Coronavirus Job Retention Scheme: your FAQs answered

1st April 2020

The Coronavirus Job Retention Scheme (CJRS) allows employers to access a grant to cover most of the wages of their workforce who remain on the payroll but are temporarily not working due to the coronavirus outbreak.

UK workers of any employer who are placed on the CJRS can keep their job, with the government paying up to 80% of a worker’s salary or wage, up to a total of £2,500 per worker each month.

The Coronavirus Job Retention Scheme, originally open for three months and backdated from the 1 March to the end of May, has been extended until October.

Main updates from the announcement on 29 May 2020 

  • improved flexibility to bring furloughed employees back part-time in July 

  • new tapered allowance which will require employers to contribute to furloughed salaries from August. 

  • claims from July onwards will be restricted to employers currently using the scheme and previously furloughed employees. The last date for new entrants to the scheme is 30 June and employees must have been furloughed for a full three week period prior to this, so the last date that employees can be put on furlough is 10 June. 

  • Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.  

What will the new tapered allowances be under the new scheme? [Added 01.06.2020] 

For June and July, there are no changes whatsoever to the scheme.  

From August 2020, the level of government grant provided through the job retention scheme will gradually reduce, to reflect the fact that many employees will be returning to work. 

The tapered allowances will be as follows: 

  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay employer NICs and pension contributions. 
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay employer NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.  
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. 

Throughout the changes to the scheme, employees will continue to receive that 80% of salary covering the time they are unable to work. 

Closed Business

Can I claim for any member of staff under the scheme from 1 July (e.g. reduce the working hours of employees who have not previously been furloughed)? [Added 01.06.2020] 

No, any claims made from 1 July must be for employees who have been previously furloughed for a full 3 week period prior to 30 June. As such, the number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS, and all these must have been previously furloughed. 

Is there a minimum or a maximum number of hours that I can bring employees back to work part-time under the new scheme? [Added 01.06.2020] 

Individual firms can decide the hours and shifts that their employees will work on their return so that it works for the companies individual needs. However,  employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing. 

When claiming the CJRS grant for furloughed hours; employers will need to report and claim for a minimum period of a week, for grants to be calculated accurately across working patterns. 

How do I work out how much I can claim for full or part-time employees? Are bonuses and commission included in the calculation? [UPDATED 16.04.2020]

You need to use the employee’s actual salary before tax, as in their last pay period prior to 19 March 2020.

If, based on previous guidance, you have calculated your claim based on the employee’s salary as of 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.

The amount you can claim will be 80% of this figure, or £2,500 - whichever is lower. You can claim for any regular payments you are obliged to pay your employees including past overtime, fees and compulsory commission payments. However, discretionary bonuses, including tips, commission payments and non-cash payments should be excluded.

My employee is on a flexible contract and their pay varies. How do I work out their entitlement?

Depending on how long the employee has been employed by the company, there are various options to work out how much you can claim whilst they are furloughed.

  • If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either the same month’s earnings from the previous year or the average monthly earnings for the year.
  • If the employee has been employed for less than a year, claim for an average of their monthly earnings since they started work.
  • If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

I have an employee on a fixed-term contract, can I furlough them? [UPDATED 06.04.2020]

Furloughed employees can be on any type of contract, including those on fixed-term contracts, agency contracts, or flexible and zero-hour contracts. 

Employees on fixed-term contracts can also have these contracts extended or renewed during the period of furlough. It is important to note that, if the contract ends and is not extended or renewed, employers will not be able to claim a grant for them.

The following groups can also be furloughed, as long as they are paid via PAYE.

  • office holders (including company directors)

  • salaried members of Limited Liability Partnerships (LLPs)

  • limb (b) workers (i.e. a worker in the gig economy)

How do I make a claim? [UPDATED 20.04.2020]

The online portal is now open and can be accessed here.

An organisation can only submit one claim every three weeks - the minimum amount of time an employee can be furloughed for. You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020.

If we are authorised to act on for you for PAYE purposes, we will be able to make a claim on your behalf. You will just need to let us know which bank account you would like the funds to go to. 

If you are making the claim yourself, you will need: 

  • your employer PAYE reference number 

  • the number of employees being furloughed 

  • National Insurance Numbers for the furloughed employees 

  • Names of the furloughed employees 

  • Payroll/employee number for the furloughed employees (optional) 

  • your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number 

  • the claim period (start and end date) 

  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks) 

  • your bank account number and sort code 

  • your contact name 

  • your phone number 

To access the portal, you will need: 

  • A Government Gateway ID and password 

  • An active PAYE enrolment 

You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020.

Keep hold of your claim reference number and the calculations used to work out your claim amount as this may be required by HMRC. Once HMRC has received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.

HMRC will retain the right to retrospectively audit all aspects of your claim.

How long will it take to receive the funds? [UPDATED 20.04.2020]

Once a claim has been submitted, the funds should reach the designated bank account six working days later.  

Can I furlough employees and bring them back to work as and when necessary if demand changes?

You must furlough an employee for a minimum of three weeks. Following this period, you can bring employees back to work if necessary. Technically, you can rotate those who are furloughed on a three-week basis, but if employees are required to leave their house to do their job, this could increase the risk of spreading the infection so we would discourage this. You would not be able to bring staff back to work periodically on a weekly basis to meet demand.

Before furloughing a proportion of your employees, try to anticipate your organisation’s demand over the coming weeks. If you furlough too many staff and those not furloughed are required to self isolate, or become sick, you may find yourself understaffed and lacking resources.

Can an employee work for another company whilst furloughed? 

If an employee has a second job, each job is independent of one another therefore they can be furloughed for one and continue to undertake work for another. However, they must not be in breach of their current employment contract with your organisation.

Can employees volunteer during their furloughed leave, for example for the NHS?

An employee can volunteer as long as the volunteering that they undertake does not:

  • generate any revenue for your organisation
  • provide your organisation with any services.

For example, an employee of a charity, whilst furloughed, can volunteer under the NHS Volunteer Responder scheme, but cannot work, free of charge, for the charity that employs them.

My employee is refusing to be furloughed, can I enforce it anyway?

As furloughing requires changes to be made to an employment contract, you cannot enforce these changes without agreeing with the employee beforehand. Employers may need to seek legal advice on the furloughing process to avoid any breaches to employment law. 

Can I furlough an employee while they are on sick leave and self-isolating?

You cannot furlough an employee whilst on sick leave or self-isolating - at this point, they are entitled to Statutory Sick Pay. However, once this period is over, they can be furloughed.

Employees who are shielding, a practice used to protect extremely vulnerable people from coming into contact with coronavirus, can be placed on furlough.

As an employer, are we still expected to pay National Insurance and pension contributions for each employee?

On 27 March, the government announced they will cover employer National Insurance and pension contributions of furloughed workers – on top of 80% of the salary.

Therefore, employers can claim a grant for 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

Can we delay making payments to furloughed employees until we have received funds from HMRC under the scheme? 

We would strongly advise against doing this as doing so will likely breach any employment contract that is in place. If you are struggling to pay employees due to short term cash flow issues, we would recommend looking into other funding options to help, for example, the Coronavirus Business Interruption Loan Scheme.

I am a director of a company. Can I be furloughed?

There have been many calls for clearer guidance from the government on this topic as it hasn’t been addressed in any of the government’s daily briefings. During the CBI webinar on 27 March, Ben Kerry from HMRC confirmed that a Director can furlough themselves and still carry out statutory duties while on furlough. Any other work, other than statutory duties, would be considered working and therefore be in breach of the scheme.

It has also been confirmed that the amount that can be claimed is limited to the salary, meaning any dividends that were previously voted and paid are not included in this calculation.

When furloughing company directors and salaried members of LLPs, HMRC's advice is for the company/LLP to formally advise the Director/salaried partner via written communication.

If my business uses contractors, can I furlough them?

If you engage the services of external contractors, they will not be eligible to be furloughed as they are not employees on your payroll. The contractors should take their own advice as to what support is available to them, depending upon whether they operate through a limited company or are self-employed.

For further guidance or help on furloughing employees, contact Helen Coombes on helen.coombes@hboltd.co.uk.

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