The Coronavirus Job Retention Scheme: What we know so far

On 26 March the Government published further guidance on the Coronavirus Job Retention Scheme (CJRS), providing additional clarity on the eligibility criteria and the principles based on which claims will need to be made.  Little is yet known about the practicalities around the making of a claim as the systems [a new HM Revenue & Customs (HMRC) portal] have not yet been set up, however in this article we set out the key points CJRS.

We at Statura will continue to monitor any relevant development / announcement and are actively working with employment law specialists in order to keep our clients updated and to support them during the CJRS claims process. In the meantime, please speak to your usual Statura contact should you wish to discuss the content of this document or indeed the way in which the COVID-19 outbreak is affecting your business in more detail.

Eligibility Criteria


The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers that had created and started a (Pay As You Earn or PAYE) payroll scheme on 28 February 2020. The scheme will be in operation for at least three months, backdated with effect from 1 March 2020.

It is designed to provide financial support to employers whose operations have been severely affected by coronavirus (COVID-19) to allow them to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.  In order to access the scheme, the employer will need to:

  • designate affected employees as ‘furloughed workers,’ and notify them of this change (see also below) - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation;
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Employers can top up salaries further if they choose to. HMRC are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.

Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process when employers are making decisions, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance. 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 £148.68 a week, rising to £151.20 a week from April 2020.  If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.

The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.

Employer's Claim

Employers need to make a claim for wage costs through this scheme and, by doing so, they will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month.

Helpfully, the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage will also be covered by the claim and the grant. Fees, commission and bonuses should not be included.

At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

The furloughed employee's wage cost is calculated as follows:

Full time and part time employees

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

Employees whose pay varies

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.


The employer does not need to place all your employees on furlough.

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:

  • full-time employees
  • part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hour contracts


Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.

To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the employer organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and the employer will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

Particular circumstances (selected examples):

  • Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
  • Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this. Employees who are shielding in line with public health guidance can be placed on furlough.
  • A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation. However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the National Living Wage (NLW) / National Minimum Wage (NMW) for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
  • Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.

How to make a claim

Although the exact procedural details on how to submit the CJRS claim are not yet known, below is what the government have indicated that the employer will need:

  • the 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)
  • the business bank account number and sort code
  • a contact name
  • a phone number

The employer will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

The online service you’ll use to claim is not available yet. We expect it to be available by the end of April 2020.

Employers can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.

Once HMRC have received the claim and the business is eligible for the grant, they will pay it via BACS payment to a UK bank account.

The employer should make your claim in accordance with actual payroll amounts at the point at which the business run your payroll or in advance of an imminent payroll.