⚠️ We are working hard to ensure this guidance is up to date. However, you should bear in mind that things may change as the government respond to the ongoing situation.

Coronavirus: What is the Job Retention Scheme?

Updated on 21 October 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 about the Job Retention Scheme.

Image of miniature shopping trolley with a job retention scheme tag inside
(c) Shutterstock / Eag1eEyes

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.


The government's guidance on the Job Retention Scheme is split over several pages, all of which can be found in the collection on GOV.UK.

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

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

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

Our colleagues at the ATT, have produced a useful summary of the Job Retention Scheme.

For some hints and tips to help you do your Job Retention Scheme 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. (These news articles reflect our understanding of the situation as at the time of writing. You can find the date they were published under the title.)

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

You may also find the information that we have put together for employees on the Job Retention Scheme helpful. There is a discussion of the interaction between furloughing and Statutory Sick Pay in our page on the test and trace system.

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. 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.

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).

In the period 1 March to 30 June 2020, an employee could not undertake any work for their employer, including answering calls or emails.

From 1‌‌ July to the end of October, employers will be able to bring their furloughed employees back to work part-time ('flexible furlough' – which we discuss in more detail here). If employees are unable to return to work, or employers do not have work for them to do, they can remain on 'full' furlough.

If you are a small employer with only a handful of staff and relatively straightforward working arrangements, you may find the amount and complexity of the official guidance on flexible furlough overwhelming as it tries to cover all situations and every eventuality! We summarise the main things that small employers need to know in our article 'Fretting about Flexible furlough?'.

It is important to note that the Job Retention Scheme closed 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 (with some limited exceptions).

This means that the final date by which an employer could furlough an employee for the first time was 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. If you do not make a claim by this date, you cannot go on to make a claim for periods starting on or after 1 July.

Even though we are now past the 10 June, it may be possible for earlier periods of inactivity by your employee to be considered as a furlough period for the purposes of you claiming a Job Retention Scheme grant for them. Our article 'Not designated 'furloughed' by 10 June? It may not be too late for your employer to claim for you under the Job Retention Scheme' explains the detail.

Contribution amount

Until the end of June, employers could 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 Employer National Insurance, pension contributions and 20% of wages to make up 80% total up to a cap of £2,500.

Job Retention Bonus

The Chancellor recently announced the introduction of the Jobs Retention Bonus.

This is a one-off payment of £1,000 to employers that have used Job Retention Scheme for each furloughed employee who remains continuously employed until 31 January 2021.

To be eligible, employees will need to:

  • earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
  • have been furloughed by an employer at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
  • have been continuously employed up until at least 31 January 2021.

Employers will be able to claim the bonus from February 2021 once accurate RTI data to 31 January has been received. More information about this scheme will be available by 31 July and full guidance will be published in the Autumn.

You can read more about the scheme on GOV.UK.

Incorrect calculation/claim?

We understand that a lot of employers will 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 legitimately claim for under the Job Retention Scheme) 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.

We explain this issue further and what employers should do in cases where their calculations are wrong in our article Have you made a mistake on a claim for the Job Retention Scheme. (Please note it is now possible to delete a claim online within 72 hours of submitting it, as described on GOV.UK.)

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.

Care and support employers

If you are a care and support employer and have had to 'shield' or have been unwell during the coronavirus pandemic or if your PA has had to shield or has had caring responsibilities, and they have not been able to work for you as a result, you may have been wondering if it is possible to 'furlough' them so that you can claim a grant from the government to help pay their wages while they are off.

Guidance on this issue can be found in these GOV.UK pages:

Any Job Retention Scheme grant received by an employer who is an individual and not employing staff in the course of a business will not be taxable on them, although the payment made to the PA will be subject to tax and NIC as normal.

In recognition of the difficult position that unrepresented, small, employers (including care and support employers) may find themselves in, in trying to understand and administer the Job Retention Scheme grant, TaxAid have also set up a helpline where you can ask a qualified, professional tax adviser for specific advice. People can call their main helpline on 0345 120 3779 and choose option 1 ‘need help accessing government support as a result of coronavirus’. Your details will be taken and a call back will be offered the following day to discuss the help you need.

Coronavirus guidance: more information
Information for employers Taking money from your savings
What is the Job Retention Scheme? Taking money from your pension
Employees: illness or self-isolation Help with paying your tax
Employees: work changes Information if you are a student or are repaying your student loan
Employees: universal credit and pay Accessing money in childcare schemes
Redundancy explained High Income Child Benefit Charge: What to do if your income falls?
Support for limited company directors School closures: family members might be able to claim state pension ‘babysitting’ credits
Self-Employment Income Support Scheme Childcare support and benefits for children
SEISS parental extension Inheritance tax exemption
Self-employment and paying tax Support for Carers
Self employment: Illness or self-isolation Carer’s allowance: can you claim?
Self-employment: work changes Volunteering and job opportunities
Help for businesses in Northern Ireland, Scotland and Wales Scams: please be vigilant!
Test and Trace Support payment Dealing with HMRC during the coronavirus outbreak

Tax penalties: coronavirus ‘relaxations’

Coronavirus guidance home page

Share this page