Coronavirus: What is the Job Retention Scheme?

Updated on 1 June 2020

The coronavirus (COVID-19) outbreak is having far-reaching financial impacts on individuals and businesses across the UK, and indeed across the world.

This page sets out what we know so far about the Job Retention Scheme.

money wages payslip
(c) Shutterstock / ShaunWilkinson

⚠️ We are working hard to ensure this guidance is up to date – however you should bear in mind that things may change on a daily basis as the Government respond to the ongoing situation.

The Coronavirus Job Retention Scheme is intended to help employers, whose business has been impacted by the coronavirus, access a grant to keep paying 'furloughed' staff (those on a temporary leave of absence) until the crisis passes, rather than lay them off or make them redundant.

Employment law

⚠️ The employment relationship continues through the furlough period and you will continue to have certain obligations – for example, workers may continue to accrue holiday pay. You should therefore not assume that the grant available under the Job Retention Scheme means that ‘furloughing’ has no cost to you – there may well be costs and other considerations that mean that furloughing is not appropriate and you may need to take some employment law advice.

You should also not assume that all employees will want to be furloughed in order to access the financial support available. In some instances, accepting redundancy for example, may be a better option for them. It is something that you may need to discuss and agree individually.

There is a useful guide to furloughing workers from an employment law perspective on the ACAS website. In particular you should check the section ‘If the workplace needs to close temporarily’.

Important dates

The scheme, open to any employer in the country with a PAYE scheme open as at 19 March 2020, will help cover the cost of wages for any qualifying employees designated as ‘furloughed’ (backdated to 1 March 2020 as appropriate).

From 1‌‌ July to the end of October, employers will be able to bring their furloughed employees back to work part-time. If employees are unable to return to work, or employers do not have work for them to do, they can remain on 'full' furlough.

It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period before 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.

Contribution amount

Until the end of June, employers can claim for 80% of furloughed employees’ of wages, up to a cap of £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

In July, the government will pay 80% of wages up to a cap of £2,500 as well as Employer National Insurance and pension contributions for the hours the employee doesn’t work (the cap on the furlough grant will be proportional to the hours not worked). Employers will have to pay employees for the hours they work. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

In August, the government will continue to pay 80% of wages up to a cap of £2,500 for the hours the employee does not work, but employers will pay Employer National Insurance and pension contributions. For the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.

In September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work. Employers will pay Employer National Insurance, pension contributions and 10% of wages to make up 80% total up to a cap of £2,500.

In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. Employers will pay ER NICs, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.


The government's guidance on the Job Retention Scheme is split over several pages:

The underlying scheme rules (the 'Treasury Direction') can be found on GOV.UK.

The Pensions Regulator have also issued guidance for employers on the pensions element of the Job Retention Scheme grant.

If you find the government guidance confusing, you may find the following useful:

Our colleagues at the ATT, have produced a useful explainer, looking at the Job Retention Scheme.

For some hints and tips to help you understand the available guidance, do your calculations and make your claim, see our news item: How to claim a Job Retention Scheme grant. We provide further clarification around furloughing and look at some tricky aspects of claiming a Job Retention Scheme grant in more detail, here.

We discuss the impact of employees in salary sacrifice schemes in the context of childcare vouchers, in our guidance for families section.

Incorrect calculations?

We understand that a lot of employers may have got their calculations of furlough pay/grant amounts wrong.

There are obvious issues if an employer pays out too much by way of furlough pay (as they will have paid out more than they can get back) but there are also serious ramifications where they do not pay out enough by way of furlough pay (that is, where they have paid out less than the ‘reference pay’ as calculated under the scheme rules). Indeed it could mean that the employer is not actually eligible to make a claim for a grant from the Job Retention Scheme as explained in this House of Commons briefing (see question 7).

Currently, however, HMRC have not confirmed what employers should do in cases where their calculations are wrong. We are continuing to raise this general issue with HMRC however in the meantime, suggest you contact the Job Retention Scheme helpline and discuss your case with HMRC.

More generally, we are working hard to try to identify the most pressing questions, issues and concerns around the scheme and HMRC's guidance so that we can put them to HMRC and government. Please contact us with any questions or comments that you have so that we can try to get the situation clarified, and guidance updated and expanded as much as possible.

We may not be able to respond to writers individually but we will post any available updates to our website, so please do check back regularly.