Under the Coronavirus Job Retention Scheme (CJRS), all UK employers can claim a grant from the HMRC to cover 80% of the wage costs for employees who are not working but on the employer’s payroll (these employees are referred to as being “furloughed”) of up to £2,500 a calendar month for each PAYE worker, plus the associated employer national insurance contributions on that wage.
For clarity, employers can claim up to the lower of 80% of usual monthly wage costs or £2,500 per employee, plus the associated employer national insurance contributions and minimum auto-enrolment employer pension contributions on the capped furlough pay.
You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.
On 20 March 2020, the Chancellor, Rishi Sunak, in the daily PM briefing, announced the Coronavirus Job Retention Scheme, for private businesses (sole-traders, limited companies, LLPs and partnerships) in response to the economic impact of the COVID-19 pandemic.
The scheme was introduced to avoid redundancies and allow employers to pay wages during this crisis period. He stated he was placing no limit on the amount of funding available for the scheme, and that the government will pay grants to support as many jobs as necessary.
The government guidance available at this stage is here and here. The Treasury issued the Direction to HMRC on 15 April 2020 under powers conferred by the Coronavirus Act 2020. This direction contains the authority and instructions for making payments under the Coronavirus Job Retention Scheme. Although amendments are possible, it is likely to be the definitive guidance on how the Job Retention Scheme works.
The CJRS online claim portal opened on 20 April 2020 and can be accessed here.
The scheme applies to employees who have been “furloughed”. Furloughed employees are employees who have;
- been instructed by the employer to cease all work in relation to their employment,
- ceased (or will have ceased) all work for the employer for 21 calendar days or more, and
- been given this instruction by reason of circumstances arising as a result of coronavirus or coronavirus disease.
The scheme is backdated to 1 March 2020 and will be open for at least four months. It was recently extended by a month to the end of June on 17 April 2020, and it has been said it will be extended further, if deemed necessary.
It should be borne in mind that this situation is fast-moving, and the guidance has already changed and been updated on a number of occasions. The number of employers choosing to furlough under the scheme has been more extensive than envisaged by the Treasury, and the guidance may change with little or no notice. If you have any specific queries, you should seek professional advice.
Additional useful links:
Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme: The government guidance for employers on whether employers are eligible and how much can be claimed to cover wages for employees on “furlough”.
Check if your employer can use the Coronavirus Job Retention Scheme: The government guidance for employees on the Coronavirus Job Retention Scheme.
The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction: The Treasury direction sets out the rules, detail and eligibility requirements of the scheme. The general understanding is that the Treasury direction will take precedence over the guidance where the guidance deviates from it, although HMRC has indicated in correspondence that they will interpret the Treasury direction in light of the guidance. It is not clear how HMRC will approach the situations where there is a direct conflict between the Treasury direction and guidance.
Work out 80% of your employees' wages to claim through the Coronavirus Job Retention Scheme: The government guidance on how to calculate 80% of an employee’s wages, National Insurance Contributions and pension contributions if an employee is furloughed due to COVID-19.
Coronavirus Job Retention Scheme calculator: A government calculator to work out the figures that will be needed when completing the online claim through the scheme. We advise caution when using the calculator, however, as there have been reports that it is not accurate.
Acas Coronavirus (COVID-19): advice for employers and employees: The Acas guidance during the COVID-19 outbreak.