Get help paying your staff with the Coronavirus Job Retention Scheme

First published: 25 March 2020
Updated: 1 June 2020

What is the Coronavirus Job Retention Scheme?
Is your business eligible for the Job Retention Scheme?
What does being ‘on furlough’ mean?
Which employees can you claim for?
Can you put apprentices on furlough?
How much can you claim with this Scheme?
How do you use this Scheme?
When will the Job Retention Scheme be open to applications?
Is there a deadline for making a claim under this Scheme?
If you have more questions about the Coronavirus Job Retention Scheme…
What other help is there?

What is the Coronavirus Job Retention Scheme?

The UK Government will reimburse you for part of the wages or salary for your staff if you’d otherwise have to lay them off during the coronavirus crisis. 

Instead of laying off employees, you put them ‘on furlough’ and the Government will help by reimbursing you.

The Scheme will cover 1 March to 31 October 2020 and the Government will review and extend this if necessary. 

So far, the Scheme has helped 1 million employers across the UK to furlough 8.4 million people.

The online portal where you can submit your claim went live on 20 April 2020. To claim, log into the HMRC website and follow the instructions.

Is your business eligible for the Job Retention Scheme?

Any organisation with a UK payroll can apply. As well as businesses, this includes charities and agencies. To be eligible for this Scheme, your business must:

• have a PAYE payroll scheme
  You must have had your PAYE scheme on or before 28 February 2020
• be enrolled for PAYE online
  Register online at the HMRC PAYE website. You’ll get an activation code in the post within 10 days. To activate your account, enter the code at HMRC PAYE website.
• have a UK bank account

What does being ‘on furlough’ mean?

Putting your employee(s) ‘on furlough’ isn’t the same as terminating their contract or making them redundant. In fact, you keep the furloughed staff on your payroll.

To qualify for the Scheme, any employees you put on furlough must not work for your business while they’re furloughed. They can do volunteer work or training.  

Which employees can you claim for?

You can claim for staff who were on your payroll on or before 19 March 2020.

If you made someone redundant after 28 February 2020 and they stopped working for you before 19 March 2020, they can qualify for the Scheme if you re-employ them and put them on furlough.

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hours. 

Read the full rules about which staff eligible:
Gov.uk Guidance | Employees you can claim for

Can you put apprentices on furlough?

Yes, you can put your apprentices on furlough like other employees. They can continue to train while on furlough.

The Government guidance states that you must pay apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (whichever is appropriate) for the time they spend training. This means you have to cover any shortfall between the amount you can claim for their wages through the Job Retention Scheme and the appropriate minimum wage.

Additionally, on 23 March, the Government published changes to learning arrangements for apprentices due to the coronavirus outbreak.

How much can you claim with this Scheme?

HMRC will reimburse you – the employer – for 80% of the wages or salary for your furloughed employees, up to a maximum of £2,500 a month.

You can choose to pay your furloughed staff 80% of their normal salary – the amount the Government will reimburse you. Or you can pay more, up to their full normal salary, which means you’d make up the difference (up to 20%) from your company’s funds. 

The reimbursement can cover the cost of wages/salaries backdated to 1 March 2020 until the end of June 2020. The Scheme covers until the end of October 2020 and on 29 May, the Chancellor set out how the Scheme will work for July until the end of October.

July 2020

If your employees are on furlough, the Government will continue to pay 80% of their salaries or wages, up to a cap of £2,500, as well as employer National Insurance and pension contributions.

From 1 July, you’ll be able to bring back furloughed employees part-time. You can decide the hours for your employees and you’ll pay their wages while they’re working for you.

August 2020

The Government will start to taper the amount of money you can claim through this Scheme to reflect that people are returning to work. Furloughed employees will still get the 80% salary payments but employers will contribute to the pay. For August, the Government will pay 80% of wages up to a cap of £2,500. You’ll pay the National Insurance and pension contributions.

For the average claim, the Government says this is 5% of the gross employment costs you’d have paid out if the employee hadn’t been furloughed.

September 2020

The Government will pay 70% of wages up to a cap of £2,187.50. You’ll pay National Insurance, pension contributions and 10% of wages to make up the 80%, up to a cap of £2,500.

For the average claim, the Government says this is 14% of the gross employment costs you’d have paid out if the employee hadn’t been furloughed.

In October 2020

The Government will pay 60% of wages up to a cap of £1,875. You’ll pay National Insurance, pension contributions and 20% of wages to make up the 80%, up to a cap of £2,500.

For the average claim, the Government says this is 23% of the gross employment costs you’d have paid out if the employee hadn’t been furloughed.

How do you use the Scheme?

1. Decide which employees to furlough, inform them and get their consent
   You must get each individual’s consent to being furloughed. This is because the change in their status is subject to normal employment law and depends on their contract of employment. It might be open to negotiation – if possible, check with your lawyer or HR advisor.
2. Submit information to HMRC
   HMRC has created a new online portal where you can submit details of your furloughed employees and how much you pay them. To claim, log into the HMRC website and follow the instructions.
3. Wait for reimbursement
   HMRC will let you know how and when you’ll get the money. The Government expects it will take around 6 days to get your money, because they have to do security checks and the BACS process can take a couple of days.

You must submit data on the usual hours you’d expect an employee to work in a claim period, and the actual hours they worked. Abuse of the Scheme is fraud. Any employees who don’t believe they’re getting their 80% share can report concerns to HMRC.

There’s more information the Scheme and how to apply in the official step-by-step guide:
Gov.uk | Coronavirus Job Retention Scheme – guide for employers (PDF)

Is the Job Retention Scheme open for applications?

Yes, it’s open now! The online portal where you can submit your claim went live on 20 April 2020. To claim, log into the HMRC website and follow the instructions.

There was a delay in opening the Scheme for applications because the Government had to build an entirely new system – the UK has never operated a scheme like this before.

After submitting your application, there will be a delay before you get the money. This is because the Government has to carry out security checks and will then transfer the money by BACS. HMRC has said that “claims will be paid within 6 working days”.

(Sources: Downing Street press conference 14 April 2020 | YouTube (response to question, at 41’12”), email from HMRC, 15 April 2020)

Is there a deadline for making a claim under this Scheme?

Yes. The Job Retention Scheme closes to new entrants on 30 June 2020. Claims from July onwards are restricted to employers already using the Scheme. This is to introduce part-time furloughing and support those already furloughed to return to work.

The last month you’ll be able to claim for your furloughed employees pay is October 2020. We don’t yet know the deadline for when you must submit your last claim under this Scheme.

If you have more questions about the Coronavirus Job Retention Scheme…

Here are more questions our members have been asking about the Scheme, with our answers:

• Do you have to pay 80% of the wages/salary gross or net?
  For full or part-time employees on a salary, you can claim for 80% of the salary they earned in their last pay period before 19 March 2020. It’s up to you what you pay them now but you’re expected to pay them the 80% and you can top this up if you wish.
  For full details, including what to do with staff who aren’t full or part-time employees, read the Government information: How much you can claim
• Should you take off tax and NI by PAYE as you would do normally?
  Yes – you should continue paying furloughed staff as normal through payroll, taking off income tax and National Insurance as usual.
• What about benefits such as pension contributions, commissions, bonuses, overtime payments and other payments? 
  It’s complicated – check the Government information: How much you can claim
• If your staff are on furlough, do you have to set an end date for the furlough and are you allowed to call them back to work if you need to?
  Yes, each furlough lasts three weeks. The Government information states:
  “Any employee on furlough must be furloughed for a minimum 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 of 3 consecutive weeks.”
  Check the Government information: When your employees are on furlough
• Does the Scheme apply to contractors and agency workers?
  Yes, possibly. The Scheme can apply to many different types of workers. Check the Government advice: Employees you can claim for
• After the furlough, do you go back to paying your staff their normal wages/salary?
  It’s up to you. The Government information states that when the scheme ends, you must decide whether employees can return to work. If not, you may need to consider making them redundant.
  Government information: After you’ve claimed

To find answers to your questions, bookmark this page:
Gov.uk | Guidance | Claim for your employees’ wages through the Coronavirus Job Retention Scheme

And take a look at the Government’s step-by-step guide:
Gov.uk | Coronavirus Job Retention Scheme – guide for employers (PDF)

What other help is there?

You might be able to get help from other UK Government schemes set up to help businesses during the coronavirus crisis. You can read more in these other posts on our blog:
Coronavirus grants for small businesses
Coronavirus loans and finance

Have your say

How is the coronavirus affecting you and your small business? We’re keen to hear from you – get in touch with us on LinkedIn, Facebook or Twitter.

Photo by Hunter Haley on Unsplash