Coronavirus Job Support Scheme

The Coronavirus Job Retention Scheme (CJRS) provides grants to employers to cover most of the costs of paying employees who are “furloughed”, i.e. employed but not working. The aim of the CJRS is to allow the employer to retain employees who will be needed when the business begins to rebuild in the future (when the pandemic has eased) and to avoid having to make those employees redundant. Any UK employer, whether small or large, charitable or non- profit, can utilise the CJRS.

The CJRS was due to end on 31 October 2020, but it has been extended to 31 March 2021. The conditions described below will apply until January 2021, when there will be a review of the level of support employers will receive from 1 February 2021 onwards.

CJRS from 1 November 2020

The furlough arrangement can be flexible, such that the employees may work for some periods and be furloughed for other periods, even within the same week. The employee must agree to the flexible working arrangement.

While on furlough, the furloughed employee must receive at least 80% of their “usual salary” of up to £2,500 per month, and this amount is covered by the CJRS grant. The £2,500 cap is reduced proportionately when an employee is furloughed for only part of the month.

The employer must pay the employee, for all periods for which they are working, at the employee’s contractual pay rate. The employer also must pay all the employer’s class 1 NIC and employer’s minimum workplace pension contributions on the entire amount of salary or wages the employee receives.

Employee’s “usual salary”

Where the employee was included in an RTI submission on or before 19 March 2020 and eligible to be included in a CJRS claim since that date, the employer should use the March pay as the reference for any furlough claims from November.

For employees taken on by the employer on or after 20 March, the “usual salary” is that paid in the last pay period which ended on or before 30 October 2020. Where the pay of a new employee has been variable, the average pay between 6 April (or the start of their employment if later) and 30 October 2020 should be used as the basis of the furlough pay.

Eligible employees

Employees do not have to have been furloughed at an earlier date to be included in a CJRS claim from November onwards.

Employees who had earnings notified by RTI submission to HMRC between 20 March 2020 and 30 October 2020 are eligible to be included in a CJRS claim. This will allow new joiners to be furloughed,
and directors who pay themselves once a year, say at the end of March.

Employees employed as of 23 September and notified to HMRC by RTI between 20 March and that date, who have since been made redundant, can be rehired and placed on the furlough scheme. This will also allow employees who were on fixed-term contracts that expired after 23 September to be re- employed and furloughed.

Employees on any type of employment contract may be included, which covers all of the following:

  • Apprentices (but they must be paid normally for time spent on training)
  • Agency workers, including those employed by umbrella companies
  • Those on zero-hour or fixed-term contracts
  • Salaried members of LLPs
  • Those subject to off-payroll rules in the public sector, classified as “deemed employees”
  • Certain employees transferred into the current employment via a TUPE arrangement
  • Nannies and domestic staff
  • Employees who are shielding in line with public health guidance
  • Those with caring responsibilities due to coronavirus
Example 1

Isolator Ltd employs Eric, who has opted out of auto enrolment, at a salary so £2,000 per month.

Eric currently receives net pay of £1,664, after deducting PAYE of £191 and employee’s NIC of £145.
Isolator Ltd pays employers’ NIC of £175.

Isolator Ltd can claim a CJRS grant for November of the lower of 80% of £2,000 = £1,600, and £2,500.
Isolator Ltd claims a grant of £1,600.

The net amount of cash required by Isolator Ltd to furlough Eric, based on maintaining his existing salary, is £2,000 + £175 – £1,600 = £575 per month.

If Isolator Ltd agrees with Eric that he will only be paid a reduced salary of £1,600 per month while on furlough, the cost to the employer will just be £175 (the employers’ NIC).

Employees with more than one employment can be furloughed by one employer and continue to work for and get paid by their second employer. Foreign nationals and employees on all types of visa may be furloughed. The subsidy for their wages under the CJRS does not amount to “access to public funds”.

In addition, the following employees may be brought on to furlough and be eligible for the grant:

  • Those returning from maternity, paternity or adoption leave
  • Those returning from sick leave or who would otherwise be on sick leave

The CJRS grant does not cover SSP, but furloughed employees can be moved on to SSP.


The Government will publish details of every business that uses the CJRS from November, once the first claims have been submitted and approved.

Public sector bodies are not expected to use the CJRS and organisations that are partially publicly funded can only use the CJRS if their private income has reduced.

What furloughed employees can do

Furloughed employees must not work for the employer during the hours they are furloughed, but those furloughed hours can be very flexible. However, the employee may work for or volunteer for another employer or organisation while furloughed by you.

The employee must agree to be fully or flexibly furloughed. The employer must communicate to each furloughed employee in writing that they are furloughed and obtain their agreement to any reduction in their contractual wages. A copy of this communication should be kept by the employer for five years.

An employee does not have to accept furlough if offered, but the employer could make the employee redundant instead, as long as the appropriate employment law procedures are followed.

Employees should be encouraged to undertake training while furloughed, but they need to be paid at least the National Minimum Wage (NMW) or National Living Wage ( NLW) for the time spent training. For the rest of the time employees are on furlough, they are not training or working, so the the NMW and NLW do not apply during that period. Thus, if their pay is reduced to a level below the NLW or NMW rate while on furlough, that is permitted. However, furloughed time spent on annual leave must be paid at normal contractual rates.

Administration of the scheme

CJRS claims must be for periods of at least seven consecutive days, but most employers will want to align the claim periods with their normal pay periods as much as possible. However, CJRS claims cannot straddle the month-end.

Furlough claims for November can be made from 8am on 11 November 2020, using the same portal as for earlier claims. The online calculator has been updated for the new CJRS rules, see: CJRSno3cal. Claims will have to reach HMRC by the 14th of the month following the month they relate to. For example, CJRS claims for November 2020 must be submitted by 14 December 2020.

Claims can be submitted in advance of the payroll being run, up to 14 days before payday. The funds should be paid to the employer six working days after the CJRS claim for the period is submitted. The delay between application and payment is to allow HMRC to undertake checks to prevent fraud.

To access the grant, the employer must have a PAYE online account, but we can submit a grant
application on your behalf, as your tax agent, if you have authorised us to act for you for PAYE matters.

For each grant application, the following information is required:

  • Number of employees included
  • Name and National Insurance number of each employee
  • Payroll number of each employee – or some other identifier
  • Employer’s PAYE reference number
  • Employer’s UTR number for business or company, or company registration number
  • Start date and end date of the claim period
  • The usual hours and the hours worked by each employee
  • Amount claimed (the online calculator can help with this)
  • UK bank account number, sort code, address and postcode on the bank account statements
  • Contact name and phone number.

When the claim covers 100 or more employees, the details can be uploaded on a spreadsheet, but in other cases each employee’s details must be manually entered online. You must keep a copy of all the information used in the CJRS claim for six years.

If you make an error in the CJRS claim, this can be corrected in the next period’s claim, or you can contact HMRC to receive a pay reference number to repay any overpaid CJRS grants.

What is not covered by the CJRS

The following amounts should not be included in any CJRS claim for wages or salaries paid from 1 November onwards:

  • Any SSP paid to the employee
  • Employers’ class 1 NIC
  • Any Apprenticeship Levy due
  • Employer pension contributions to the workplace pension

Student loan repayments must be deducted from the employee’s wages and paid over, as normal.

Owner-managed companies

Many director/shareholders pay themselves a small salary and take the balance of their income as dividends from their companies. The CJRS does not cover the payment of dividends; only the salary paid under PAYE is eligible for the grant.

Example 2

Louise is the managing director and majority shareholder in her company. She pays herself £12,500 per year. Her husband (who is also a director) and son also work part-time for the company, earning £10,000 a year each.

Providing all the necessary procedures are gone through to furlough them (e.g. amendment of contract terms, recording the decision of the company’s board to furlough), there seems to be no reason why Louise’s company could not claim grants to get reimbursement of 80% of the wages of all three family members. Louise and her husband must only undertake duties to fulfil their statutory obligations as company directors and must not generate any income for the company while on furlough.

Directors of their own companies can be fully or flexibly furloughed. If the latter, they may work for some hours and be furloughed for other hours.

While on furlough the director must not provide any services to or on behalf of the company, or generate any income for the company or any connected business, for the hours in which they are furloughed. Directors can undertake statutory duties while furloughed that would reasonably be judged as necessary, such as submitting statutory returns and supplying information to HMRC.

Directors are not eligible for help under the Self- employment Income Support Scheme (SEISS).

Salary sacrifice

Where a salary sacrifice scheme is in place, employees cannot normally move freely in and out of that scheme, as a change in contract terms is required first. However, HMRC has agreed that the coronavirus is a “life event” that allows the employee to move out of the salary sacrifice scheme. This is particularly important for schemes involving pension contributions. All of the CJRS grant claimed must be paid to your furloughed employees as wages. Employees can choose to have a higher percentage of their contracted earnings paid as pension contributions while on furlough and agreed pension deductions can continue while the employee is furloughed.

CJRS grant is taxable

The amounts paid to an employee on furlough are deductible for tax purposes by the business (as normal) and the CJRS grant is taxable income of the employer. Where the employer is not a business, such as an individual employing domestic staff, the CJRS grant is not treated as the employer’s taxable income.

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