This page will be updated as more information becomes available. Last updated 1st June 2020
What employers need to know about furloughing staff through the Coronavirus Job Retention Scheme
To safeguard against staff being made redundant in the economic climate created by COVID-19, the government have introduced the Coronavirus Job Retention Scheme.
To save you from the jargon, our guide talks you through the scheme.
Who is the Coronavirus Job Retention Scheme for?
The scheme is for employers of staff who would otherwise have been laid off due to the impact of COVID-19 in the UK.
Rather than laying off staff, employers can instead designate their employees as ‘furloughed workers’. In return, the government will reimburse up to 80% of each employee’s employment costs, up to a maximum of £2,500 per month.
Employers can choose to make up the difference between the 80% payment and employees’ normal salaries, but they don’t have to. It’s also worth remembering that the grant is a reimbursement, not an up-front payment, which could mean cashflow issues for some employers.
A ‘furloughed worker’ is an employee who has been temporarily laid off, asked to stop working, or given leave whilst remaining on the payroll. The key here is that they do, in fact, stop working.
Who is eligible for the Coronavirus Job Retention Scheme?
The scheme is available to any UK based employer with a PAYE scheme. This means that any employer, including those in the public sector, Local Authorities, and charities are also eligible. It covers employees who were in employment from 28th February 2020.
Directors who are employed by a company that they own are also eligible. The difficulty for company directors is that they typically take a lower salary as an employee through payroll, and then take dividends. Because the scheme is based on what goes through payroll, directors of limited companies might not be able to claim much support.
Can staff still work whilst furloughed?
When the scheme first launched, staff were not permitted to work whilst furloughed. This will change from 1st July 2020, after which furloughed staff will be allowed to work on a part-time basis, with employers claiming for normal hours that are not worked.
Staff that are still able to work from home should do so whilst receiving their normal salary. The Coronavirus Job Retention Scheme is for those employees who are furloughed, and are currently unable to work due to the COVID-19 outbreak.
Do employees still accrue annual leave whilst furloughed?
Yes, staff who have been furloughed during the COVID-19 outbreak still accrue their annual leave as they normally would.
My employees usually get paid commission, will that be included in a claim?
The furlough grant for each employee is calculated using basic pay, and any additional commission or bonuses will not be included, even if they are normally part of the employee’s earnings each month.
What is the minimum amount of time that I can furlough an employee?
To be eligible under the Coronavirus Job Retention Scheme an employee must be furloughed for a minimum of three weeks.
Does the Coronavirus Job Retention Scheme cover employer on-costs?
On-costs are how much it costs, on top of their salary, for an employer to employ a member of staff. The CJRS reimburses employers for 80% of an employee’s regular pay, up to a maximum of £2,500 each month and also covers the employer’s NI and minimum employer’s pension contributions due on the subsidised amount.
When does the Coronavirus Job Retention Scheme open?
The furlough period began from 1st March 2020 and in the first instance lasted for 3 months. The online service launched through HMRC’s brand new dedicated portal on 20th April 2020. HMRC are contacting businesses to explain how to use the portal. Or, your accountant should be able to make the submissions to HMRC for you if they are authorised to act on your behalf for PAYE matters.
Whilst it’s expected that the first grants will be paid within weeks, the delay might mean you need short-term cash flow support to continue employing staff until the scheme is available. If that’s the case, you may wish to consider the Coronavirus Business Interruption Loan.
When does furlough under the Coronavirus Job Retention Scheme end?
When it was first launched, the CJRS was scheduled to finish at the end of June 2020, and has now been extended until October 2020. The scheme will continue to operate under its present form until the end of July. Rishi Sunak has confirmed that, from August onwards, employers will be expected to take over a greater share of funding the scheme.
This means that while furloughed employees can still expect to receive at least 80% of their salary, employers will be expected to share more of the cost with the government. To support the transition though, the government have confirmed that greater flexibility under the scheme will permit employees to return to work on a part-time basis.
How do I use the Coronavirus Job Retention Scheme to make a claim?
To use the Coronavirus Job Retention Scheme there are some steps that employers must follow.
Designate affected employees as furloughed workers.
Tell your employees about this change (formally, in writing, is the best method).
Employers (or agents authorised to act on their behalf for PAYE matters) will need;
the NI number for each furloughed employee;
as well as their salary;
and NI and pension contributions, to calculate the amount to claim.
ePAYE reference number
how many employees are being furloughed
the start and end dates of the claim period
the amount being claimed
the UK bank account number and sort code for HMRC to pay the claim
the company UTR number, or the Companies House reference, or the Self Assessment UTR number
Do I work out a Coronavirus Job Retention Scheme claim by total, or by pay period?
When entering the information in to the claim portal, you’ll need to have the amount that you are claiming for each pay period. So, if staff have been furloughed for three months, and you operate payroll on a monthly basis, you’ll need to submit three claims; one for each payroll.
This might mean calculating part of the month on normal pay, and part of the month as furloughed, in order to claim back the furloughed element.
What dates should I put on my Coronavirus Job Retention Scheme (CJRS) claim?
The start date of the first CJRS claim is the date that your employee was first furloughed. The end date of that claim is the last day of the pay period when they were furloughed. Claims cannot be submitted with an end date that is more than 14 days away. It’s a bit confusing, so we’ll give you an example of furlough dates, and how it works when making a claim through CJRS.
Example furlough dates when submitting a claim for the Coronavirus Job Retention Scheme:
Staff are paid on a monthly basis, and in this example their usual pay period is 1st of each month, until the last date of each month.
An employee was furloughed on 17th March as a result of COVID-19. Claims through the Coronavirus Job Retention Scheme are submitted for each pay period, but because the portal for making claim submissions didn’t open until 20th April, claims for March and April can be made under one claim.
So, the start date of the claim is 17th March, and the end date is the end of April’s pay period; 30th April.
The employee is still furloughed for the entire pay period of May. Another claim can be submitted through the Job Retention Scheme. The start date for this claim is 1st May, and the end date of the claim is 31st May. A claim cannot be submitted more than 14 days before the end date of the claim.
What happens after I submit a claim through the Coronavirus Job Retention Scheme?
HMRC will check it the claim once it is submitted. If it’s eligible, the payment will be sent to your UK bank account via a BACS payment. There isn’t a way to check the status of the claim application online but, once submitted, applicants will receive a claim reference. HMRC advise applicants to wait at least 10 working days before contacting HMRC to check the status of the claim.
What is the final date that I can furlough an employee for the first time?
Though you’ll be able to continue claiming for staff who have already been furloughed, the Coronavirus Job Retention Scheme closes to new entrants from 30th June 2020.
After that date you’ll only be able to claim through the CJRS for employees that have already been furloughed for a 3 week period, which means that the last date you can furlough an employee and still meet the cutoff date is 10th June 2020. As an employer you’re able to claim for the period ending 30th June up until 31st July.
When can furloughed staff return to work?
To help employers get things moving again, they’ve announced that furloughed staff can return to work on a part-time basis, starting from 1st July 2020. HMRC have said that employees can work for any amount of time, though you’ll only be able to claim the grant for normal hours not worked, for a minimum of a week.
Can a furloughed employee hand in their notice?
Yes, an employee can give notice that they’re leaving an employer even while furloughed under the Coronavirus Job Retention Scheme. Being on furlough doesn’t affect their normal contractual rights.
When does support through the Coronavirus Job Retention Scheme reduce?
Employers will still be required to pay furloughed employees a minimum of 80% of their normal salary, though the grant employers can reclaim through CJRS will be reduced in stages, starting from 1st August 2020.
As of 1st August HMRC will still continue to pay 80% of wages up to a maximum of £2,500. After this date though, it will be up to the employer to pay employer’s NI and pension contributions.
In September the CJRS will change again, with HMRC reducing the amount they pay to 70% of wages, up to a maximum of £2,187.50. Like August, employers must pay employer’s NI and pension contributions.
In October the amount that can be reclaimed through CJRS will reduce again to 60% of wages, up to a maximum of £2,187.50, with employers continuing to pay employer’s NI and pension contributions.