Skip to content

Coronavirus Job Retention Scheme

Coronavirus Job Retention Scheme


On Friday 20 March, the UK Chancellor Rishi Sunak announced that the UK government would intervene to pay wages and salaries for the entire workforce of the country for businesses affected by the economic impact of the Coronavirus pandemic.

Further guidance was issued in the weeks that followed. Below is a summary of how the Coronavirus Job Retention Scheme (CJRS) works to support businesses to pay their employees, specific criteria that applies to the scheme and how employers can access the support.


CRJS is available to all UK employers who had a PAYE scheme in place on 19 March 2020 (updated). The scheme is not limited to specific sectors or industries which were affected first and foremost by the Coronavirus outbreak, such as those in retail, leisure, hospitality and tourism.

There is no need to demonstrate financial hardship either.


Furloughing Workers

Employers now have the option of ‘furloughing’ workers. This means that employees can be retained on the payroll rather than being laid off or made redundant.

The scheme is effective from 1 March and is applicable to those employees on the payroll of employers on 19 March 2020 (updated). This means that any employees who were laid off between 1 March and 20 March can be “re-employed” and retained on the payroll for the duration of the scheme.


Employees Already Absent

Employees who are already on sick leave on 20 March or who are self-isolating cannot be furloughed. They can be furloughed once their period of sick leave/isolation comes to an end.

Employees who are shielding in line with public health guidance can be placed on furlough. Shielding is a mechanism that allows employees on the critical or vunerable list to be protected from harm, working from home with or without a requirement to carry out normal employment duties.


Rules Regarding Furloughed Workers

A furloughed employee cannot do any work whatsoever for their employer. Training and volunteer work can be carried out by the employee, but any such activity carried out cannot generate income for their employer. Examples of things that are not permitted include:

  • An employee running the company payroll
  • Working on client services
  • Organising deliveries to customers
  • Social media marketing and promotion


Procedures For Employers

Employers should consider all options available before proceeding. These options will include:

  • redundancy
  • short time working
  • furloughed workers

Staff cannot be forced into being designated as a furloughed worker. It is within the rules of the scheme that becoming furloughed must be “by agreement” between employers and employees.

Logically, most staff will agree to being furloughed rather than being made redundant or placed on shorter hours. Staff can retain between 80% and 100% of their normal wage without performing any duties whatsoever. Each case will be based on its own merits though. For example, there may be some staff with long years of service who are more willing to accept early redundancy, whilst other prefer to do some work for their employer on shorter hours.

You should notify employees in writing that they have been furloughed. We have a template to do this, available on our Facebook Group – click here to join:

Once employees are furloughed, the employer is contractually obliged to pay their salary at the agreed amount (i.e. from 80% to 100% of normal salary, subject to agreement between employer and employee.

Please note – you cannot backdate furloughed workers beyond Friday 20 March unless employees were taken off your payroll between 1 March and 20 March. Also, employers must comply with equal opportunities legislation when deciding which employees are to be offered furloughed worker status.


Payroll Procedures

Run your payroll as normal with employee salaries as has been agreed in writing. File your payroll as usual via RTI with HMRC.

The employer is still liable for all PAYE, NIC and pension contributions (subject to any additional agreements reached with HMRC or pension providers).

Whilst not set out in the available guidance, we are recommending that employers consider showing payments to furloughed workers as a new line item on payslips, to differentiate this pay element from normal/regular hours. For help on how to do this using Xero Payroll, please contact one of our team and we can send you a learning video to guide you through the set up and processing.


What Can Be Claimed

Once an employee has been designated as furloughed, employers can reclaim up to 80% of their normal wage cost from the UK government, with a cap of £2,500 per month. Employers can also recoup the related employers NIC and pension contribution relating to the furloughed employee.

Fees, commission and bonuses cannot be included in the figure for costs within the scheme. For employees with variable hours and pay, the employer can use the following reference periods and can claim for the higher of:

  • the same month’s earning from the previous year (for example earnings from March 2019)
  • average monthly earnings in the 2019-20 tax year

This element will be applicable to Casual Workers and those on zero hours contracts, as long as they are paid through PAYE.


How To Claim

There is a new portal launched by HMRC to notify details of all furloughed employees. Once notified, HMRC will reimburse the employer 80% of the normal gross salaries (plus NIC and pension costs). Therefore, if you have agreed to pay employees 80% of normal gross pay, HMRC will reimburse you in full. If you agreed to pay over 80%, then the business is taking on the cost and HMRC will reimburse 80% of normal gross pay.

The new portal used to submit claims under CJRS is was launched on Monday 20 April 2020 and can be accessed from your HMRC PAYE online account.

Employers can only claim the grant once every 3 weeks; not weekly.

The first batch of refunds to employers were processed in the last week of April.

Employers will either have to:

  1. Fund the employee salaries in the meantime from working capital, or seek bank support in the interim period (loan or overdraft)
  2. Liaise with employees on deferring their salary payments (subject to their contract and normal employment law in this area)


As with all financial measure and government support initiatives, this is an ever changing and evolving area. We cannot be held liable for any reliance placed on the above guidance. Please contact us to discuss your circumstances further.



Facebook Page:

Facebook Group:


Related Posts