COVID-19: Coronavirus Job Retention Scheme Update

The UK Government today issued further guidance on the operation of the Job Retention Scheme, which is intended to provide grants to employers negatively affected by the COVID-19 pandemic, as a measure to avoid redundancies.

Information as of Tuesday 12 May 2020 at 3pm UK

The CJRS is available to all UK employers who had employees registered as at 28 February 2020 under a Pay As You Earn (PAYE) scheme and who have taken the decision to 'furlough' some, or all, of their employees. The CJRS is effective from 1 March and backdated claims can be made to the date at which employees were furloughed (not before).

The UK Chancellor Rishi Sunak announced on 12 May that the CJRS scheme would be extend until the end of October 2020 and from August, employers will need to share the cost of paying salaries through the scheme with the government. The CJRS is set to continue for all sectors and regions of the country but with greater flexibility to support the transition back to work. Employers currently using the scheme may potentially be able to bring furloughed employees back to work on a part time basis.

Employers cannot unilaterally furlough an employee unless this is specifically stated in their employment contract. As such, employee consultation and written agreement is required. To qualify for the Scheme, employees cannot currently work during the period they are furloughed. The CJRS can apply to full-time, part-time, agency and zero hours employees.

Employers can currently use a special HM Revenue & Customs (HMRC) portal to claim for 80% of furloughed employees' usual monthly pay (up to £2,500 a month) plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can choose to top up employees' pay if they wish to do so, but any costs related to a top up will be met by the employer.

Employers will need to pay employees through payroll and report payments as normal to HMRC and claim reimbursement in the form of a cash grant.

To claim, employers will need:

  • their PAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • a UK bank account number and sort code

The responsibility for calculating the amount of the claim sits with employers and HMRC have said they will retrospectively audit all aspects of claims made. Claims will be made by BACS payment. Grants claimed under the Scheme must be included as income in the company's calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

If you have employees in the UK and would like to discuss the latest Government announcement, please contact:

Kiki Stannard
Tel: +44 (0)20 7430 5913

Tim Baker
Tel: +44 (0)20 3667 5971

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