COVID-19 and Job Retention Scheme for UK employers

The Treasury issued a Direction to HMRC which was subsequently issued on 17 April 2020 regarding the Coronavirus Job Retention Scheme (“CJRS”).


The underlying purpose of the CJRS is to support employers retain existing staff with paid temporary leave. An employee is only treated as being on furlough if:

  • The employee and employer agree to cease all work in relation to employment;

  • There is a written record of the employee’s agreement which should be kept on file for 5 years;

  • The minimum period for which work is ceased must be 21 calendar days or more; and

  • The instruction is given by reason of circumstances arising as a result of coronavirus pandemic.


Who can apply?

The scheme is accessible to all UK employers (small, large, charitable, non-profit and for-profit) which were operating a PAYE payroll scheme on or before 19 March 2020. In principle, all employers are eligible to claim under the scheme. Although the guidance refers to “employers whose operations have been severely affected by coronavirus” it goes on to say that the government recognises that different businesses will face different impacts from coronavirus.

The guidance adds that administrators are only expected to access the scheme if there is a “reasonable likelihood of re-hiring the workers”. Putting employees on furlough and claiming in respect of them under the CJRS will involve adopting the contracts of employment of those employees. Furlough agreements between the company (in administration) and the employees should reflect that.


How to apply?

The Government provides access to the scheme through an online portal. You can only submit one claim every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated to any date from 1 March onwards, but only if the employees concerned have not been carrying out any work for you in the interim period. 


What can you claim?

For those paid regular wages, employers can claim 80% of their regular monthly wage or up to a cap of £2,500 per employee through the Scheme.

In addition, you can claim the associated Employer National Insurance Contributions and 3% minimum automatic enrolment employer pension contributions payable on the subsidised wages paid to furloughed employees.

The Scheme was backdated to 1 March 2020 and the Chancellor has announced that it will continue until the end of October 2020. From 1 August, new flexibility will be introduced “to get employees back to work” but it is not currently clear how this will work.


From 1 August employers will be expected to pay a percentage towards the furlough salaries. 

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