Summary of what employers need to know about the UK's Coronavirus Job Retention Scheme and how we can help.

The Coronavirus Job Retention Scheme (CJRS) was introduced on 20 March 2020 as a way for UK employers to avoid having to lay-off employees in large numbers during the coronavirus crisis, and instead furlough them with pay. In May 2020, UK Chancellor Rishi Sunak announced that the scheme would be extended until the end of October 2020 and would be adjusted in August in order to manage the transition of employees back into work.

Specifics on incoming changes to the scheme will be revealed at the end of May but the government has already made certain details clear. To prepare for that transition, employers should become familiar with the CJRS and the furlough claim application process.

Are all employers eligible for the scheme?

As long as employers have operated PAYE from 19 March 2020, are enrolled in PAYE online, and have a bank account in the UK, they are eligible for the CJRS. Certain types of businesses, such as public sector organisations or private sector businesses with public funding, are eligible for the scheme but are not expected to use it because it is likely they will have been able to remain in operation during the crisis.

How will claims be verified?

The CJRS is for employers that have had their operations severely affected by the coronavirus crisis. It is, as yet, unclear how the UK government will seek to verify that scheme applicants are being honest about their claims. That said, the government has stated that audits may be conducted on certain claims and released more robust fraud provisions on 17 April to address the prospect of dishonest claims. An online portal has also been set up for the public to report fraudulent claims.

How does the scheme work?

The CJRS has been in place since 1 March 2020 and was initially set up to run for 4 months. Under the scheme, UK employers can claim the lower amount of:

  • 80% of their employees’ gross pay


  • £2,500 per month (plus employer NICs and the minimum auto-enrolment pension contributions)

Scheme guidance suggests that employers are entitled to include any regular payments they are obliged to make to their employees in their claim (up to the 80% limit). Those payments cover not only regular wages but other types of payment such as non-discretionary overtime and non-discretionary commission payments. The guidance also includes direction on how employers should manage fixed rate and annual salary employees, and employees returning from statutory leave.

In order to claim from the CJRS, employers must furlough employees for a minimum of 3 weeks, although it is possible to furlough more than once, or run ‘rolling’ furloughs of different groups of employees, as long as each period is for at least 3 weeks.

Payments made to workers under the CJRS will be taxed in the usual way.

Which employees can be furloughed?

In order to claim scheme payments for an employee, an employer must demonstrate that:

  • They have paid the employee during the 2019/20 tax year
  • They made a Real Time Information Return for that employee on or before 19 March 2020
  • They have not reported the employee’s employment cessation date before 19 March 2020

The date of eligibility (19 March) may mean that some new employees may be ineligible for scheme payments: if they started on 2 March, for example, but were not paid until 31 March, they would fall outside the date boundaries. Assuming the above criteria are met, however, all employees, including part-time and zero-hour workers, are eligible. Even non-employees such as office holders, salaried members of LLPs, and agency workers are eligible as long as they are paid via PAYE.

Apprentices may also be eligible for the scheme as long as they are paid the Apprenticeship National Minimum Wage, although this may mean that employers must top up their scheme payments.

How should employers decide who to furlough?

Employers may choose to furlough their employees for a variety of reasons, although certain factors, such as how much work there is to be done, may play a more prominent role in the decision-making process. Government guidance suggests that employers should consider discrimination concerns when choosing who to furlough although it may be justifiable to prioritize the furloughing of employees in vulnerable groups for health reasons.

Employers may ask for volunteers when deciding who to furlough as a way to make the process easier.

What kind of arrangement needs to be in place for a furlough to begin?

The latest government advice states that employers must have a written agreement in place with an employee before they can be furloughed.

Since previous government guidance stated that agreements with employees were not necessary, many employees were furloughed without their written consent. Government guidance issued on 17 April states that employers should now confirm furloughs in writing to previously furloughed employees. Subsequent guidance from 23 April also states that a collective agreement is also a valid way of making a CJRS claim.

It may be the case that written consent cannot be obtained from employees who are already furloughed. In this context, employers should seek to put an agreement in place to the extent that it is possible to do so. While it is likely that HMRC will still allow this type of claim, that outcome is not guaranteed and it may be advisable for employers to seek legal advice on how to proceed.

In cases where it is possible to obtain an employee’s consent for their furlough, employers that do not do so may face legal claims for unfair wage deduction. A recent High Court case concluded that an employee’s failure to respond to an agreement letter from their employers did not constitute implied consent to the furlough.

In any aspect of their furlough arrangements, employers should seek to communicate clearly with employees while they work through the consent process.

Can employers who have been laid-off return to work?

The CJRS allows employers to re-employ workers who were made redundant between 28 February and 19 March. Once re-employed, those workers can be furloughed under the scheme. The government has issued specific online guidance for employers setting out which employees are eligible for the CJRS.

The CJRS makes provisions for workers who cannot return to work because they have responsibilities to care for others as a result of the crisis. The provision would allow parents to care for children, for example, or allow for employees who live with someone who is shielding from the virus to stay at home.

Can employees with two employers be furloughed?

Employees with two or more employers can be furloughed from one or both employments. Each of their employers can make claims under the normal rules of the CJRS.

Are workers that are isolating or on sick leave covered by the scheme?

Government guidance sets out the following information for workers that are self-isolating or on sick leave during the coronavirus crisis:

  • The CJRS is not intended for employees on a short sickness absence from work since they may claim SSP. Short-term sick leave employees can however be furloughed for business reasons.
  • Employees that are being shielded can be furloughed if it is not possible for them to work from home. They may be eligible for SSP if they are not furloughed.
  • Long term sick-leave employees can be furloughed at their employer’s discretion.
  • Employees that fall sick during their furlough may be moved onto SSP at the discretion of their employer.
  • Employees on maternity leave (or other types of family leave) may remain on that leave until it comes to its natural end – at which point they can, if eligible, be furloughed.

Are furloughed employees allowed to work?

Under the direction of HM Treasury, furloughed employees must stop ‘all work’ for their employers. While they are furloughed, they may not generate revenue for their employer (or associated organizations) or provide services. Employers may reassign the tasks that these employees would normally carry out to employees who are not furloughed.

In updated government advice, furloughed employees who are union representatives are allowed to carry out their duties in representing employees. Furloughed employees may serve as volunteers or, if they are paid the National Living Wage, undergo training.

The CJRS permits furloughed workers to begin working for another employer. Employers that do not wish their employees to begin working for another employer may address this eventuality in their furlough agreement.

Can employees on furlough go on holiday leave?

Updated guidance on how to calculate employee wages and updated CJRS guidance for employees confirm that furloughed employees can take holiday leave. The guidance states that, per the Working Time Regulations, employers must pay furloughed employees their normal rate of holiday pay.

Employers that are paying holiday pay to furloughed employees can still claim the CJRS grant during the leave, but must top up their employee’s wages, if necessary, from their own funds.

If you are struggling with CJRS calculations, or any aspect of the UK’s furlough scheme, activpayroll is here to help. Please contact our Audit & Compliance Manager Simon Wright via email

To find more information on coronavirus support for businesses, employers and employees in the UK and around the world, visit the activpayroll Latest News page.

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