Find out the latest information about the Coronavirus Job Retention Scheme for UK employers.
This page was updated on 9 July 2020.
On Friday 20 March, Rishi Sunak, Chancellor of the Exchequer, announced the introduction of the Coronavirus Job Retention Scheme which will ensure that businesses can continue paying employees.
On May 12, the Chancellor made announcements extending the scheme until the end of October. Until the end of July, workers will continue to receive 80% of their salary, up to £2,500.
On May 29, the Chancellor Rishi Sunak, announced that in August the UK Government contribution will stay at 80%. However, employers will be asked to pay national insurance and employer pension contributions.
In September, employers will be asked to start paying towards people’s wages. The UK Government will pay 70% of the furlough grant, employers 10%.
In October, UK Government will pay 60%, employers 20%. The scheme will end in October.
From 1 July onwards, flexible furlough will be in place. Employers will have maximum flexibility to decide to bring back employees for a number of days per week.
For full details on the second phase of the Job Retention Scheme as of June, please see here.
On 8 July, during his summer statement speech, the Chancellor, Rishi Sunak announced the introduction of a Job Retention Bonus which will allow UK employers to receive a one-off payment of £1,000 for each furloughed employee who is brought back into work and still employed as of 31 January 2021.
- The Coronavirus Job Retention Scheme is a grant and therefore businesses will not have to pay this back
- Businesses will designate affected employees as 'furloughed workers' and notify employees of this change
- From March to end of August, HMRC will reimburse 80% of furloughed workers wages up to £2500 per person, per month
What does furloughing mean?
To be eligible for the scheme the employee must be furloughed. Furlough leave has been introduced by the government during the Coronavirus pandemic to mean leave offered which keeps employees on the payroll without them working. As the furloughed staff are kept on the payroll, this is different to being laid off without pay or being made redundant.
From the period between March to end of June, any furloughed staff are NOT allowed to do any work for the employer during the period in which they are furloughed. The grants do not cover wages of employees working a reduced schedule due to the virus; the employee mustn’t work for the employer at all during the furloughed period - this is different to short term working and layoff.
On 24th April, the government announced that furloughed employees planning to take paid parental or adoption leave would be entitled to pay based on their usual earnings rather than a furloughed pay rate. More information on the announcement can be seen here.
Furloughed employees are also entitled to annual leave and should be paid their usual holiday pay. In this case, employers can still claim 80% of the workers’ salaries, but will have to make up the difference where the normal holiday pay rate is higher. During the furlough period, employees can also continue to accrue holiday as outlined in their employment contract. If a staff member is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. Employers should not put staff on furlough for a period just because they are on holiday for that period. More details relating to holiday pay can be seen here.
Pay will be backdated to 1 March 2020. On May 12th it was announced that the scheme would be extended from 1 March to end of October.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan Scheme (CBILS) or the Bounce Back Loans (BBLS).
Who can apply for the scheme?
Any employer can apply for the scheme. The scheme is aimed at avoiding redundancies for the temporary period where an employer is unable to cover costs due to COVID-19. Self-employment is not covered by the scheme.
Key Points to note:
An employee must not work for the employer during the time of being furloughed to be eligible for the scheme. This applies for the months March to end of June.
An employee must agree to be furloughed and therefore a business must have this conversation with the employees. Changing the status of an employee is always subject to existing employment law.
- Employees can be on any type of contract, including: full-time, part-time, agency contracts, flexible or zero-hour contracts. The scheme also covers employees who were made redundant if they were rehired by their employer on or before 19 March 2020 (original cut-off date was 28 February 2020 which was extended by the Chancellor on the 15th April).
- Employees must be employed under PAYE to be eligible for the scheme and must have been on PAYE payroll on 19 March 2020.
- Employees can undertake training or volunteer subject to public health guidance, as long as employees are not:
- making money for an employer or a company linked or associated to an employer
- providing services to an employer or a company linked or associated to an employee
- From July to October the scheme will become more flexible. Employers currently using the scheme will be able to bring furloughed employees back part-time. The UK Government will ask employers to share the costs of paying people’s salaries.
- Any employees placed on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough.
- Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.
An employer is not required to pay the additional 20% - however they can top up pay if they chose to do so.
Employment law will still prevail within this situation and therefore an employer needs to ensure they are still treating staff fairly and reasonably and not discriminate in line with employment law.
- From March to end of July, Government will also cover employer National Insurance and pension contributions of furloughed workers – on top of 80% of salary
Second Phase of the Scheme – June to October
The eligibility criteria from the first phase (March – May) of the Job Retention Scheme remains the same for the second phase (June – October), however there are changes to the scheme as of June.
- During the month of June, essentially nothing changes in terms of payments and flexibility. However, the scheme will close 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 3-week period prior to 30 June. This means that the final date by which an employer can furlough an employee for the first time will be June 10. However, on the 9th June the government announced that this cut-off date will not apply to parents returning to work from paternity and maternity leave in the coming months who will still be eligible for the scheme. This will also apply to military reservists. You can furlough an employee who is a military reservist returning to work after a period of mobilisation after 10 June, even if you are furloughing them for the first time. It is important to note that in both cases this will only apply where they work for an employer who has previously furloughed employees. Full details on eligibility can be seen here.
- From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. Under the flexible scheme it appears the minimum period is one week, but this is yet to be confirmed. A YouTube video providing an overview of the Job Retention Scheme, including details on flexible furloughing can be accessed here.
- 1 July is the earliest date you will be able to make claims for days in July.
- 31 July is the last day that you can submit claims for periods before or on 30 June.
- In August the UK Government contribution will stay at 80%. However, employers will be asked to pay National Insurance and employer Pension contributions. From August onwards employers must pay National Insurance and Pension contributions.
- In September, employers will be asked to start paying towards people’s wages. The UK Government will pay 70% of the furlough grant, employers 10%.
- In October, UK Government will pay 60%, employers 20%. The scheme will end in October.
For further details on the Job Retention Scheme from June to October, please see here.
How do I claim?
The online claim service was launched on GOV.UK on Monday 20 April 2020. Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities. Employers have the opportunity to also delete a claim, as long as it is within 72 hours of submitting it.
After claiming, companies should allow 6 working days for the pay to come through. This means employers should submit an application by 22 April, to receive payment by 30 April. Businesses are also advised to keep a note or print-out of their claim reference number as confirmation won’t be received via SMS or email.
In preparation to claim, you will need:
- A Government Gateway (GG) ID and password – if you don’t already have a GG account, you can apply for one online, or by going to GOV.UK and searching for 'HMRC services: sign in or register'
- Your ePAYE reference number. You must be enrolled for PAYE online – if you aren’t registered yet, you can do so now, or by going to GOV.UK and searching for 'PAYE Online for employers'
- The number of employees being furloughed. If you have fewer than 100 furloughed staff – you will need to input information directly into the system for each employee. If you have 100 or more furloughed staff – you will need to upload a file with information for each employee; HMRC will accept the following file types: .xls .xlsx .csv .ods.
- Information for each furloughed employee you will be claiming for: Name, National Insurance number, Claim period (per the minimum length of furloughing of 3 weeks) and claim amount, and PAYE/employee number.
- Your bank account number and sort code
- Your contact name
- Your phone number
- Employers will be able to make their first claim under the new scheme from 1 July
- From July, 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.
- From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward.
To be eligible for the grant, employers must confirm in writing to their employee that they have been furloughed. Visit the government’s step-by-step guide for employers and HMRC's webinar for further information and apply online here.
You should retain all records and calculations in respect of your claims. Business owners should ensure that they evidence their financial situation, planning and decision-making from February onwards and they should not make any redundancies in order to be eligible for the scheme.
Employees who believe they are not getting their 80% share can also report any concerns to the HMRC fraud site. HMRC will take action against those abusing the scheme.
In the event that you’ve overclaimed through the scheme, you can:
- correct it in your next claim
- make a payment to HMRC (only if you’re not making another claim)
The government has released further information on how to pay all or part of your grant back here.
The Growth Company, in partnership with the Greater Manchester Combined Authority and delivery Partners have launched EmployGM, a new service to tackle job market challenges in Greater Manchester as a result of coronavirus (COVID-19). The initiative will enable self-employed individuals who have registered a significant drop in work, secure alternative work opportunities in sectors exhibiting increased worker demand, as well as learning or training opportunities for furloughed staff. More information on the service can be seen here.
What if I am self-employed?
The Self-Employed Income Support Scheme will provide self-employed people a guaranteed income of 80% of their trading profit, up to £2,500 per month for at least three months. You can read more on the scheme here. GOV.UK has further details about who is eligible for the scheme and how it will work.