⚠️ 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?
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 some information for employers about the Coronavirus Job Retention Scheme.
The Job Retention Scheme, set up in March 2020, helps employers pay their workers’ wages if they are unable to work during the coronavirus crisis. This can include workers who:
- have caring responsibilities resulting from coronavirus, such as caring for children who are at home as a result of school or childcare closing, or
- are clinically extremely vulnerable, or in the highest risk group for severe illness from coronavirus according to the public health guidance for their area.
Under the Job Retention Scheme, you can claim a grant so that a ‘furloughed’ worker can receive up to 80% of their usual wages, via the payroll, up to a total of £2,500 each month.
The Job Retention Scheme was due to come to an end on 31 October 2020 with a new Job Support Scheme running from 1 November 2020.
⚠️ On 31 October 2020 it was announced that the Job Support Scheme will be postponed, with the Job Retention Scheme continuing in the meantime (now confirmed to be in place until 30 September 2021).
For more information on the Job Retention Scheme from 1 November, please see below.
The government's guidance on the Job Retention Scheme is split over a number of pages, all of which can be found in the collection on GOV.UK.
The underlying scheme rules (the ‘Treasury Directions’) can be found on GOV.UK.
Guidance on how to deal with the accrual of holiday leave and pay during furlough, can be found on GOV.UK.
The Pensions Regulator have also issued guidance for employers on the pension 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. (Although some of the news articles we refer you to on this page, were written early on in the life of the scheme, some of the information in them may still be useful to employers, so links to them have been retained. You can find the date they were published under the title.)
An article looking at some important Job Retention Scheme calculation considerations for January to April 2021, which are particularly important for employers with variably paid employees, can be found here.
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 on our page Employees: illness or self isolation.
There is a useful guide to furloughing workers from an employment law perspective on the ACAS website.
The main thing to note is that the employment relationship continues through the furlough period and you will continue to have certain obligations – for example, workers may continue to accrue holiday. Therefore, you should bear in mind there may still be ongoing costs to you of ‘furloughing’ staff, over and above the employer contributions required under the Job Retention Scheme. There may also be 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.
The scheme, open to most employers across the country, helps cover the cost of wages for any qualifying employees designated as ‘furloughed’ – originally, a qualifying employee was basically anyone was on their employer's payroll and included on an RTI payroll submission to HMRC on or before 19 March 2020.
The original Job Retention Scheme closed to new entrants from 30 June. For the period 1 July to 31 October, employers were only able to claim for furloughed employees that they had furloughed for a full three-week period before 30 June (with some limited exceptions). This meant that the final date by which an employer could furlough an employee for the first time was 10 June 2020, for the three-week furlough period to be completed by 30 June 2020. Employers had until 31 July 2020 to make any claims in respect of the period to 30 June 2020.
In the period 1 March to 30 June 2020, an employee could not undertake any work for their employer, including answering calls or emails.
Since 1 July 2020 employers have been able to bring their furloughed employees back to work part-time (‘flexible furlough’ – which we discuss in more detail here). Employers have to pay the employee’s wages for the hours they work as normal, as well as Employer National Insurance and employer pension contributions for those hours. Employers are required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. Since 1 July 2020, employees can also remain on 'full' furlough, as required.
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 about flexible furlough in our article: Fretting about Flexible furlough?
Claims for the period ending 31 October 2020 needed to be made by 30 November 2020. From this date it is not possible to add to or amend any claims for the period to 31 October 2020.
On 31 October 2020, it was announced that the Job Retention Scheme, which was due to end on 31 October 2020, was to be extended to 31 March 2021. It was subsequently extended again to 30 April 2021, and has been extended further to 30 September 2021 in the March 2021 Budget
Claim windows under the extended Job Retention Scheme (from 1 November 2020) are much tighter than previously. Claims should be submitted by day 14 of the following month (unless employers have a reasonable excuse), to ensure prompt claims following the end of the month which is the subject of the claim.
Employers will also have only 28 days from the end of the month to increase their claim if they realise they have made a mistake (unless they have a reasonable excuse).
A list of the relevant dates and more information about reasonable excuse, can be found in our news article Coronavirus Job Retention Scheme (CJRS): a brief update for employers.
Until the end of June 2020, employers could claim for 80% of furloughed employees’ 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 the wages.
For July, the government paid 80% of wages up to a cap of £2,500 as well as Employer National Insurance and pension contributions for the hours the employee did not work (the cap on the furlough grant being proportional to the hours not worked). Employers paid employees for any hours they actually worked.
For August 2020, the government paid 80% of wages up to a cap of £2,500 for the hours the employee did not work, but employers paid Employer National Insurance and pension contributions. For the average claim, this represented 5% of the gross employment costs that they would have incurred if the employee had not been furloughed. Employers paid employees for any hours they actually worked.
For September 2020, the government paid 70% of wages up to a cap of £2,187.50 for the hours the employee did not work. Employers paid Employer National Insurance, pension contributions and 10% of wages (to make up 80% of wages in total) up to a cap of £2,500. Employers paid employees for any hours they actually worked.
For October 2020, the government paid 60% of wages up to a cap of £1,875 for the hours the employee did not work. Employers paid Employer National Insurance, pension contributions and 20% of wages (to make up 80% of wages in total) up to a cap of £2,500. Employers paid employees for any hours they actually worked.
From 1 November 2020 to 30 April 2021, in light of the worsening situation and increased restrictions, the government has gone back up to paying 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. Employers must continue to pay employees for any hours they actually work.
From July 2021 employers will be required to contribute to furlough pay with the government contribution reducing accordingly – see our Budget 2021 summary for more information.
Further details of the extension of the scheme from 1 November 2020
On 31 October 2020, it was announced that the Job Retention Scheme, which was due to end on 31 October 2020, would be extended (first to 31 March 2021, then to 30 April 2020), with the UK government paying 80% of ‘usual wages’ for the ‘usual hours’ furloughed employees do not work, up to a cap of £2,500, for periods from 1 November 2020.
This means that the Coronavirus Job Support Scheme which was due to come into effect on 1 November 2020 is now postponed. Extending the Job Retention Scheme is more favourable for employers (as compared to what was proposed under the Job Support Scheme) and although there is no obligation on employers to put employees on furlough, it is hoped that employers will continue to take advantage of the scheme to support their employees.
The Job Retention Scheme was subsequently extended again from 1 May 2020 to 30 September 2021 in the March 2021 Budget.
The full details of the scheme from May 2021 have yet to be announced but see our Budget 2021 summary which outlines what we know about it at the moment.
How does it work?
Employers continue to have flexibility to ask their employees to work on a part-time basis and furlough them for the rest of their usual working hours, or furlough them full-time.
Employers can claim either shortly before, during or after running their payroll (as opposed to only in arrears as was proposed under the Job Support Scheme).
Under the extension, employees must agree to being furloughed (fully or flexibly) before their new working arrangements start and the employer must confirm details of their new terms and conditions in writing. The only exception to this is for agreements made retrospectively in the period to 13 November 2020 (given the extended scheme started on 1 November 2020 but the guidance wasn’t published until 10 November 2020).
The calculations for determining usual wages and usual hours for those employees who have been previously furloughed (or were eligible to have been previously furloughed, even if they actually were not), remain largely the same, which will be a relief to employers who may have got used to the original Job Retention Scheme!
For an employee who meets the criteria of the extended scheme and so is an eligible employee but was not previously eligible for the Job Retention Scheme (for example because they were only taken on in April 2020), it is necessary to use slightly modified calculations of usual pay and usual hours, as follows:
- For employees on fixed pay employed on or after 20 March 2020, the last pay period prior to 30 October 2020 provides the basis for the usual wages calculation.
- For employees on variable pay or hours employed after 20 March 2020, the average of the tax year 2020/21, up to the start of the furlough period, provides the basis for usual wages calculation.
If an employee was not previously eligible for the Job Retention Scheme, then usual hours for a ‘fixed pay’ employee will be the contracted hours worked in the last pay period ending on or before 30 October 2020.
For variably paid employees, the usual hours will be the average hours worked in the tax year 2020/21 up to the start of furlough.
Employers must pay all Employer National Insurance contributions and pension contributions. Employers can choose to top up their furloughed employees’ wages beyond the 80% paid by the UK government for hours not worked, but they are not required to do so.
An article looking at some important Coronavirus Job Retention Scheme (CJRS) calculation considerations for January to April 2021, which are particularly important for employers with variably paid employees, can be found here.
Under the extended scheme from 1 November 2020, employers can claim for employees who were on their PAYE payroll on 30 October 2020. Employers must have made a Real Time Information (RTI) submission to HMRC between 20 March 2020 and 11.59 pm on 30 October 2020, notifying a payment of earnings for that employee.
Employers and their employees do not need to have benefited from the scheme before to make a claim (unlike the scheme from 1 July to 31 October 2020). The extension can therefore include employees who started work for their employer too late to qualify for the original scheme.
If employees were on an employer’s payroll on 23 September 2020 (i.e. notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working for them afterwards, they can also qualify for the scheme if the employer re-employs them. You should be aware that there may be employment law considerations that go along with re-hiring ex-employees.
As announced in Budget 2021, for claim periods starting on or after 1 May 2021, employers will now be able to include employees that were previously not eligible due to RTI submissions being sent after 30 October 2020. Guidance now states that all employees who have had a PAYE RTI submission made for them between 20 March 2020 and 2 March 2021 are now eligible to be included in a CJRS claim from May 2021. The eligibility for the periods March 2021 and April 2021 remains unchanged.
Publication of employer details
Under the extended scheme, to aid transparency and to deter fraudulent claims, HMRC will publish information about employers’ claims.
From January 2021, HMRC started publishing the list of employers who have claimed under the CJRS for periods from December onwards, on GOV.UK. Starting from 25 February, on a monthly basis they will publish the names and Company Registration Numbers (for those who have one) of employers who make CJRS claims for periods starting on or after 1 December, together with an indication of the value of their claims.
HMRC will not publish the exact amount of claims, but rather the band within which claims fall; for example £0 - £10,000, £10,000 – £25,000, or £25,000 - £50,000. You can find a full list of these bands on GOV.UK. The details HMRC publish will not include information about the employers’ employees.
If an employer thinks publishing these details would result in a serious risk of violence or intimidation to them or others, they can request that details of their claims are not published by completing the online application form. HMRC will not publish an employer’s details until they have informed the employer of their decision on the application. Employers only need to apply once, as the decision will cover all CJRS claim periods starting from 1 December 2020 (or from when an application is agreed, if later).
Employees will also be able to check if a CJRS claim has been made on their behalf through their online Personal Tax Account from 25 February.
We understand that a lot of employers will have got their calculations of furlough pay/grant amounts wrong, particularly in the early stages of the scheme when there was a lot of confusion about what the rules were.
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 at all!
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?.
Note: Since 30 November it has not been possible to submit any further claims or add to existing claims for the period 1 July to 31 October 2020. (Note it has not been possible to submit any further claim or add to existing claims for the period 1 March to 30 June since 31 July).
Although the GOV.UK guidance does not say specifically whether or not it is still possible to amend existing claims for the period 1 July to 31 October 2020 after 30 November 2020 (for example, to extend an employee's claim within a particular claim period or to change monetary values), our understanding is that this is not allowed either.
Therefore, if you discover an underpayment of furlough pay to an employee, which under the scheme rules you have an obligation to make good, this may have to come from your own pocket.
If you have underclaimed a grant in the period to 31 October 2020, there is now nothing you can do about this.
If you have underclaimed a grant from 1 November, you must amend it by the amendment deadline for the relevant month:
To amend a claim for
You must amend the claim by 11.59pm on
29 December 2020
28 January 2021
1 March 2021
29 March 2021
28 April 2021
HMRC may also accept amendments after these dates if there is a reasonable excuse for the failure to make the amendment in time.
If you have overclaimed a grant, you may need to pay some money back to HMRC, or you can reduce your next claim by the overclaimed amount. You can find HMRC's guidance on what to do, on GOV.UK.
Note, that the deadline for notifying HMRC about any overclaimed amounts of grant from before 22 July 2020 that employers haven’t managed to pay back 'informally', was 20 October 2020. The deadline for notifying HMRC about any subsequent over claimed amounts is 90 days from the date you received the overpaid grant.
We expect these rules to continue for April 2021 onwards but will confirm this when more details are available.
If you do not meet the ‘notification’ deadlines, you may have to pay a penalty, as set out in this HMRC factsheet.
The factsheet is quite confusing, but our understanding of the penalty position in respect of failing to notify HMRC that you need to repay some grant monies within the relevant time limit, is as follows:
- A new law has been passed that specifically means employers who knew their JRS grant was incorrect at the time they received it, and who haven’t repaid it/who don’t notify within the relevant timeframe, will be treated as having made a deliberate and concealed failure to notify (of the over claimed grant). They can be charged a penalty of up to 100% of the amount over claimed as at the end of the notification period.
- Those who didn’t know their JRS grant was incorrect at the time they received it, and who don’t notify within the relevant time frame, will fall under general ‘failure to notify a liability’ principles, and will only face penalties if the amount of overpaid grant has not been repaid by 31 Jan 2022.
Further details of the penalty situation are available in a comprehensive article looking at correcting JRS claims, from our ATT colleagues. This article also confirms that HMRC will usually expect employers to pay back what they owe 30 days after the notification has been made. If employers do not do this, or do not engage with HMRC about paying, then HMRC may issue an ‘assessment’ to claw back the amount due.
Note that to the extent that you paid your employee an amount which you now need to pay back to HMRC, you need to think very carefully before attempting to claw an amount back from your employee.
Whilst there is no automatic right for an employer to recover such monies from an employee under the law governing the JRS scheme, the Employment Rights Act 1996 does allow employers to make deductions from an employee’s future wages to recover overpayments of wages made by mistake, which may apply. We explain more in our news article: Need to pay back a Job Retention Scheme (JRS) grant? What employers should – and shouldn’t – do.
Job Retention Bonus (JRB)
The Job Retention Bonus was to be a one-off payment of £1,000 per employee to employers that have used the Job Retention Scheme for each furloughed employee who remained continuously employed until 31 January 2021.
The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the Job Retention Scheme is now being extended to 30 September 2021, the policy intent of the JRB no longer applies, so it will not be paid in February as was originally planned.
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:
- Using direct payments during the coronavirus outbreak: full guidance for people receiving direct payments and personal assistants.
- Coronavirus Job Retention Scheme: people receiving direct payments.
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, the tax charity TaxAid have also set up a free 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.