What the Coronavirus Job Retention Scheme means for you

March 2021 update: You can find out more about the latest changes to the Coronavirus Job Retention scheme here.

What is the Coronavirus Job Retention Scheme?

The scheme allows businesses who put an employee on furlough to claim grants to cover 80% of their employee's salary, capped at £2,500 per month. This is to allow businesses to remain solvent without having to make staff redundant.

What does being furloughed mean?

If you are put on furlough it means that you are no longer required to come into work or do your job. You remain an employee of the business and on payroll, ready to come back to work once government regulations are relaxed.

You must not provide any service to your employer while furloughed or make them any money, though you can still do voluntary work and training.

Who could be furloughed as part of the scheme?

All full-time, part-time, zero hours or agency staff can be furloughed as long as you are paid through PAYE (pay as you earn) and were on the company’s payroll on or before 19 March 2020. 

If you want to be put on furlough you should discuss it with your employer, but employees cannot demand to go on furlough.

If you stopped working for your employer between 28 February 2020 and 19 March 2020 as a consequence of the coronavirus crisis, your former employer can rehire you to put you on furlough.

How long does furlough last on the scheme?

You must be furloughed for a minimum of three weeks in order for you to be eligible for the scheme. If you are called back to work after less than three weeks, you employer will need to pay you.

Is furlough compulsory?

No. Existing employment law still applies. You must agree for your employer to put you on furlough, though alternatives are likely to include redundancy.

Who can furlough staff?

To claim as part of the scheme your UK business, charity, recruitment agency or public authority must hold a UK bank account and have been trading since 19 March 2020. You will also need an ePAYE reference number.

You must notify your staff in writing if you plan to put them on furlough, and they must agree.

Can directors be furloughed?

Yes. If you are a director of a UK business you can claim your own PAYE salary through the scheme, but not any bonuses or dividend payments. However, you must not provide a service or earn your company money during your furlough period.

How much do furloughed staff get paid?

Your employer can claim 80% of your core salary, up to £2,500 per month. Your core salary does not include bonuses, dividends or commission.

Your employer can also claim their statutory pension and national insurance contributions through the scheme, though you will still pay national insurance and income tax as normal.

Your employer may choose to pay your full salary by topping up the grant, but they do not have to. If you have multiple employers, each one can claim up to £2,500 to fund 80% of your monthly salary.

If you are paid an irregular monthly salary, the grant will be calculated by either your average core salary from the 2018-19 tax year or your pay from the same month last year, whichever is higher.

How to claim

Employers will need to submit claims using the UK government portal. You can only submit one claim every three weeks.

To claim you will need to submit:

• An ePAYE reference number

• The number of employees you are putting on furlough

• The dates you are claiming for

• The amount you are claiming

• Your bank account number and sort code

• A contact name and number

HMRC reserves the right to retrospectively audit claims.

When will furloughed staff be paid?

Your employer should pay you as usual during your furlough, then claim back the money through the scheme.

What if furloughed staff can’t live on 80% of their salary?

Even if you are paid minimum wage, you may still only receive 80% of your salary if you are furloughed as part of the scheme. You are still able to take on work while on furlough, so long as your employment contract allows it. Many industries have been left short staffed by the coronavirus crisis.

You can also supplement your furlough earnings with in-work benefits such as Universal Credit payments.

Find out more about Universal Credit

What if staff are on parental leave?

You will continue to receive statutory minimum payments and your employer will be able to claim any additional salary you receive through the scheme.

Find out more about your parental leave and pay rights here.