Editor’s note: The Coronavirus Job Retention Scheme concludes at the end of September 2021. The next stage of the scheme started on 1 July 2021. Read this article for more details.
We’re now in the final stages of the Coronavirus Job Retention Scheme (CJRS), the lifeline that many employers had been hoping for when it was announced back in March 2020.
The CJRS means staff can be temporarily given a leave of absence while the government contributes to their salaries.
This leave can be part time, or full time, depending on the reduced capacity of the business as a result of coronavirus.
What this article covers
Below, we attempt to answer some of the essential questions around the CJRS along with how to make a claim.
Please note that we refer to employees in a general sense. Within employment law, there is a difference between employees and workers.
Generally speaking, the scheme applies to both (see question five Which employees are eligible under the Coronavirus Job Retention Scheme?).
This article provides answers to the following questions:
1. Is the Coronavirus Job Retention Scheme winding down?
It’s been widely reported in the media that the CJRS is winding down.
In actual fact, nothing’s changed. It’s always been planned that the final month of the scheme would be September 2021.
It’s simply that the scheme now requires increased employer contributions to the furloughed employee’s salary.
Up until 30 June 2021, employers could claim up to 80% of a furloughed employee’s usual salary for the time they aren’t working, capped at £2,500.
Employers were required to contribute all employer National Insurance contributions (ER NICs) for the unworked hours claimed for, and also the minimum mandatory (auto-enrolment) pension contributions for the employee.
However, from 1 July 2021 onwards, in addition to NICs and pension contributions, businesses are required to contribute to the payment for the furloughed hours.
- July 2021: 10% contribution, meaning the government pays 70%.
- August and September 2021: 20% contribution, meaning the government pays 60%.
See “How much can I claim under the Coronavirus Job Retention Scheme?” below, for specifics.
Employees can be furloughed with a part-time work pattern you agree with them, or they can be furloughed full time, depending on the needs of your business.
Working arrangements for an employee (and the subsequent CJRS claim) must be for a minimum of seven consecutive days.
To use the CJRS even now, the employee doesn’t need to have been furloughed before, nor does your business need to have used the CJRS before.
However, the employee you furlough must have been on your payroll on or before 2 March 2021, which is to say, you must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, which includes a payment of earnings for the employee.
As with existing CJRS claims, you can claim under the CJRS extension shortly before, during or after running your payroll. You should then receive the money within six working days.
Claims under the CJRS extension are made at the existing government website.
The final claim for the extended period, which will be for September 2021 payroll, must be submitted by 14 October 2021.
2. How much can I claim under the Coronavirus Job Retention Scheme?
In general, the CJRS rules say you can claim for regular payments that constitute an employee’s salary. This can include past overtime, fees or compulsory commission payments.
However, you can’t include discretionary payments such as tips, non-compulsory commissions, and non-cash payments.
Payments-in-kind or salary sacrifice complicate things a little (see question 15, How are benefits-in-kind treated under the Coronavirus Job Retention Scheme?).
Here are the rules about what claims can be made for payrolls from this point onwards:
- July 2021: You can claim up to 70% up to a cap of £2,187.50 for furloughed hours and must contribute the remaining 10% yourself (up to a maximum of £312.50). You must make employer National Insurance contributions and minimum mandatory pension contributions.
- August 2021: You can claim up to 60% up to a cap of £1,875 for furloughed hours and must contribute the remaining 20% yourself (up to a maximum of £625). You must make employer National Insurance contributions and minimum mandatory pension contributions.
- September 2021: As with August, you can claim up to 60% up to a cap of £1,875 for furloughed hours and must contribute the remaining 20% yourself (up to a maximum of £625). You must make employer National Insurance contributions and minimum mandatory pension contributions.
3. How long does the Coronavirus Job Retention Scheme last for? And how long can I furlough staff for?
The scheme began on 1 March 2020 and was due to close at various points. But current events mean it has been extended and now closes with September 2021’s payroll.
The minimum amount of time staff must be furloughed for in order to claim under the scheme varies:
- Until 30 June 2021: The minimum claim period was three consecutive weeks.
- From 1 July 2021: The minimum furlough claim period is seven consecutive days. Because you must claim separately for each month, if part of this minimum seven days is at the start or end of the month, your claim period may be less than seven days. But the length of the furlough across the two months must still be seven consecutive days or more.
Employees can be furloughed multiple times under the scheme, returning to work (and your ordinary payroll) in between times if so required, provided this is within the CJRS guidelines.
But the minimum furlough claim period must be seven consecutive days.
Staff can be furloughed for all their usual working hours or they can work part-time shift patterns of any type agreed between yourself and the employee.
You claim under the CJRS only for the hours the employee is furloughed and therefore not working when they would otherwise normally do so. You will pay them their usual salary for the times when they are working, pro-rata.
4. Who pays the salaries for furloughed employees under the Coronavirus Job Retention Scheme?
You pay the salary within the limitations mentioned in question two above (How much can I claim under the Coronavirus Job Retention Scheme?). You then claim some or all of that money back from the government before, during or after the payroll run.
If you’re unable to pay salaries because of cash flow issues caused by coronavirus disruption, the government is offering other forms of help:
Recovery Loan Scheme
Any business can apply for loans from £25k to £10m through to the end of 2021, with the government providing an 80% guarantee. This scheme is open until 31 December 2021, although this is subject to review – so you might want to avoid delays if you intend to apply.
This replaced the earlier Bounce Back Loans and the Coronavirus Business Interruption Loan Scheme, but is not exclusive and you can apply for a Recovery Loan in addition (subject to availability and acceptance from lenders).
5. Which employees are eligible under the Coronavirus Job Retention Scheme?
For CJRS applications through to 31 September 2021, most of your employees or workers will probably be eligible for you to furlough and claim for.
The only criterion is that they must have been on your payroll on or before 2 March 2021, which is to say, you must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, that includes a payment of earnings for the employee.
They don’t need to have been furloughed previously, and nor does your business need to have used the CJRS before.
All types of employment and employment contracts are included, including full time, part time, agency workers, flexible workers, and zero-hour contracted workers – see question seven (How do I claim under the Coronavirus Job Retention Scheme?) for employees who work irregular hours.
Foreign nationals who work for you are eligible too.
Employees on fixed-term contracts are also eligible. If their contract ends during the furlough period, you can either extend it – as you might in any other circumstance – or end it, at which point you won’t be able to furlough and claim for them.
6. What employers or businesses are eligible to furlough and claim under the Coronavirus Job Retention Scheme?
Your operation must be running a UK PAYE payroll. You don’t necessarily need to be an incorporated business, for example, and there are no size restrictions with relation to turnover.
If you have your base or office outside the UK, you’re included – provided you run a UK payroll. You can furlough and claim for any number of employees.
However, employers must also have the following in place to claim:
A UK PAYE payroll scheme as of 2 March 2021
This means the employee(s) you’re claiming for must have been in the Full Payment Submission (FPS) data sent as part of the Real Time Information (RTI) reporting to HMRC that must be sent before or when a payroll is run.
Be enrolled for PAYE Online
This is part of running a UK PAYE scheme.
A UK bank account
Or one in the Isle of Man or Channel Islands.
7. How do I claim under the Coronavirus Job Retention Scheme?
You should use the online service provided by HMRC.
The service walks you through step-by-step in order to make a claim. You’ll need to input information as listed below.
The application process doesn’t require you to use your payroll software, although you’ll probably need certain information stored within it.
Once you’ve applied, you’ll be given a claim reference number, at which point HMRC will check your claim to ensure it’s correct. You should tell your employees you’ve made a claim and that they don’t need to do anything more.
You must have also worked out how much you intend to claim, which will be based on your payroll. The government offers a calculator that you can use to help you work this out.
You’ll need to gather quite a few details before making the application.
Note that you or your payroll agent can apply, but if you use a ‘file-only agent’ (one who files your Real Time Information return but doesn’t act for you in other matters), you must claim yourself. The file-only agent will be able to provide the details you need if you don’t already have them to hand.
How you claim depends on whether you’ve furloughed 100 or more employees.
Claiming under the Coronavirus Job Retention Scheme for 1-99 employees
Details about your business and the claim you or your agent will need are as follows:
- Your UK bank sort code and account number.
- Your employer PAYE scheme reference number.
- Your name (or the employer’s name if you’re an agent).
- The Government Gateway user ID and password you got when you registered for PAYE Online.
- Your company’s Corporation Tax unique taxpayer reference, and your company registration number (if your business is incorporated).
- Your Self Assessment unique taxpayer reference (if you’re self-employed).
- The start date and end date of the claim.
- The full amount you’re claiming for, including employer National Insurance contributions and any employer minimum pension contributions.
- A phone number and a contact name.
Details about your employees you or your agent will need:
- The total number of employees you’ve furloughed.
- Each of their National Insurance numbers (your employees can find their NI numbers via the free HMRC app).
- Optionally, you can also provide each of their payroll or employee numbers.
Claiming under the Coronavirus Job Retention Scheme for 100 or more employees
Those who wish to claim for 100 or more furloughed employees will need to create a spreadsheet file containing the following details, with each employee occupying one line of the spreadsheet:
- The full name of each employee.
- The employee’s National Insurance number.
- The furlough start date for that employee.
- The furlough end date for that employee, if known.
- The full amount claimed for that employee.
You can optionally provide the following:
- The payroll number for that employee.
You’ll need to upload this file when requested during the application process.
8. If I’ve reduced an employee’s hours (or their pay), can I claim for them under the Coronavirus Job Retention Scheme?
If you reduced an employee’s hours or pay independently of a CJRS claim then, unfortunately, you won’t be able to claim in retrospect.
This remains true even if you took these actions as a direct result of coronavirus disruption, or in a bid to avoid having to lay-off staff.
However, employees can work part time under the CJRS, as an alternative to full-time furlough.
This means they can work part-time shift patterns of any type agreed between yourself and them.
You claim via the CJRS only for the hours the employee is not working when they would otherwise normally do so. You will pay them their usual salary for the times when they are working, pro-rata.
9. Do I have to furlough all my staff under the Coronavirus Job Retention Scheme?
You can furlough any number of staff – from one, to all of them – and they don’t have to have been furloughed before.
The only limitation is that they must’ve been employed and on your payroll on 2 March 2021 provided you had made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.
10. When do I get repaid the money for the Coronavirus Job Retention Scheme?
You’ll need to claim via an online service provided by HMRC. HMRC says applicants can expect a payment to be in their bank account within six working days after submission of the claim.
However, HMRC adds that you should allow at least 10 working days for the payment to arrive before raising a query via the helpline due to high call volumes at its call centres.
If you face cash flow issues running your payroll, it’s also worth considering the other coronavirus schemes.
11. What adjustments do I have to make in my payroll run for furloughed employees under the Coronavirus Job Retention Scheme?
You will probably need to manually reduce furloughed staff salaries to 80% of their usual salary up to the maximum grant claim each month. HMRC will not do this for you.
Seek help from your payroll provider if you need help undertaking how to run a payroll under the CJRS. See question seven (How do I claim under the Coronavirus Job Retention Scheme?) if the employee’s hours or salary usually vary.
If you pay employees more than the 80% outlined by the scheme (for example, you opt to continue paying 100% of salaries), this should be a separate payment line within your payroll for identification purposes.
12. How much do I have to pay my staff via the Coronavirus Job Retention Scheme?
This depends on how the employee is furloughed.
- Full-time furlough: You should pay each employee at least the amount of the CJRS grant you claim for them, which will usually be 80% of their usual salary up to the £2,500 cap. and claim the amount via the CJRS. You will need to contribute to the 80% you can claim for the months of July, August and September 2021, as explained earlier.
- Part-time/flexible furlough: For each hour the employee works for you, you should pay them their usual salary, pro-rata (including all applicable NICs, pension contributions, and so on). For the hours the employee is not working for you – that is, the working hours in which they are furloughed – you must pay them at least the amount of the CJRS grant you claim for them, which will usually be 80% of their usual salary up to the £2,500 cap and claim the amount via the CJRS. As above, you’ll need to contribute to the amount you can claim as part of the CJRS for July, August and September 2021.
You can’t keep any of the money you claim under CJRS for yourself or your business, regardless of any costs you incur.
If you don’t pay the full amount of the grant to your employees (less the employer’s National Insurance contribution and pension contribution elements), you’ll need to repay 100% of it back to HMRC.
If you fail to tell HMRC that you haven’t paid all the CJRS funds received to employees and pension schemes, or if it’s not used to cover what you’ve already paid them, you may have to pay HMRC an additional penalty of 100% of the value of the grant, in addition to repaying the grant.
The employee continues to pay taxes and National Insurance out of their wages, just like they would normally – see question 14 (What taxes are paid with the Coronavirus Job Retention Scheme?) below.
13. What happens to pension payments under the Coronavirus Job Retention Scheme?
You contribute the entirely of the employee’s minimum auto-enrolment pension contributions.
14. What taxes are paid with the Coronavirus Job Retention Scheme?
There are two sides to this question, relating to the employer and the employee.
Employer: Money you claim under the scheme must be included as income in your calculation for Income Tax or Corporation Tax, in accordance with normal principles.
You can deduct employment costs as normal from your taxable profits.
Employee: You must deduct employee tax and NICs as usual via the payroll on the salary you pay them under the scheme.
You must pay employer NICs too, and the minimum mandatory pension contributions, as outlined in question two (How much can I claim under the Coronavirus Job Retention Scheme?).
15. How are benefits-in-kind treated under the Coronavirus Job Retention Scheme?
The salary you pay and subsequently claim under the scheme as outlined in question two (How much can I claim under the Coronavirus Job Retention Scheme?) must not include the cost of non-monetary benefits provided to employees.
This includes benefits-in-kind, or benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay.
In other words, if an employee earns £2,500 per month but their salary is listed as £2,000 because of a salary sacrifice scheme that pays £500 towards their pension, then you can only claim for 80% of £2,000.
This must be communicated to the employee.
However, if the individual opts out of the benefit or salary sacrifice scheme, you can increase their salary to its full contractual amount and use this as a basis for your claim.
Again, this option must be communicated to the employee.
Some benefit or salary sacrifice schemes don’t allow opting out outside of extraordinary circumstances, such as major life changes – marriage or serious illness, for example.
The government has said the following in relation to the CJRS: “HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements if the relevant employment contract is updated accordingly.”
16. Can I charge my employees a fee to administer the Coronavirus Job Retention Scheme?
No fees can be charged from the money you claim. You must not pay the employee less than you claim for, or pay them in anything other than the form of money.
17. What checks will be in place for the Coronavirus Job Retention Scheme?
The government says: “HMRC will retain the right to retrospectively audit all aspects of your claim.” Remember that HMRC has access to your PAYE records and tax returns for you and your employees.
18. Can agency staff be furloughed under the Coronavirus Job Retention Scheme?
Agency staff can be furloughed if they’re on your payroll. If they’re employed by an umbrella company and on their payroll, the umbrella company can furlough them.
Speak to both the worker and the agency to find the best arrangement for your business and the individual concerned.
The same applies to Limb workers, who are also known as dependent contractors – if they’re on your payroll, you can furlough them and then claim.
19. Can I furlough myself under the Coronavirus Job Retention Scheme?
Those who can be furloughed include officeholders such as salaried company directors as set out in the Companies Act 2006, and salaried members of Limited Liability Partnerships (LLPs).
Contractors who are salaried through their own personal services company (PSC) and are a director of the PSC can furlough themselves. They can claim only for their salary and not for any dividends.
However, self-employed individuals who use Self Assessment for income tax should use the Self-Employment Income Support Scheme Grant Extension (SEISS).
Furloughing of salaried company directors must be a formal decision of the board of directors, and noted in the company records and communicated in writing to the director(s) concerned.
During the furlough period, company directors can carry on statutory obligations required of their role. But, as with any furloughed employee, they can’t carry out work for the company that creates commercial revenue, provides services, or is carried out on the behalf of the company.
Members of an LLP can be furloughed only if they’re designated as employees for tax purposes under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005.
Furloughing might require a formal decision by members of the LLP and potentially changing the LLP agreement. The usual salary to be used to calculate the claim must be the LLP’s profit allocation (excluding any personal/LLP performance additions).
20. How do I tell staff they’re furloughed under the Coronavirus Job Retention Scheme?
Seek agreement with each employee and, once this has been achieved, write to them with the dates of the furlough period, and inform them what their salary will be during the period.
You may need to adjust their employment contract to take the furlough into account, along with the adjustment in salary.
If you switch the employee to part-time working then this must be agreed with them (including the hours to be resumed) and communicated to them in writing.
You must keep a record of your communications to employees with regard to furloughing for five years.
21. Does furloughing via the Coronavirus Job Retention Scheme need a new employment contract?
This is possible, especially if you intend to switch the employee to part-time working. It will depend on existing provisions within the employment contract. You should consult an employment or contract law specialist if in any doubts.
Remember that whatever adjustments you make to the contract continue to be subject to equality and discrimination laws.
22. When does the Coronavirus Job Retention Scheme end?
Following an extension, the CJRS now ends on 30 September 2021.
23. Can employees work while furloughed under the Coronavirus Job Retention Scheme?
If you furlough an employee and make a CJRS claim – either full or part time – they aren’t allowed to undertake work for, or on behalf, of your organisation for the hours and dates that you’re claiming the grant for them.
This limitation must be communicated to the employee when they are furloughed.
You or they must not try to get around this by reassigning different types of work tasks to them during their furlough, for example, or assigning them a different role (or in a different office).
The government says the ban on working for your organisation during furloughing includes “providing services or generating revenue”.
However, if their employment contract allows it, the employee is free to undertake paid work for other employers or individuals at their discretion – either existing employment they were already undertaking alongside their employment with you, or new work.
It’s possible some individuals may end up being furloughed by more than one employer.
Again, if you don’t wish them to take on new work with another employer, that should be communicated to the employee. However, you might want to consult an employment or contract law expert with regard to enforcing such a measure.
Your employees can take part in training while furloughed, or volunteer work – although the work or training can’t provide services to your organisation, or generate revenue, or be on behalf of your organisation.
24. How are staff on statutory leave or pay affected by the Coronavirus Job Retention Scheme (e.g. maternity leave)?
Employees continue to have the same rights at work during the furlough. They can still claim Statutory Sick Pay (SSP), maternity leave and other parental rights.
You must pay statutory pay as usual (with the exception of the first two weeks of SSP, for which the rules are different for those affected by coronavirus).
Should the employee be claiming a statutory payment then you can’t claim for them under the scheme.
The exception is if there is enhanced earnings-related contractual pay for maternity, adoption, paternity or shared parental pay. You can claim this through the Coronavirus Job Retention Scheme.
Once the individual is back at work following their statutory leave period, you can then furlough them and claim for them under the scheme as with any other employee.
25. What happens to employee annual leave during furloughing via the Coronavirus Job Retention Scheme?
This will depend on the employment contract you have with the employee. Many employees are likely to continue to accrue leave as they would ordinarily.
However, if the contract says leave is accrued per hours worked then, in this instance, the employee might not accrue leave in their furloughed hours if part-time working.
Employees who take leave must be paid according to their contract, which may mean you need to pay them 100% of their normal salary, not just the 80% of the usual salary up to the cap.
For this reason, some employees may want to take their leave while furloughed.
You can only claim the CJRS grant for employees on furlough. You can’t claim the CJRS grant if they are on paid leave.
You should be careful an employee doesn’t take leave such that it reduces the seven-day minimum length of a furlough period. That will mean you’re unable to claim their salary for that period.
Furloughing may leave the individual with a surplus of leave as the end of the year approaches, so your communications with them should include reminders to book their leave for periods following the end of the coronavirus disruption.
Or you may decide to allow to let employees rollover leave to next year, if the employment contract allows this, of course.
26. Can I use the Coronavirus Job Retention Scheme funds to make somebody redundant?
No. The intention of the scheme is quite the opposite – it intends to keep employees paid during the disruption.
27. Are charities allowed to use the Coronavirus Job Retention Scheme?
Yes, charities can. And public authorities can make use of the scheme too.
However, the government doesn’t expect it to be used by many public sector organisations because they will continue to provide essential services or contribute to the coronavirus response.
28. Can an employee demand or ask to be furloughed under the Coronavirus Job Retention Scheme?
No. Under employment law, employers must allow time off to help someone who depends on them in an unexpected event or emergency.
The government has confirmed that situations related to coronavirus would qualify. But there’s no legal obligation for employers to pay employees for this time, or furlough them.
Employees who are shielding in line with public health guidance (or need to stay at home with somebody who is doing this) can also be furloughed if they can’t work from home and you would otherwise have to make them redundant.
The government says: “Shielding is a measure to protect extremely vulnerable people by minimising interaction between those who are extremely vulnerable and others.”
29. Are there any commitments at the end of the Coronavirus Job Retention Scheme?
Existing employment laws must be observed, and the Coronavirus Job Retention Scheme does not override these. But it also demands no further commitments from businesses.
The money is supplied as a grant, so doesn’t need to be repaid – however, the funds must be returned if they are not used in line with the purpose of the scheme.
There’s no need to maintain employment after the payments have ceased.
Existing redundancy laws apply should you find yourself needing to take such measures following the end of the scheme.
For example, if 20 or more employees are being made redundant at the same time then collective redundancy rules apply. You will need to carry out a consultation of a minimum length with a representative for the workers.
Additionally, you will need to provide a contractual or statutory notice period.
30. How long do I have to keep documents relating to my Coronavirus Job Retention Scheme application?
Following your application for the scheme, you must retain the documentation for a period of six years.
You must keep the following for each claim:
- The claim reference number you’re given.
- Any calculations you used to work out how much the claim should be, such as spreadsheet files or even calculations that you’ve written down.
- The amount claimed for each employee.
- The hours worked and the hours usually worked for flexibly furloughed employees.
A copy of all records, including the amount claimed under the scheme, and the claim period for each employee.
Editor’s note: This article was first published on 17 April 2020 and has been updated for relevance.