Coronavirus Job Retention Scheme – FAQs

What is the Coronavirus Job Retention Scheme (CJRS)?

The CJRS is focussed around encouraging employers to “furlough” staff rather than laying them off.  The term “furlough” isn’t well known in the UK but it is widely understood in (for example) the US economy.  It refers to an involuntary temporary leave of absence which is imposed due to the special needs of the company or employer. 

The purpose of the CJRS is to encourage employers to stand down employees in a temporary fashion on furloughs rather than laying staff off.  

It appears that the term “furlough” will cover staff who remain under contract and on the payroll but are not working because the employer does not have work for them to do as a result of the virus. This certainly ought to cover staff placed on statutory layoff. However, the key difference is that the new term “furlough” presents a similar option for employers who do not currently have the contractual right to require staff to be laid off. 

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Both the Chancellor’s statement and HMRC’s guidance are a little ambiguous but we understand this to be a grant of up to £2,500 a month per employee.  

The salary figure is based on the person’s salary in February 2020.  HMRC will be able to confirm this via Real Time Information.  

So this would effectively mean that for a person on a salary of £37,500 (£3,125 a month in February 2020) then HMRC would pay the maximum grant of £2,500 towards that. 

For persons on salaries below £37,500 (£3,125 a month in February 2020) then the grant paid would be proportionately lower, and for persons on annual salaries of above £37,500, the grant per month would be capped at £2,500 and so the additional monthly cost of having that person on furlough would have to be borne by the employer.  

The CJRS will be backdated to 1 March 2020 and will operate for at least April and May 2020 but the Chancellor has confirmed it will be extended if required.  

HMRC say they are working urgently to set up a system for reimbursement.  Existing systems are not set up to facilitate payments to employers.  HMRC expect that refunds by grants will be made at the earliest from April 2020. 

Which employees does CJRS apply to?

Any worker can be considered for furlough as long as you are a UK employer with a UK bank account and the worker was on your PAYE payroll on 28 February 2020.

The scheme is designed to help employees where their employer is unable to operate or has no work for the employee to do because of coronavirus.

You may note that the scheme does not allow for the inclusion of employees who join the business after 28th February 2020. We understand that this is an anti-avoidance measure, but it will cause commercial issues for businesses who have hired employees after that date, but before the announcement of the CJRS, in good faith. 

Do I pay employees their full salary when they are furloughed?

If you haven’t entered into a formal variation to an employment contract with an employee, then you should pay them their normal salary and benefits package throughout the furlough period.

The Government’s Guidance for Employers makes it clear that this change to an employee’s status (of not being at work) is subject to existing employment law. What this means in practice is that you will have to immediately try to get an agreement with employees to place them on furlough, either by asking staff to indicate if they are agreeable to it or by asking for volunteers.

Once agreed you must write to your employee confirming the furlough to be eligible to claim relief under CJRS.

If you intend to change your employees’ entitlements in any way, then you will need to formally vary their employment contracts.

Employers will need to ensure that employment contracts are updated, and employees are properly consulted on the changes to their contract to be able to take advantage of the CJRS.

We recommend that employment law advice is sought if you intend to make any changes to your employees’ pay. Contact details of local employment lawyers are included at the end of this note.

How are furloughed employees paid?

The employer will continue to pay the employee through payroll as usual on the normal payday using the Real Time Information (RTI) system. The employee will pay tax and NIC on payments made as normal. We also understand that employees will still be required to pay student loans and employee pension contributions during the period of furlough.

Payment of PAYE and NIC should be made to HMRC and the RTI filing requirements continue to apply. In addition, pension uploads, along with payments, should continue to be made to the pension provider.

What can I claim back from the government?

The Chancellor has provided informal clarity to Parliament that a grant can be claimed which equates to 80% of the employment costs for the pay reference period (i.e. the grant is based on wages for a previous pay period). The exact definition of employment costs has not yet been confirmed but we understand, based on current guidance, that this will include reference to taxable pay including wages and car allowances, etc. plus employers’ NIC and the legal minimum pension contributions.

The government has confirmed that bonuses, commissions and fees are not included as part of monthly earnings. We note that this does not align with the rules on holiday pay, etc. where you need to consider whether commission is classed as part of ordinary pay for a worker. 

You can claim CJRS relief for a minimum of 3 weeks per furloughed employee and for up to 3 months (although this may be extended) from 1 March 2020.

The previous pay reference period hasn’t been confirmed yet as there is a desire to help seasonal workers, who traditionally have higher earnings in the spring and summer months.

The total maximum grant amount that can be claimed by an employer per employee will be £2,500 per month.

Based on the NIC thresholds applicable from 6 April 2020, if an employee receives wages per month of £1,000, the employers’ NIC would be £37 and the minimum employer pension contribution would be around £14. The total cost to the employer of paying this employee for the month will be £1,051. Therefore, the grant available would be £1,051 x 80% = £841 per month.

If monthly employment costs for an employee are normally £3,125 or more, then the amount the employer can claim will be the capped at £2,500 per month from the government by way of a grant. Please note that this would equate to a monthly gross salary of around £2,773, or an annual salary of £33,280, based on our current understanding of the employment costs that can be reclaimed and the 2019/20 NIC thresholds.

If an employer agrees with a furloughed employee to vary their salary under furlough such that the total employment costs will be reduced to £2,500 per month, (where they had normally exceeded £3,125) then this should be covered in full by the grant claim.

If, however, the employer continues to pay the employee at their normal rate, then any excess paid to the employee in excess of the capped amount of £2,500 plus the employer NI, employer pension costs etc. will continue to be an expense to the employer.

We expect that, for some employers, the availability of the grant will still make it easier to agree with higher-paid staff that furlough is appropriate in certain circumstances where staff are unable to work or have been rendered unproductive due to the Covid-19 outbreak.

As the grant can only be claimed against 80% of wages for a previous pay period, increasing employee wages now will have no impact on what they would be paid with this scheme. This is partly an anti-avoidance measure to prevent abuse of what is intended to be a system to protect employment.

How do I make a claim?

The employer will be responsible for maintaining records in respect of furloughed employees.

A grant can be claimed retrospectively from the government. CJRS will be administered by HMRC. A portal is currently being developed to enable claims. This is expected to be available by the end of April 2020.

Can employees check emails and receive calls whilst they are “furloughed”?

The chancellor confirmed that there will be no provision to partially furlough staff. This means employees will need to be entirely non-active to qualify.

Do directors qualify for CJRS?


Furloughing of any individual who has been subject to PAYE will be possible.

If directors are included within the furloughed workers, as they often take a low or no salary from the business and dividends are utilised to top up their income, which are not subject to PAYE, then the dividend amounts are unlikely to form part of the CJRS calculation for the director.

A further concern is that a director must be non-active to be furloughed but, given they will continue to need to manage the business in some way, especially if they operate a personal service company, they are unlikely to be completely inactive and therefore may fail the CJRS requirements.

Commercially businesses will need to make a choice between the cost saved by furloughing directors and the commercial disruption of not having that director performing an active role in the business. 

Do casual workers and employees on zero-hour contracts qualify for the CJRS?


Employers will be required to use an average of hours worked to calculate the amount available to claim under the CJRS.

The 80% grant will apply to the higher of:

  • The earnings in the same period in the previous year; or
  • The average earnings in the whole previous 12 months (or fewer if they have worked for less than 12 months, including a part month calculation if they were taken on in February).

What if I need a furloughed employee to perform some work?

There may be some flexibility for a furloughed worker returning to work and then going back on furlough. A worker must be furloughed for a minimum of 3 weeks for their employer to be able to claim CJRS relief.

An employer can place a worker on furlough more than once, and one period can follow straight after an existing furlough period, while the scheme is open.

Whilst on furlough, an employee must not perform any employment duties. Therefore, a reduction in an employee’s hours will not qualify for relief under the CJRS.

We await further clarity on this, but as employers may need to react to peaks and troughs, it may be that they can plan to utilise employees for a particular busy period in a month and furlough them for quieter periods.

Furloughed workers may volunteer or train as long as they are not making money for or providing services to their employer. Employers can require workers to undertake training at home provided this condition is met, as long as they are paid at least the National Minimum Wage / National Living Wage for the time they spend training.

What is the impact on the National Minimum Wage?

We do not expect the National Minimum Wage (NMW) legislation to apply to furlough payments, as the employee will not be allowed to work. As NMW is based on working time, no work must mean that any payment made will be outside the scope of NMW.

What about benefits provided to employees?

We do not expect benefits provided to an employee to qualify for CJRS relief unless they are provided to meet minimum legal requirements e.g. automatic enrolment pension contributions.

If the employee’s salary entitlement reduces whilst they are furloughed, then benefits based on the level of salary will also decrease e.g. employer and employee pension contributions.

Employers will need to determine whether they continue to provide other benefits or enhanced benefits (i.e. above the minimum legal levels) as part of any furlough discussions with employees.

You must not encourage an employee in any way to “opt-out” of an automatic enrolment pension scheme. Doing so could cause the employer to be in breach of the existing regulations relating to Workplace Pensions. 

Salary sacrifice schemes

Where a furloughed employee is a participant in a salary sacrifice scheme then, unless the employees’ contractual terms are varied, the salary sacrifice is likely to continue from the furloughed pay and the benefits available to the employee are likely to continue as current guidance does not specifically refer to this.

However, it may be possible to cancel the salary sacrifice and associated provision of a benefit as part of a contractual variation. As with all contractual variations, this should be discussed and agreed with the employee and, if necessary, employment law advice taken by the business. 

Can CJRS be backdated?

CJRS relief can be backdated to 1 March, but claims will be limited to being backdated to the day the employee completely stopped undertaking duties of employment (i.e. those who have already been made redundant as a result of coronavirus).

If businesses re-employ staff that have been made redundant since 1 March, these employees are eligible for furlough and the employer can apply for the CJRS grant.

CJRS will not apply to employees who have been put on reduced hours.

This means that if an employee worked reduced hours because of Coronavirus from 12 March and became completely inactive on 26 March, CJRS relief could only be claimed from the government from 26 March.

What if I have an employee who has reduced their hours due to childcare difficulties?

If the employee has reduced their hours because they are unable to perform work due to coronavirus, such that they may have been made redundant, then they may be considered for furlough and the CJRS should be available on payments made to them. As previously stated, an employee must not perform any employment duties whilst on furlough, so if the employee has chosen to reduce their hours to part-time due to childcare difficulties, this will not qualify for relief under the CJRS.

What if I need to make a furloughed employee redundant?

A furloughed employee can be made redundant while on furlough or immediately after. CJRS grant payments will cease when the redundancy occurs.

What if an employee refuses furlough?

If you ask an employee to go on furlough and they refuse, you may consider redundancy or termination of employment, depending on the circumstances. However, this must be in line with normal redundancy rules and protections

What if an employee is self-isolating and claiming Statutory Sick Pay?

We would expect that these employees will be required to remain on SSP until their self-isolation period ends.

The Government’s guidance released on 26 March states that if a worker is on sick leave or self-isolating because of coronavirus, they should speak to their employer about whether they’re eligible for furlough. The guidance states that an employee should get Statutory Sick Pay (SSP) while on sick leave or self-isolating but can be furloughed after this.

The government’s guidance goes on to say that employees who are shielding in line with public health guidance can also be placed on furlough.

What if an employee is currently on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay?

Employees must take at least two weeks of Maternity Leave (four weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth and they may want to do this.

If they are eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they will be entitled to claim up to 39 weeks of statutory pay or allowance.

If they qualify for SMP, they 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.

Some employers ‘top-up’ Statutory Maternity Pay and their employees are eligible for an enhanced, earnings-related rate of pay. If an employee is eligible for enhanced (contractual) maternity pay from their employer, this is included within the wage costs that the employer can claim through the scheme. The same principles apply if a worker qualifies for contractual adoption pay, paternity pay or shared parental pay.

What if an employee is currently pregnant and due to start Maternity Leave?

The government confirmed on 26 March 2020 that employees will start Maternity Leave as usual.

If their earnings have reduced due to a period of furlough or SSP prior to Maternity Leave starting, then this may affect their SMP entitlement.

The same principle applies to contractual adoption pay, paternity pay and shared parental pay.

What if someone has an attachment of earnings – what will happen to these deductions, will they continue if someone furloughs and is on 80% earnings?

It is our understanding that such deductions will still need to be made from employees. If the order is based on the level of pay, we expect that the deduction will reduce if the employee is receiving less pay under their revised contract.

I am an employer, what should I do now?

  • Designate affected employees as “furloughed” workers
  • Consider whether to vary their employment contracts during the period of furlough
  • Engage employment lawyers as relevant
  • Enter the communication process with employees
  • Keep records of information relating to furloughed employees including the date they became inactive, their earnings and other benefits paid to them during this period, the date that they return to work
  • Submit the RTI filings to HMRC
  • Pay the furloughed worker

Consider cashflow management recommendations set out at in our blog – Cash Management: COVID-19.

Looking for more advice?

If you have any questions or concerns, please get in touch with your usual MHA Henderson Loggie contact, or if you are an employee looking for advice on your position, please get in touch with ACAS or check out the latest guidance for employees on the GOV.UK website.