FAQs: A guide to the Coronavirus Job Retention Scheme

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Further details of the Coronavirus Job Retention Scheme have been released by the Government. This Q&A will answer some of the key questions businesses have in relation to the Scheme:

What is the Coronavirus Job Retention Scheme?

A Government scheme to support businesses whose operations have be severely affected by the Coronavirus to continue to pay staff and avoid redundancies.

Employers will be able to designate employees who would otherwise have been made redundant as “furloughed”. Through a HMRC portal, employers will be able to make a claim for a grant of 80% of furloughed employees’ wage costs up to a maximum of £2,500 per month.

Who can use the Scheme?

Any organisation which had a PAYE scheme running on or before 28 February 2020 and has a UK bank account including:

  • Businesses;
  • Charities;
  • Recruitment Agencies (where agency workers are paid through PAYE);
  • Public authorities.

Which employees can be claimed for?

Those employees who were on the PAYE payroll on 28 February.

This means that employees who were made redundant after 28 February but before the announcement of the Scheme can be brought back onto the payroll and a claim under the Scheme can be made.

Employees on any type of contract can be furloughed, including:

  • Full-time;
  • Part-time;
  • Flexible and zero-hours.

Is the grant subject to tax?

Yes, the employee’s wage while on furlough leave will be subject to income tax and other deductions in the usual way.

Does the grant include employer National Insurance and pension contributions?

In addition to 80% of furloughed employees wage costs, employers will receive the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

How will the grant for employees whose wage varies be calculated?

Businesses will need to take the higher of either the same month’s earnings for the previous year or average monthly earnings for the 2019-20 tax year.

For employees who have been employees less than a year, the claim will be based on their average monthly earnings since the start of the year.

Do employees need to agree to be furloughed?

Yes, designation as a furloughed employee is a change to the employment contract and therefore must be agreed with the employee.

Must businesses make up the additional 20%?

No, it is up to the employer to choose whether to pay the difference.

Can employees continue to do some work for the business?

No, furloughed employers must not undertake any work for or on behalf of the business.

How long must an employee be furloughed for in order to make a claim under the Scheme?

A minimum of 3 weeks.

What do businesses need to do to make a claim?

Claims will be made through HMRC’s online portal. To make claim you will need:

  • Your ePAYE reference number;
  • The number of employees being furloughed;
  • The claim period (start and end date);
  • Amount claimed (per the minimum length of furloughing of 3 weeks);
  • Your bank account number and sort code;
  • Your contact name; and
  • Your phone number.

Employers will need to calculate the amount they are claiming themselves and more details regarding how to do this will be released by the Government before the Scheme goes live.

When does the Scheme open?

The Government is aiming to have the Scheme operational by the end of April.

How long will it be available?

At least 3 months, starting from 1 March 2020.

We are here to help you and your business navigate the Coronavirus crisis. For more information and support, please do not hesitate to get in contact with any member of our Employment Team. 

Lydia Cammiade

Lydia Cammiade Associate

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