Employers: Coronavirus Job Retention Scheme

The following information is based on the information publishes as of 26 March. It is intended as an indication of how the scheme will work, as no detailed guidance issued yet.

The principle behind the scheme is to keep employees at home whilst enabling employers, whose operations have been severely affected by Coronavirus, to retain staff. The ‘Coronavirus Job Retention Scheme’ will be available for employers of furloughed workers (employees on a leave of absence) at a rate of 80% of the salary for employees, up to £2, 500 limit, who otherwise would have been laid off

Eligibility Criteria

  • All UK employers that had created, started or ongoing PAYE payroll scheme on 28 February 2020.

  • Any UK organisation with employees can apply including businesses, charities, recruitment agencies (for agency workers paid through PAYE), public authorities.

  • The minimum time for an individual to be furloughed is three weeks. Employees can be furloughed multiple times.

  • Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract (full, part – time, agency contracts, flexible and zero-hour contracts);
  • Scheme also covers employees who were made redundant since 28 Feb 2020;
  • Whilst on furlough an employee cannot undertake any work that is generating revenue or providing services. (Being on reduced hours or for reduced pay excludes employee from the scheme). Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
  • Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.
  • Employers must designate affected employees as ‘furloughed workers' and notify the employees of this change. You can choose some employees to furlough and not others.
  • Being a Director or Manager of a company does not disqualify you from the Job Retention Scheme. Directors or Managers will be able to continue undertaking their statutory duties while furloughed, such as filing out company accounts etc (note this is the only work allowed under the scheme).


You will receive a grant from HMRC to cover:

  • Employee salary: the lower of 80% of an employee’s regular wage or £2,500 per month,
  • associated Employer National Insurance contributions of the above
  • and minimum automatic enrolment employer pension contributions on that subsidised wage.

Fees, commission and bonuses should not be included.

If you do have sufficient funds, make payments to your furloughed workers accordingly.

This should go through the payroll as normal with tax. Employee NICs should be deducted as normal. HMRC confirmed this on Twitter on 25 March 2020. 

  • Salaried employees (full/ part time) with regular income: the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%.
  • Employees with varied pay, employed for a full 12 months prior to the claim: you can claim higher of either the same month’s earnings from the previous year or the average monthly earnings from the 2019-20 tax year;
  • Employees with varied pay, employed less than 12 months but on payroll as of 28 Feb 2020: 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.

It is not yet clear how the grant will work for employers who are unable to pay their furloughed workers until the grant comes in and whether they can delay wages payments until HMRC pay them.

Grants given are for the period of furlough from 1 March 2020.  Your claim start date will be the first day your employees were on leave (after 1 March 2020). It will last for at least 3 months, further extensions may be given if necessary.

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.

Illustration 1

Small Business Ltd employs Mrs A at an annual salary of £24,000, so £2,000 per month. Mrs A has opted out of auto enrolment.

Each month, Mr A currently receives net pay of £1,655 which is after deducting PAYE of £191 and employees NIC of £154. On this salary, the employer pays employers' NIC of £177.

The available grant for the employer is the lower of

(a) 80% of £2,000, and

(b) £2,500

Plus employers' NIC on this amount

So X Ltd claims a grant of £1,600 plus £122 = £1,722.

The net amount of cash required by X Ltd to furlough Mr A based on maintaining the existing salary is £2,000 + £177 - £1,722 = £455 per month.

It is a matter for employment law whether the employer is actually required to pay this top up. Employees and employers can agree to a different arrangement during the furlough.


  • Employee on unpaid leave – Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
  • Employee 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.
  • Employee with 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.
  • Volunteer work - A furloughed employee can take part in volunteer work as long as it does not provide services to or generate revenue for, or on behalf of your organisation.
  • Training – if employees are required to complete online training courses then they must be paid at lease the NLW (National Living Wage) / NMW (National Minimum Wage – changes in April) even if this is more than the 80% of the wage that will be subsidised.
  • Maternity Leave, contractual adoption pay, paternity pay or shared parental pay - 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.
  • Holiday pay - Holiday will continue to be accrued while the individual is furloughed.
  • Company directors – Many owner managed company director/shareholders pay small salaries and the balance of income as dividends. The scheme does not extend to dividends. Only the salary is relevant to the scheme. Such companies must have been paying a salary through a payroll to be eligible for a grant.
  • Employee not accepting furlough - An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead using the usual employment law procedure.

When It Will Be Available?

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 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.

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.

Important Note

Text updated for information published by HMRC on 26 March 2020.  It should not be relied on for advice at this stage but is intended to give an indication of how the scheme will work. 

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a SCAM.