Coronavirus Job Retention Scheme (CJRS) FAQs

Last updated 1 June 2020

What is the CJRS?

The CJRS is a Government scheme aimed at stopping workers from being laid off due to the COVID-19 crisis. Under the CJRS, employers can access grant support to continue to pay part of the salary of employees who would have otherwise been laid off due to the crisis.


What support is available?

From 1st March 2020 to 30th June 2020 businesses can claim a maximum grant of the lower of:-

  • 80% of an employee’s ‘regular wage’ and.
  • £2,500 per month

Plus the associated Employers National Insurance Contributions (NIC) and the minimum auto enrolment employer pension contributions (if opted in).

From 1st August 2020 the grant will be reduced to cover only 80% of the employee’s ‘regular wage’. The employer will now have to pay the associated employers NIC and minimum auto enrolment employer pension contributions.

From 1st September 2020 the grant will be reduced to cover only 70% of the employee’s ‘regular wage’ up to a maximum of £2,187.50. The employer will now have to pay 10% of the employee’s regular wage and all associated employers NIC and minimum auto enrolment employer pension contributions.

From 1st October 2020 the grant will be reduced to cover only 60% of the employee’s ‘regular wage’ up to a maximum of £1,875. The employer will now have to pay 20% of the employee’s regular wage and all associated employers NIC and minimum auto enrolment employer pension contributions.


Which employers are eligible?

All employers who have:

  • a payroll scheme in place on or before 19 March 2020;
  • enrolled for PAYE online; and
  • a UK bank account.


Which employees are eligible?

Employees must have been on the employer’s payroll scheme on or before 19 March 2020 and been notified to HMRC on an RTI submission on or before 19 March 2020.

The scheme will cover the following types of workers:

  • Full time employees;
  • Part time employees;
  • Employees on fixed term contracts;
  • Employees on zero-hour contracts;
  • Agency workers;
  • Apprentices;
  • Office holders (including company directors);
  • Salaried members of a Limited Liability Partnership; and
  • Limb (b) workers.

In order for employees to be eligible for the more flexible scheme post 1 July 2020, they will need to already be within the scheme, which means they must have been furloughed for a full 3-week period prior to 30 June 2020.


What is an employee’s ‘regular wage’?

“Regular wage” for fixed salary employees will be in reference to their salary in their last pay period prior to 19 March 2020. For most employees will be in reference to their February 2020 payslip.

(If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.)

However, “regular wage” for employees with variable pay will be calculated as follows:

If the employee has been employed with the business for a 12 month period prior to the claim you can claim the higher of:

  • The same months earnings from the previous year; or
  • The average earnings for the 2019/20 tax year (calculated on a daily basis).

If the employee has worked for the employer for less than 12 months, then a claim should be made for their average earnings since starting work.

HMRC’s guidance includes more detail on the calculation including several examples.


How is the grant calculated?

Using the maximum cap of £2,500, the calculation of the amount that can be claimed for an employee being paid the grant amount only is as follows:-

Furloughed salary £2,500
Employer’s NIC £   245
Auto enrolment contribution £     59 (if enrolled)
Maximum Grant £2,804

The NIC calculation varies depending on whether the employee’s salary was topped-up or not, and HMRC provide detailed calculation steps for the NIC claim. The pension is more straightforward and simply requires a pro-rating of the qualifying earnings threshold if the furlough is a part-month.

Care should be taken with salary sacrifice pension schemes; the pensions regulator have published detailed guidance on this.


Can people who have been made redundant be brought back into employment and furloughed?

If an employer has made employees redundant or the employees stopped working for them after 28 February 2020 but before 19 March 2020, these employees can be re-employed, put on furlough and 80% of their wages (subject to the above calculation and cap) can be claimed by the employer.

Similarly, employees who have resigned in order to start a new job after 28 February, but the new job subsequently fell through, can be put back on payroll and furloughed. Decisions around whether to offer to re-employ and furlough someone who has left or resigned are down to the individual company.


Can directors be furloughed?

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company.


Can employees work while on furlough?

To qualify for the scheme, employees must not undertake work for the employer while furloughed. If any element of employment duties are being performed it is likely to mean the employee will not qualify for the scheme.

From 1st July 2020 employers will be able to bring back previously furloughed employees ‘part time’ and still claim the grant for the normal hours not worked. This will allow the phased introduction of employees working a reduced schedule due to the virus.


What if the employee has more than one employment?

An employee who is furloughed can do no work at all for the employer while on furlough; this may also apply during non-working hours post 1 July, but the detailed guidance is awaited.

Our current understanding is that an employee can hold a separate employment with a different and unconnected employer, which will be unaffected.

If an employee is able to work for more than one employer under the terms of their contract and subject to usual employment law, then they may work for another employer while on furlough. They must not do any work to generate revenue for the employer who has furloughed them.


Can employees train while on furlough?

Yes. Employees are able to train while on furlough, but consideration should be made to ensure that the employee doesn’t fall below minimum wage due to the number of hours spent training.


Can employees be bought back from furlough?

Yes, prior to 1st July 2020, employees can be moved in and out of furlough (to cover staff sickness etc), however, employees must be furloughed for a minimum period of 3 weeks before being brought back.

From 1st July 2020 employers will be able to bring back employees ‘part time’ and still claim the grant for the normal hours not worked. This will allow the phased introduction of employees working a reduced schedule due to the virus. Employers will need to report and claim for a minimum period of one week for an employee that is under ‘flexible furlough’ to remain eligible for the grant.


Is this a loan?

No, this is not a loan. This is a grant and will not be repayable by the employer.


Is the grant taxable income?

Yes, this is taxable as income for both income tax and corporation tax purposes. Businesses are able to deduct employment costs as usual when calculating taxable profits.


When does the furlough begin?

Employers can back date the furlough of employees to 1st March 2020. However, the grant will only apply from the date the employee is furloughed i.e. stopped working for the employer. If this is part way through the month the grant will be pro-rated accordingly.


How long is the scheme running for?

The scheme is running to 31st October 2020.


Do employees have to agree to be furloughed?

Yes, employees must be consulted and agree to being furloughed.  Changing the status of an employee is subject to existing employment law.

Some contracts may include an ability to lay-off workers. Although lay-offs under the Employment Rights Act 1996 are a different legal concept the wording in contracts may enable some employers to impose a furlough period.  If there is no lay off provision in the existing contract the employer will need to agree with the employee that they going to become furloughed because no work is available. Employers should seek legal advice if in any doubt.


What about employees who don’t agree to be furloughed?

If employees do not agree to be furloughed employers can dismiss by reason of redundancy if the redundancy definitions are met and a proper process followed.


What is the process?

Employers will need to:

  • designate affected employees as ‘furloughed workers,’
  • notify the employees and agree the furlough with them, subject to employment law and existing contracts, ideally in writing.

Employers will pay the employee the furlough salary through payroll, using the RTI system as usual.  Employers will then be able to apply to HMRC for a grant to cover 80% of the furloughed worker’s wage cost up to a total of £2,500 a month.  In order to do so, it will be necessary to submit information to HMRC about the employees that have been furloughed and their earnings through HMRC’s online portal.


What information will be needed to make the claim?

To claim, employers will need:

  • to be registered for PAYE online and have their Government Gateway ID and password, or an agent fully authorised  to act on their behalf (not for file only)
  • their Unique tax reference number
  • their Company registration number (if applicable)
  • the furloughed employees’ details:-
    • Employee name
    • National insurance number
    • Payroll number (optional)
  • the claim period (start and end date)
  • the business’s bank account number and sort code (the grant cannot be paid to an agent)
  • a contact name
  • a contact phone number

The employer will need to calculate the amount of the claim. Employers should make their claim using the amounts in the payroll – either before or during running payroll. Claims cannot be submitted more than 14 days before the end of the relevant claim period.

Employers cannot make more than one claim during a claim period therefore all furloughed employees should be included in the claim for the period as you will not be able to make another for the same period.

HMRC will retain the right to retrospectively audit all aspects of the claim.

Once a claim is made HMRC will check it, and if the employer is eligible for the grant, they will pay it via BACS payment to a UK bank account within 6 working days.


Do benefits still accrue for employees while on furlough?

Benefits are not included in the claim and will still accrue in line with an employee’s contract. Where an employer provides benefits to furloughed employees this will be payable in addition to the salary paid under the CJRS.


Is the employer required to supplement salaries over the 80%?

No. Employers can make up the additional pay, but they are not required to do so.

For employees who have been furloughed, employers can choose whether to:

  • Only make the gross cost payment reimbursed by the government.
  • Pay all of the difference between the grant and the employee’s normal gross cost.
  • Pay part of the difference between the grant and the employee’s normal gross cost.

Any extra payment the employer chooses to make will be either the additional 20% of salary, or any amount in excess of £2,500. If management choose to pay more, it will depend upon the business’ overall health and cashflow affecting the ability to fund payments. Concerns about staff retention once the crisis has passed may also affect decisions being made.

There is no reason why employers could not choose to supplement the salaries initially, and then choose not to in later months, although presumably then the employee’s consent to the furlough could theoretically be withdrawn. An employee would be unlikely to withdraw consent when the alternative is redundancy.

Please note, whether an employer chooses to top up or not will affect the amount of employer’s NIC that can be claimed on the grant (see above).


How are employees on statutory sick pay (SSP) or statutory maternity pay (SMP) affected?

Employees on sick leave or self-isolating should continue to get SSP but can be furloughed after this.  Employees who are shielding in line with public health guidance can be placed on furlough.

Employees who qualify for SMP will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £151.20 a week from April 2020.

You can claim through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either:

  • maternity pay
  • adoption pay
  • paternity pay
  • shared parental pay


Do the self-employed qualify?

The self-employed are not eligible for the job retention scheme. Instead a separate grant scheme, the Self-employment Income Support Scheme (SEISS), is available for the self-employed.


Do members of limited liability partnerships (LLP) qualify?

As mentioned above, members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through the CJRS scheme.

To furlough a member, the terms of the LLP agreement may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.


Can we make a decision to furlough staff later on, for example, back-dating a claim if the month’s results are not as expected?

A furloughed employee cannot work for the business while furloughed, so the decision cannot be made retrospectively. You will need to agree a start date with the furloughed employee and claim from then.


Will annual leave continue to accrue during furlough?

Employees do continue to accrue holiday during furlough. If they are entitled to more than the statutory annual leave, the employer could ask them to waive their rights to the additional holiday accruing while on furlough, however the employee may not agree to this.


I am a director/shareholder taking a small salary and dividends – does the furlough take dividends into account when calculating the “regular wage”?

The regular wage is calculated on salary alone and will not take into account any dividends drawn.


Does furloughing employees override annual leave already booked?

It is probably wise to cancel all annual leave that has been booked by staff that you intend to furlough as this may cause issues with the scheme i.e. minimum furlough period of three weeks etc.

The government has announced that the Working Time Regulations 1998 have recently been amended to allow for 4 weeks of annual leave to be carried forward for two years where the leave could not be taken due to COVID-19.

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