Find out the latest information about the Coronavirus Job Retention Scheme for UK employers.
This page was updated on 30th March 2020.
On Friday 20 March, Rishi Sunak, Chancellor of the Exchequer, announced the introduction of the Coronavirus Job Retention Scheme.
The scheme will ensure that businesses can continue paying employees that would have been made redundant because of the Coronavirus.
- 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
- 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.
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.
Pay will be backdated to 1 March 2020 and the scheme will run for three months.
If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan Scheme (CBILS).
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:
- Employees must be employed under PAYE to be eligible for the scheme and must have been on PAYE payroll on 28 February 2020.
- 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 since 28 February 2020, if they are rehired by their employer.
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.
An employee must not work for the employer during the time of being furloughed to be eligible for the scheme.
An employer is not required to pay the additional 20% - however they can top up pay if they chose to do so.
HMRC are currently working on a system to facilitate employer payments – should an employer be unable to pay this straight away please contact GC Business Growth Hub for further support.
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.
- Government will also cover employer National Insurance and pension contributions of furloughed workers – on top of 80% of salary
How do I claim?
HMRC is developing an online portal to submit information about employees being furloughed and their earnings. The portal is expected to be available by the end of April 2020.
To claim, you will need:
- Your ePAYE 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)
- Your bank account number and sort code
- Your contact name
- Your phone number
- You will need to calculate the amount you are claiming
Sign-up for C19 updates and we will email you when this is announced.
In the meantime, business owners should ensure that they evidence their financial situation, planning and decision-making for the past two months and they should not make any redundancies in order to be eligible for the scheme.
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.