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Coronavirus Job Retention Scheme

Employee Costs

Will the government help me to keep my staff employed while they cannot work due to the Coronavirus outbreak?

The government will cover up to 80 per cent of the wages of each employee that is unable to work as a result of the Coronavirus situation. There are many reasons why they may not be able to work and the government’s Coronavirus Job Retention Scheme is intended to prevent businesses from having to lay off staff during these challenging times.

How much can I claim?
Business owners should be able to claim 80 per cent of the cost of staff wages, up to £2,500 each. NI contributions and pension contributions for each staff member that cannot work because of Coronavirus at any time in March, April and May 2020 will also be paid under the scheme. Businesses must put their staff on furlough in order to qualify. This means the staff will be on temporary leave and must not carry out any tasks or revenue-producing jobs for their employee during the period over which they are claiming.

Under what circumstances might I furlough staff members and claim on the scheme?
You may have been forced to close your operation during the COVID-19 outbreak as part of the government’s social distancing measures, or you may not be able to keep your staff in work as they cannot travel to work for the same reasons. Other staff may have caring roles at home, looking after children who are off school due to school and nursery closures, while others may have vulnerable relatives at home.

Many businesses will claim on the scheme for staff they simply have no need for over the three-month period due to the fact that business has dried up in response to the lockdown and other Coronavirus-related measures. In this case, you can furlough some staff and keep others on.

How do I claim on the furlough scheme? 

There are a number of details you will need for each staff member in order to claim on the scheme, so check the official government web page for all the latest information. Some of the information you’ll need includes the period of furloughing, which has to be more than three consecutive weeks; the payroll numbers for each staff member; and the National Insurance numbers for each furloughed staff member.

As the employer making the claim, it’s your responsibility to calculate the amount you are claiming, up to a maximum of £2,500 per month, or 80 per cent of wages (whichever is the lowest), for each staff member. HMRC then retains the right to audit the claims at a later date and will also check the claims made before making the payments.

You are advised to make the claim just before you run your payroll, or at the same time, as the claim will be based on the amounts in your payroll. Salaries within the payroll should be adjusted beforehand in agreement with the affected staff.

When did the scheme become effective?

  • you can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying HMRC of payment of that employee on or before 19 March 2020

  • employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.

What are my legal obligations?
When you are deciding who to put on furlough, bear in mind that the usual equality and discrimination laws apply to you, as an employer. You should discuss your decision with your staff and listen to concerns.  You have the option to top up your furloughed employee’s salary but you are not legally obliged to do so.


Update on the scheme

On 12 May, the Chancellor Rishi Sunak announced that the CJRS scheme will be extended until the end of October. The scheme will continue in its current form until the end of July.

From 1‌‌ August to the end of October, HMRC will introduce more flexibility so employers will be able to bring their furloughed employees back to work part-time and contribute to paying employees’ wages while still receiving support from the scheme.

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