Coronavirus Job Retention Scheme

On 20 March, the Chancellor announced the Coronavirus Job Retention Scheme (JRS). The Government has now published fresh guidance on the scheme, providing further information. The main points to note are:

  • The scheme is open to all UK employers (including charities, recruitment agencies, and public authorities) that:
    • had created and started a PAYE payroll scheme on 28 February 2020; and
    • have a UK bank account.

Employers can use the scheme anytime during a period starting from 1 March 2020 and ending no earlier than 1 June 2020.

  • Employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month. The employer can choose whether to make a top-up to this amount. “Fees, commission, and bonuses” will not count as wages.
  • In addition, employers can claim for the associated employer National Insurance contributions (NICs) and minimum (3%) automatic enrolment employer pension contributions.
  • Claims can be made for furloughed employees on the employer’s PAYE payroll on 28 February 2020, including:
    • full-time employees;
    • part-time employees;
    • employees on agency contracts; and
    • employees on flexible or zero-hour contracts.
  • Employees hired after 28 February 2020 cannot be furloughed or claimed for. Similarly, employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
  • The minimum period of furlough is three weeks.
  • The scheme covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
  • An eligible employee on furlough “cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue”.
  • A furloughed employee can take part in volunteer work or training, provided it does not supply services to or generate revenue for, or on behalf of, their employer. If workers are required, for example, to complete online training courses while they are furloughed, then they must be paid at least the NLW/NMW for that time spent training, even if this is more than the 80% of their wage that will be subsidised.
  • If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for the JRS and the employer will have to continue paying the employee through their payroll and pay their salary subject to the terms of their employment contract. Thus, the JRS favours employers that divide their workforce into normal hours employees and those on furlough, rather than spreading work around.
  • Employees who have more than one employer can be furloughed for each job, with the £2,500 cap applying to each employer individually.
  • All payments to employees are taxable (and NICable) for them as earnings in the normal way.
  • For the employer, the grant is income for tax purposes, but in practice, it should be fully offset by the payments made.
  • The procedures for registering a claim are here.


It is unclear how the JRS will apply in practice for a one-person company or any owner /managed business where almost inevitably the employee/director(s) will have to undertake some services to keep the company going.