Coronavirus Job Retention Scheme

Coronavirus Job Retention Scheme

Updated: 20 April 2020.  The Coronavirus Job Retention Scheme portal is now live.  See below for how to apply.

The Chancellor of the Exchequer has announced the Coronavirus Job Retention Scheme to prevent workers losing their jobs as result of the spread of the Coronavirus.  The government intends to keep workers employed even if the economic slowdown that results from measures taken to combat the Coronavirus result in companies losing money.

The Coronavirus Job Retention Scheme can be applied for by employers on behalf of employees.  The employers will need to make a grant application for each employee.

The Chancellor has stated that any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.

 

  • 80% of employee’s wages to be paid (up to a maximum of £2,500 per month).
  • Payments will be backdated to 1 March 2020, and will be made, initially, for a period of 3 months.
  • In addition, the government will cover employer National Insurance and pension contributions¹ for furloughed workers (‘furloughed workers’ are those who have been designated for the scheme; see below for more information).
  • Furloughed workers will be allowed to volunteer for the NHS without risking their pay.
  • Those made redundant after 28 February 2020 can be re-employed and placed on furlough.
  • Self Assessment income tax payments due in July 2020 will be deferred until January 2021.
  • VAT payments due between March and June will also be deferred. No VAT registered businesses will need to make a payment between now and then.
  • From 6 April Universal Credit and Tax Credits will be increased by £20 per week.
  • The recently launched Coronavirus Business Interruption Scheme will be interest free for 12 months.
  • Also from April the Local Allowance Housing rates will pay for at least 30% of market rents in each area. Housing Benefit and Universal Credit increases will also support the housing market.

¹ Minimum auto-enrolment pension scheme contributions.

HM Treasury is working to implement the Coronavirus Job Retention Scheme now and expects to make the first grant payments in the next few weeks.

Additional measures HM Treasury is taking to help businesses through this difficult time:

  1. Statutory Sick Pay relief package for small to medium sized businesses.
  2. 12 months business rates holiday for retail, hospitality and leisure businesses in England.
  3. £10,000 grant funding for businesses in receipt of small business rate relief or rural rate relief.
  4. £25,000 grant funding for retail, hospitality and leisure businesses with property which has a rateable value between £15,000 and £51,000.
  5. Bank of England lending facility for larger companies to help with liquidity at a time when cash flows are interrupted by the Coronavirus pandemic.
  6. The availability of the HMRC Time to Pay Scheme (to enable companies to pay outstanding tax liabilities over an extended period of time).

 

How to Access the Coronavirus Job Retention Scheme

  • The employer needs to designate employees as ‘furloughed workers’, and the employees must be informed of this change.
  • Information will need to be submitted to HMRC through a new website portal, giving details of the employees and their earnings.
  • HMRC will then reimburse the employees with up 80% of their wages (to a maximum of £2,500 per person per month).  HMRC are setting up this system now, as a current one does not exist to perform this role.

 

Coronavirus Job Retention Scheme Extension

On 17 April, the Chancellor extended the opening of the scheme until the end of June.  He said the scheme would also be kept under review, and extended still further if necessary.

This page will be updated as the scheme becomes fully operational.

 

How to Claim for the Coronavirus Job Retention Scheme

Please visit the online portal  by clicking here.

Sign in using your Government Gateway ID and complete the application.

If you do not have a Government Gateway ID you can create one using the link on the portal page.

 

Additional Background Information:-

 

Claim for your employee’s wages through the Coronavirus Job Retention Scheme

Find out if you’re eligible and how much you can claim to cover wages for employees on temporary leave (“furlough”) due to coronavirus (COVID-19).

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

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, 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 use this scheme anytime during this period.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

Who can claim

Any UK organisation with employees can apply, including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.

Public sector organisations

The government expects that the scheme will not be used by many public sector organisations, as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.

Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.

Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.

In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.

Employees you can claim for

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

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

To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the 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.

This scheme is only for employees on agency contracts who are not working.

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

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, 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.

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

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

If your employee is on unpaid leave

Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.

If your employee is on Statutory Sick Pay

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.

If your employee has more than one job

If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

If your employee does volunteer work or training

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 NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

If your employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay

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.

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.

Work out what you can claim

Employers need to make a claim for wage costs through this scheme.

You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. 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.

We will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.

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.

Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

Employer National Insurance and Pension Contributions

All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.

You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.

You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).

National Living Wage/National Minimum Wage

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

What you’ll need to make a claim

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. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

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. HMRC will retain the right to retrospectively audit all aspects of your claim.

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.

You 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.

What to do after you’ve claimed

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

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

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.

When the government ends the scheme

When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

Employees that have been furloughed

Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.

Income tax and Employee National Insurance

Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.

Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

 

Check if your employer can use the Coronavirus Job Retention Scheme

Find out if you’re eligible, and how much your employer can claim if they put you on temporary leave (“furlough”) because of coronavirus (COVID-19).

If you and your employer both agree, your employer might be able to keep you on the payroll if they’re unable to operate or have no work for you to do because of coronavirus (COVID-19). This is known as being ‘on furlough’.

Your employer could pay 80% of your wages through the Coronavirus Job Retention Scheme, up to a monthly cap of £2,500.

You’ll still be paid by your employer and pay taxes from your income. You cannot undertake work for your employer while on furlough. We expect the scheme to be up and running by the end of April.

Check if you’re eligible

Both you and your employer must agree to put you on furlough – so speak to your employer about whether they can claim. You cannot apply for the scheme yourself. Once agreed your employer must write to you confirming you have been furloughed to be eligible to claim.

Any UK employer with a UK bank account will be able to claim, but you must have been on your employer’s PAYE payroll on 28 February 2020. You can be on any type of contract, including a zero-hour contract or a temporary contract.

This scheme does not apply if you are self-employed or to any income from self-employment.

If you’re on sick leave or self-isolating because of coronavirus (COVID-19), speak to your employer about whether you’re eligible – you should get Statutory Sick Pay (SSP) while you are on sick leave or self-isolating, but can be furloughed after this.

If you are shielding in line with public health guidance, then you should speak to your employer about whether they plan to place staff on furlough.

The grant will start on the day you were placed on furlough and this can be backdated to 1 March.

If you’re a public sector employee

The government expects that the scheme will not be used by many public sector organisations, as the majority of public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.

Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them.

This also applies to non-public sector employers who receive public funding for staff costs. Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.

In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.

If you work for the public sector, you can get more information about how the scheme works for you from your UK Government Department, employer or, in the case of employers funded by the Scottish Government, Welsh Government or Northern Ireland Executive, through your respective administration.

If you were made redundant after 28 February

Your employer can agree to re-employ you and place you on furlough instead. They’ll still be able to claim a grant to cover 80% of your monthly earnings, up to a monthly cap of £2,500.

If you currently have more than one employer

You can be put on furlough by one employer and continue to work for another, if it is permitted within your employment contract.

If you’re put on furlough by more than one employer, you’ll receive separate payments from each employer. The 80% of your normal wage up to a £2,500 monthly cap applies to each job.

If you are on Universal Credit

If you’re earning less because you’re on furlough, your Universal Credit payment might change – find out how earnings affect your payments.

If you are on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay

You must take at least 2 weeks Maternity Leave (4 weeks if you work in a factory or workshop) immediately following the birth of your baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth and you may want to do this.

If you are eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and you will be entitled to claim up to 39 weeks of statutory pay or allowance.

If you qualify for SMP, you will still be eligible for 90% of your average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of your 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.

Some employers ‘top up’ Statutory Maternity Pay and their employees are eligible for an enhanced, earnings related rate of pay. If you are eligible for enhanced (contractual) maternity pay from your employer this is included within the wage costs that your employer can claim through the scheme. The same principles apply if you qualify for contractual adoption pay, paternity pay or shared parental pay.

If you are currently pregnant and due to start Maternity Leave

You will start Maternity Leave as usual. If your earnings have reduced due to a period on furlough or statutory sick pay prior to your Maternity Leave starting this may affect your Statutory Maternity Pay. The same principle applies to contractual adoption pay, paternity pay and shared parental pay.

How much you’ll get

Your employer will get a grant to cover 80% of your monthly earnings, up to a maximum of £2,500. Firms will be eligible for the grant once you have been furloughed, from 1 March. Your employer:

  • will pay you at least 80% of your usual monthly earnings, up to a maximum of £2,500, as your wage
  • can claim for a minimum of 3 weeks and for up to 3 months – but this may be extended
  • can choose to pay you more than the grant – but they do not have to

You’ll still pay Income Tax, National Insurance contributions and any other deductions from your wage.

If you are concerned that your employer is not paying you what you are entitled to then you should raise this with your employer in the first instance, then with Acas (Advisory, Conciliation and Arbitration Service).

How your monthly earnings are calculated

If you’ve been employed (or engaged by an employment business in the case of agency workers) for a full year, employers will claim for the higher of either:

  • the amount you earned in the same month last year
  • an average of your monthly earnings from the last year

If you’ve been employed for less than a year, employers will claim for an average of your monthly earnings since you started work. The same arrangements apply if your monthly pay varies such as if you are on a zero-hour contract.

If you started work in February 2020, your employer will pro-rata your earnings from that month.

Bonuses, commissions and fees are not included as part of your monthly earnings.

While you’re on furlough

Your employer will need to notify you before putting you on furlough.

Once you are on furlough you will not be able to work for your employer, but you can undertake training or volunteer subject to public health guidance, as long as you’re not:

  • making money for your employer
  • providing services to your employer

If workers are required to for example, complete training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Any activities undertaken while on furlough must be in line with the latest Public Health guidance during the COVID-19 outbreak.

Your employer can still make you redundant while you’re on furlough or afterwards.

Your rights as an employee are not affected by being on furlough, including redundancy rights.

If your employer chooses to place you on furlough, you will need to remain on furlough for a minimum of 3 weeks. However, your employer can place you on furlough more than once, and one period can follow straight after an existing furlough period, while the scheme is open. The scheme will be open for at least 3 months.

If you do not want to go on furlough

If your employer asks you to go on furlough and you refuse you may be at risk of redundancy or termination of employment, depending on the circumstances of your employer. However, this must be in line with normal redundancy rules and protections.

Published 26 March 2020

 

All Coronavirus Articles

Coronavirus Job Retention Scheme Extended Until the End of June

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme