COVID-19: Coronavirus Job Retention Scheme (CJRS)



Mar 26, 2020





Under the Coronavirus Job Retention Scheme (CJRS), all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those who would otherwise have been laid off during this crisis. This applies to employees who have been asked to stop working, but who are being kept on the payroll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month.  This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1st March 2020 and is initially open for 3 months, but will be extended if necessary.

All UK-wide employers with a PAYE scheme will be eligible – this includes the public sector, Local Authorities and Charities.


What are the parameters for the scheme?

  • If your business has been severely affected by the Pandemic and you were about to make employees redundant, the CJRS offers the alternative of ‘furlough’. Furloughed workers will be put on ‘furlough leave’. During this time, they will continue to be employed by their employer, but they will not be required to work for a temporary period of time. The CJRS will assist employers by reimbursing them up to 80% of the wages of each furloughed worker, up to a maximum of £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
  • The CJRS will run from April 2020 (date to be confirmed) but will be backdated to 1 March 2020. This means that anyone who has been laid off since 1 March and has not left the business under redundancy can be caught by the scheme. The CJRS is expected to run for at least 3 months, although the government may decide to extend it as things progress.
  • The CJRS will reimburse employers for wage costs, and so employers will need to pay their employees at least 80% of their normal wages during any lay off period, and then they apply for a grant via a standalone online portal.  This is likely to be introduced around 21 April, and will allow furlough payments to be reimbursed.  Until these payments start to filter through the system, employers are likely to have to deal with cash flow issues.
  • Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.


What do employers need to do?

The Government has published online guidance on the finer details of the Scheme and how it will work in practice. Below we outline the actions an employer should take to comply with the scheme:

  1. Employers will need to designate affected employees as ‘furloughed workers’ and notify those employees of this change and agree this with them.
  2. You should check employee contracts of employment to see if there is a contractual right to lay employees off if there is a downturn in work. If not you will need to discuss and agree with employees that they are ‘furloughed’. This may involve a negotiation. Either way you will probably need employees’ consent. Given the alternative of redundancy, one assumes common sense will prevail. Note: if you have more than 20 employees whose contracts need to be changed, then a more formal consultation process will need to be undertaken and we recommend legal advice at this point.
  3. Employers should notify employees in writing and explain why the decision was necessary (Covid-19 Pandemic).
  4. Please note it is solely the employer’s choice to furlough and not the employee’s. If the employee requests to be furloughed, the employer can refuse to agree e.g. if there is still work for them to do.
  5. Employers then need to submit information to HMRC about those employees who have been designated as ‘furloughed’ and their earnings, via a new online portal which is being set up. If you are doing this for the March payroll run you should keep a list of furloughed employees and salary details.


What are the conditions for making a claim?

  1. Employers can reclaim up to 80% of wage costs as of 28 February 2020 for full time and part time salaried employees, up to a cap of £2,500 per month.  In addition they can claim the associated employer NICs and minimum auto-enrolment pension contributions on that wage. Fees, commission and bonuses should not be included. It’s not yet clear if cash allowances and overtime should also be excluded.
  2. HMRC will then reimburse 80% of wage costs for ‘furloughed workers’ up to a cap of £2,500 per month, per furloughed worker. Exactly when these funds will be available is currently unknown. (We will advise you when the Portal is ‘live’).
  3. The conditions for receiving CJRS do not displace an employee’s existing employment contract, so a furloughed employee will still be entitled to holiday, maternity and sick pay as per their existing terms of employment.
  4. For employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (eg earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year.
  5. Individuals are only entitled to the minimum wage for the hours they work. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
  6. Furloughed employees can be paid more than 80% of their pay if the employer chooses (bearing in mind the CJRS will reimburse a maximum of 80% to a maximum of £2500 per employee).
  7. Employees should not undertake any work for their employer while they are ‘furloughed’. The fact that the employer is unable to give its employees any work for the time they are ‘furloughed’ is what allows them to claim up to 80% of the employee’s wage for all employment costs (up to £2,500 a month).
  8. Although an employee who is furloughed can do no work at all for that particular employer, they can hold a separate employment with a different and unconnected employer which will be unaffected.
  9. Eligible employees for the scheme include apprentices and agency workers.  Staff are allowed to study whilst they are being furloughed.
  10. Employees can be moved in and out of being furloughed as work becomes available to an employer and then ceases again.  Furlough leave may also be rotated among employees. However there is a minimum period of 3 weeks of furlough before an employee can return to work.
  11. Employers can only claim once every three weeks, i.e. they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
  12. Company directors can be furloughed and receive 80% of their salary. They can continue to fulfill their basic director’s duties provided that these are limited to legally required administrative tasks and do not extend to working in the company.  Many owner-managed company directors or shareholders pay themselves small salaries and the balance of their income as dividends.  Be aware that only a director’s basic salary is relevant to the scheme and it does extend to dividends.


We understand that this is a confusing and uncertain time for employers, and there are a lot of considerations to take into account.   All of the PT team are working as normal, so if you would like any advice on making a claim for the job retention scheme then please drop us an email and we will be delighted to help.


Coronavirus Job Retention Scheme (CJRS)
Article Name
Coronavirus Job Retention Scheme (CJRS)
Guidance on the Coronavirus Job Retention Scheme (CJRS), which provides businesses with financial support to pay 80% of an employee’s salary to protect against redundancies due to the current crisis.
Publisher Name
Paish Tooth
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