employers can rotate the employees it places on furlough. This could help in a situation where a business has work for some staff, but not enough work for all.

Do National Minimum Wage (NMW)/Living Wage (NLW) obligations still apply?

As furloughed employees are not working, an employer does not need to worry if their hourly pay once furloughed falls below NMW/NLW rates. However, if employees are required to complete online training then they must be paid at least the NLW/NMW for the time spent training.

What happens during furlough?

As noted above, the minimum length of a furlough period is three weeks and an employee can be placed on furlough more than once. During furlough, normal employment rights continue to apply including SSP entitlement, maternity and other parental rights as well as rights against unfair dismissal and to redundancy payments. Holiday continues to accrue.

When does furlough end, and what happens then?

When the Government ends the CJRS, employers will need to determine whether furloughed employees can return to their duties. If they cannot, it may be necessary to consider termination of employment on the grounds of redundancy.

You can read the full government guidance by clicking here. If you wish to discuss any of the contents of this article with a member of the Hewitsons Employment team then please contact Nick Hall on 01604 463375 or click here to email Nick.