Assistance to retain employees
The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to assist UK businesses that are not able to maintain their current workforce due to business interruption caused by the effects of the coronavirus pandemic, social distancing and the UK
What is it?
The intent for the scheme is to provide support for employers to continue paying part of their employees’ salary for those employees that may otherwise have been laid off or made redundant during this crisis. Individuals that have been ‘furloughed’ will continue to be employees but will not be working for the employer.
Under the scheme, employers can apply for a grant from the Government to cover 80% of the wage costs of furloughed employees, up to a limit of £2,500, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum auto enrolment employer pension contributions) on that subsidised pay.
It is a temporary scheme, initially lasting for a three month period from 1 March 2020 to 31 May 2020, but recently extended to 30 June 2020.
Who can claim?
The CJRS applies to all entities with a UK payroll, including businesses, charities, recruitment agencies, public authorities as well as individuals employing staff (such as nannies) that have:
- created and started a PAYE payroll scheme on or before 19 March 2020
- enrolled for PAYE online
- a UK bank account
Public sector organisations are generally not expected to make use of the scheme as their employees will continue to provide essential public services. In addition, where employers receive public funding for staff costs, and that funding is continuing, those employers are expected to continue to pay staff in the usual manner.
Where a company is under the management of an administrator and the administrator considers that there is a reasonable expectation that the business will be continuing, e.g. by exiting administration or through a sale process, and hence that any furloughed employees could be rehired, they will be able to access the CJRS.
Which employees are eligible?
CJRS covers the following employees as long as they were on the payroll on or before 19 March 2020 and had been notified to HMRC on an RTI submission on or before 19 March 2020:
- full-time employees
- part-time employees
- employees on fixed-term contracts
- employees on flexible or zero-hour contracts
- agency workers
- company directors
- salaried members of LLPs
For specific examples of employee cirsumstances, please download the full PDF for details.
Self-employed workers are not covered by this scheme but may be covered under the separate Self-employment Income Support Scheme and the enhanced benefit system through changes to Universal Credit.
How do I furlough employees?
You should discuss with your employees to obtain their consent to being furloughed and to make any changes to their employment contract by agreement.
Existing employment law still applies and so you will need to check employment contracts carefully for your rights. It is recommended that you obtain employment legal advice.
To be eligible for the grant, employers must confirm in writing to their employees that they have been furloughed and it is recommended to get the employees agreement in writing. A record of this communication must be kept for five years.
Employees that have been furloughed have the same rights as they did previously. These include Statutory Sick Pay entitlement, maternity rights, other parental rights, also rights against unfair dismissal and to redundancy payments.
Employees must not undertake any work for their employer while furloughed to qualify for the scheme. The grants do not cover the wages of employees working reduced hours due to the coronavirus. The employees must not work for the employer at all during the furlough period otherwise they will not qualify for the scheme and the employer will not receive the grant from the Government. Recent HMRC guidance has reinforced this fact and furthermore made it a requirement that the employer notifies the employee in writing that they cannot carry out work for the employer during the furlough period and obtains the employee’s written agreement to this and that they have ceased all work.
Employees must be furloughed for a minimum period of at least three consecutive weeks after which they can be asked to return to work on their previous contractual terms. Employees can be furloughed multiple times during the term of the CJRS subject to the minimum 3 week requirement per instance of furlough.
If employees do not agree to be furloughed, they can be dismissed by reason of redundancy by the employer. In this case the employer must make sure the redundancy definition is met and the proper process followed. If employers feel furlough may be followed by redundancies it may help to select employees for furlough using a process similar to the redundancy selection process.
How much can I claim?
HMRC will reimburse 80% of furloughed workers gross wages, up to a cap of £2,500 per month, plus the Employer National Insurance contributions and minimum auto enrolment employer pension contributions (3% on qualifying earnings) associated with those wages.
Employers can top up the remaining 20% (or more) but are not obliged to and will not receive reimbursement of any top up amount. To the extent that employers do decide to top up on a selective basis, it is recommended that they are mindful of anti-discrimination rules.
How do I pay furloughed staff?
Employers pay staff through payroll as usual and will be able to claim back the costs (subject to the limits detailed above) through the new CJRS portal being set up.
How do I claim?
To claim, you will need:
- Your employer PAYE reference number
- The number of employees being furloughed
- National Insurance numbers for the furloughed employees
- Names of the furloughed employees
- Payroll / works number for the furloughed employees
- Your Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
- The claim period start and end date
- Amount claimed (covering the minimum length of furloughing of 3 consecutive weeks)
- Your bank account number and sort code
- Your contact name
- Your phone number
You will need to calculate the amount being claimed. HMRC retain the right to audit all aspects of the claim retrospectively.
If you have fewer than 100 furloughed employees, you will need to enter each employee’s details separately. If you have more than 100 furloughed employees, you will be asked to upload a file (in one of .xls .xlsx .csv .ods formats) with the information rather than input it directly.
If you use an agent, such as a payroll provider or firm of accountants, who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf. Otherwise you will need to submit the claim yourself. Please read our step-by-step guide for more information.
Please also see our post from 5 June for an update on the changes announced by the government.