The Coronavirus Job Retention Scheme is an initiative open to all UK employers with a PAYE scheme in place for the employees. The scheme will keep employees employed by their employer but they must not undertake any work. The government will cover 80% of furloughed workers’ wages, up to £2,500 a month. Read more about the qualifying criteria, and how it may benefit your UK business.
The government has also published a step by step guide for claiming your employees’ wages through the CJRS, which can be accessed here.
Employers are able to claim back 80% of furloughed workers wages, limited to £2,500 per month and employee. Additionally, the employer can claim for associated Employer National Insurance contributions (NIC) and minimum automatic enrolment employer pension contributions. Fees, commission and bonuses should not be included. Employees must be furloughed for a minimum of three weeks.
The government initially said that the scheme will remain open for a minimum of three months but the deadline has now been extended in its current form until end of July.
On 12th May, it was announced by the Chancellor that the scheme will remain open until the end of October, though under different circumstances. From the start of August, furloughed workers will be able to return to work part-time and employers will be expected to pay a percentage towards the furloughed staff’s salaries. These contributions will partly replace those made by the government, thus ensuring that employees will continue to receive 80% of their salary, up to £2,500 a month.
The application portal went live on 20th April and can be accessed here.
All UK employers are eligible to apply for the scheme. This includes not only for-profit businesses, but also charities and recruitment agencies and public authorities. The scheme requires, however, that the organisation has a UK bank account and has started a PAYE payroll scheme prior to, or the day of, 19th March. In addition, you need to be enrolled for PAYE online (this can take up to 10 days).
About The Employees
Any type of employment is eligible, though the furloughed employees must have been on the PAYE payroll prior to, or on the day of, 19 March 2020. The employee cannot undertake any work for the organisation, thus, the scheme does not cover employees who are working on reduced hours or reduced salary contracts due to the current crisis.
Examples of type of employees you can claim for:
- Full-time employees
- Part time employees
- Employees on agency contracts
- Employees on flexible or zero-hour contracts
- Rehired employees who were made redundant since 28 February.
Foreign nationals are also eligible to be furloughed.
Please see more detailed guidance on different types of employees on this page.
No, employers are not enforced to furlough all employees. When choosing who to furlough, the usual equality and discrimination laws will apply.
The government recommends that any changes made to employment contracts should be discussed and done in consent with employees.
Short term illness/ self-isolation should not be a consideration in deciding whether to furlough an employee. The Coronavirus Job Retention Scheme is not intended for short-term absences from work due to sickness, and there is a 3 week minimum furlough period.
If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee.
Calculating the Claim
You are entitled to claim 80% of the employee’s salary before tax as of 28 February, non-inclusive of fees, commission and bonuses and with a maximum amount of £2,500. See detailed guidance on how to calculate the wages here.
National Insurance and Pension Contributions
You are also entitled to claiming back the associated NIC and minimum automatic enrolment employer pension contributions from the HMRC, both which you are still liable to pay. Note that you cannot claim for:
- additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
- any pension contributions you make that are above the mandatory employer contribution
The calculation differs depending on how long the employee has been employed.
Employees whose pay varies and were employed from 6 April 2019
If the employee has been employed continuously from the start of the 2019 to 2020 tax year, you can claim the highest of either:
- 80% of the same month’s wages from the previous year (up to a maximum of £2,500 a month)
- 80% of the average monthly wages for the 2019 to 2020 tax year (up to a maximum of £2,500 a month)
Employees whose pay varies and who started employment after 6 April 2019
If the employee started their employment after 6 April 2019, claim for 80% of their average monthly wages since they started work until the date they are furloughed, up to a maximum of £2500 per month.
About Furloughed Employees
Yes, you may top up your employee’s salary if desired. Bear in mind, you will also have to pay for NIC and pension contributions for the top-up amount, which you will not be able to claim back.
No. According to the scheme, no one can be furloughed or claimed for unless they are on the PAYE payroll scheme before or on the day of 19 March.
Yes, as long if they do not do any type of work to generate revenue for, or on behalf of, the organisation.
Furloughed employees have the same right as they did before, including SSP, maternity rights and rights against unfair dismissal. Depending on the outcome, the right to redundancy payments could be particularly important ones the government ends the scheme.
This does not affect your claim – an employee can be furloughed for each job separately.
Claiming with HMRC & End of Scheme
To make a claim, you will need:
- to be registered for PAYE online
- your UK bank account number and sort code
- your employer PAYE scheme reference number
- the number of employees being furloughed
- each employee’s National Insurance number
- each employee’s payroll or employee number (optional)
- the start date and end date of the claim
- the full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
- your phone number
- contact name
You also need to provide either:
- your name (or the employer’s name if you’re an agent)
- your Corporation Tax unique taxpayer reference
- your Self Assessment unique taxpayer reference
- your company registration number
See more details here.
As long as you are eligible for the grant, the HMRC will pay it directly to your UK bank account. (within 6 working days of submitting the claim). The amount must then be transferred directly to your employee. You may not deduct any fees from the grant.
Once you’ve claimed, make sure you:
- keep a copy of all records, including:
- the amount claimed and claim period for each employee
- the claim reference number for your records
- your calculations in case HMRC need more information about your claim
- tell your employees that you have made a claim and that they do not need to take any more action
- pay your employee their wages, if you have not already
When the scheme ends, the employee can return to normal duties, or, it may be necessary to consider redundancy. The normal procedures for terminations must then be followed.
How We Can Help
At Goodwille, we will keep monitoring the current situation and governmental advice regarding COVID-19, regularly updating our blog If any additional information is announced regarding the Coronavirus Job Retention Scheme we will notify you, and support you throughout the application process.
We encourage our clients, as well as other businesses, to get in touch with our team in case you have any questions or concerns regarding your UK operations and the implications of COVID-19.