The Coronavirus Jobs Retention Scheme – “Furloughing” of employees

Updated 12th May 2020

Advice for Employers

Under the Coronavirus Jobs Retention Scheme (CJRS), all UK employers with a PAYE scheme that was created and started on or before 28 February 2020 will be able to access support to continue paying part of your employees’ salary for those employees that would otherwise have been laid off during this crisis and to avoid redundancies.

This applies to employees who have been asked to stop working, but who are being kept on the payroll, otherwise described as ‘furloughed workers’.

It was intended for the JRS to run for at least 3 months from 1 March 2020, but on 12th May 2020 it was extended to October 2020. Employers can use this scheme anytime during this period. The CJRS covers the cost of wages backdated to 1 March 2020 and includes workers who were in employment on 28 February 2020. Employees hired after this date cannot be furloughed.


  1. Furloughed employees must have been on the PAYE payroll on 28 February 2020, and can be on
    any type of contract, including:
    a. full-time employees
    b. part-time employees
    c. employees on agency contracts
    d. employees on flexible or zero hour contracts
  2. HMRC will pay employers a grant worth 80% of an employee’s regular wage costs, up to £2,500 a month, plus the associated employer National Insurance Contributions (NIC) and minimum
    automatic enrolment employer pension contributions on that subsidised wage.
  3. For full time and part time salaried employees, the employee’s actual salary before tax, as of 28
    February should be used to calculate the 80%. Fees, commission and bonuses should not be
  4. For employees whose pay varies, if the employee has been employed (or engaged by an
    employment business) for a full twelve months prior to the claim, the employer can claim for the higher of either:
    a. the same month’s earning from the previous year
    b. average monthly earnings from the 2019-20 tax year
  5. If the employee has been employed for less than a year, the employer can claim for an average of their monthly earnings since they started work.
  6. Employees are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working. Furloughed workers are not working and can claim the lower of 80% of their salary, or £2,500 even if this would be below NLW/NMW.
  7. Tax and NICs will still have to be paid as normal.
  8. Qualifying employers include:
    a. Businesses,
    b. Charities,
    c. Recruitment Agencies (agency workers paid through PAYE),
    d. Public Authorities.
  9. The business must have a UK bank account.
  10. Employers should discuss with their staff and make any changes to the employment contract by
    agreement. To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
  11. A worker must be furloughed for a minimum of 3 weeks for their employer to be eligible to claim under this scheme.
  12. If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.
  13. A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of their employer.
  14. If workers are required to complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
  15. If an employer offers enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that can be claimed through the scheme.
  16. HMRC are working urgently to set up a system to pay these grants. We expect the first grants to
    be paid within weeks and HMRC are aiming to get the system in place before the end of April.
  17. More guidance on how employers should calculate their claims for employer National Insurance Contributions and minimum automatic enrolment employer pension contributions will be provided.
  18. To claim, employers will need:
    a. their PAYE reference number
    b. details of the number of employees being furloughed
    c. the claim period (start and end date)
    d. amount claimed (per the minimum length of furloughing of 3 weeks)
    e. bank account number and sort code details
    f. a contact name and phone number.
  19. The employer will need to calculate the amount to be claimed. HMRC will retain the right to
    retrospectively audit all aspects of a claim.
  20. Employers can only submit one claim at least every 3 weeks, which is the minimum length an
    employee can be furloughed for.
  21. Once HMRC have received a claim and the employer is eligible for the grant, they will pay it via
    BACS payment to a UK bank account.
  22. Employers should make a claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
  23. Employers must pay the employee all the grant you receive for their gross pay, no fees can be
    charged from the money that is granted.

Eligibility and accessing the CRJS

All UK businesses are eligible.

Employers will need to:

  • Designate affected employees as ‘furloughed workers,’
  • Notify those employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • Submit information to HMRC about the employees that have been furloughed and their earnings. This will be through a new online portal (HMRC will set out further details on the information required)

The overall message, however, is that the Government will provide assistance to both employers and employees. They are urging businesses not to make permanent redundancies.

Contact us

We are here to help you with all aspects of the CJRS process, from analysis of employees to be furloughed to the formal claim process. Please speak to your usual MHA Tait Walker contact or email