Coronavirus Job Retention Scheme: FAQs for businesses


The Coronavirus Job Retention Scheme (CJRS) was announced as part of the Chancellor’s package of measures addressing the key challenges facing businesses amid the COVID-19 crisis. Under the scheme, all UK employers will be able to access a grant to continue paying up to 80% of the wages of those employees that would otherwise have been made redundant or laid off during the crisis.  These FAQs are based on the guidance issued by HMRC on 26 March 2020 and we expect more detailed guidance to follow.

The Scheme

Who is eligible?

All UK businesses, regardless of the size or sector, who have had a PAYE payroll scheme in operation since 28 February 2020 and who have a UK bank account.

What do businesses need to do to access the scheme?

To access the scheme, in basic terms employers need to:

  • designate affected employees as ‘furloughed workers’ and notify employees of this change; and
  • make claims by submitting information to HMRC about furloughed employees and their earnings through a new online portal. HMRC are urgently working to set-up the online portal and mechanism for reimbursement.

Businesses cannot submit more than one claim in any 3 week period.

What information do businesses need to make a claim?

To make a claim, employers will need:

  • their ePAYE reference number;
  • the number of employees being furloughed;
  • the claim period (start and end date);
  • the amount claimed (per each 3 week furlough period);
  • their UK bank account number and sort code;
  • a contact name; and
  • a contact phone number.
How long will the scheme run for?

The CJRS will run for at least 3 months from 1 March 2020, but will be extended if necessary.

Furlough leave

What does “furlough” mean?

Furlough means a temporary leave of absence for economic reasons and furlough leave is designed to save the jobs that otherwise would have been lost due to COVID-19.

Which employees are covered?

Employees employed through a PAYE payroll system. This includes full and part-time employees, as well as those on zero-hour contracts and employees on agency contracts.  Agency workers will need to be furloughed by the agency if they are on the agency’s payroll.  In that case the agency would receive the grant funding.

How should a business choose which employees to furlough?

This will be a commercial decision but employers should discuss this openly with their employees and make any changes to the employment contract by agreement. Employers should have regard to discrimination and equality laws when making decisions in relation to the process and in deciding to whom they offer furlough.

Employers should document their decision-making and record the fact that the furlough is due to the COVID-19 crisis which has had a severe impact on the business.

Employers should agree in writing with the employee that they will not undertake any work and, unless the employer decides to top up the grant and pay 100% salary, that the employee agrees to receive 80% of their pay (or the £2,500 capped amount if the employee’s regular wage exceeds £30,000 p.a.).

Can an employee still carry out any work for the business?

No. Employees cannot undertake any work for their employer whilst they are furloughed. This includes providing services or generating revenue for the business. However, we understand that company directors can carry out their statutory duties even if they are furloughed and that employees can undertake training and take part in volunteer work.

Can an employee whose hours have been reduced as a consequence of the crisis be furloughed?

No. Employees will not be eligible to be furloughed if they are carrying out any work at all for their employer.

Does the scheme cover employees that are due to start employment in April 2020?

No. To be furloughed the employee must have been on the PAYE payroll on 28 February 2020. Any employee who joined their employer after this date will not be eligible for furlough leave.

Can employees who have already been made redundant be furloughed?

Yes. The scheme covers employees who have been made redundant as a result of the COVID-19 crisis since 28 February 2020 but these employees will need to be rehired by their employer and then furloughed.

Can furloughed employees be called back to work if needed (e.g. if other staff members are on sick leave)?

A furloughed employee must be furloughed for at least 3 weeks; otherwise they will not be eligible for furlough leave. A furloughed employee may be called back to work after the initial three week period if necessary. Employees can be furloughed more than once during the 3-month scheme period.

How does furlough leave affect employment rights?

Employees retain their employment status during furlough leave and at the end of the leave employees have the same rights including Statutory Sick Pay, maternity rights, other parental rights, rights against unfair dismissal and the right to a statutory redundancy payment. Although it has not been specified in the guidance, it is likely that holiday entitlement will continue to accrue.

Payments under the scheme

How much can each business receive?

The grant will be 80% of an employee’s regular wage before tax (or, if lower, £2,500 per month) plus the associated employer’s NICs and minimum automatic enrolment employer pension contributions on that subsidised wage. Please note that employers will remain liable to pay (with the help of the grant funding) the employer’s NICs and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.

Fees, commission and bonuses should not be included when calculating the 80% figure. The current guidance is not clear on whether other amounts such as overtime and shift allowances should be included. We expect this to be clarified in future guidance.

The amount to be claimed is to be calculated by the business as a self-assessment. It is therefore important that businesses keep clear records of how the claimed amounts have been calculated in case HMRC retrospectively raise enquiries into the claims. We are expecting further guidance to be published detailing exactly how these amounts should be calculated.

If an individual’s salary is more than £2,500 per month, are they still eligible for the payment up to the £2,500 cap?

Yes. Businesses will receive the maximum £2,500 payment per month in respect of furloughed individuals who earn more than £2,500 per month.

If an individual receives variable pay, will this affect their CJRS payment?

If an employee has been employed for a full twelve months prior to the claim under the scheme then the business can claim the higher of:

  • the same month’s earnings from the previous year; or
  • the average monthly earnings from the 2019-20 tax year.

If an employee has been employed for less than a year then the business should claim for an average of their monthly earnings since they started work.

Do employers have to pay the remaining 20% of an individual’s salary?

An employer can choose to top up an employee’s salary, but is not obliged to do so. Please note that employer’s NICs and pension contributions on any top up will not be covered by the scheme.

When will businesses receive the money?

Businesses will not be able to make any claims prior to the scheme going live and HMRC have stated that the scheme should be up and running by the end of April.

When do furloughed employees have to be paid?

Furloughed employees should be paid on the date that they usually receive their salary.

How can businesses without cash flow pay their workers?

The Government has also announced a Coronavirus Business Interruption Loan Scheme to help small and medium sized businesses that need short term cash flow support. Please see our article on the loan scheme for further details.

How does the CJRS interact with Statutory Sick Pay for individuals who are self-isolating?

Employees who are on sick leave or self-isolating will be entitled to Statutory Sick Pay but can be furloughed after this. Employees who are shielding in line with public health guidance can be placed on furlough leave.

Will furloughed individuals still be taxed on their wages?

Yes. Wages of furloughed workers will be subject to Income Tax and employee NICs as usual. This means that if a business pays an employee £2,500 per month in connection with the scheme, that employee will receive £2,500 less income tax, employee NICs and any other relevant deductions.

How will employers be taxed on receipt of the grant?

Payments received by a business under the scheme are made to offset deductible wage costs. They should therefore be treated in the normal way and included as income for Income Tax and Corporation Tax purposes. As usual, businesses can deduct employment costs when calculating their taxable profits.

Miranda Cass


Lidia Poczok

Justin Costley


Julia Cockroft


Rachel Arnison

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