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Guidance and interpretation as of 21st April 2020 of the Coronavirus Job Retention Scheme (CJRS). The government is yet to provide full details and this article will be updated as more information is announced. Read a full summary of COVID-19 Government Support.


If staff are unable to work due to the coronavirus, the government will pay 80% of the “full employment costs, up to a cap of £2,500 per month” of retained workers who are designated as ‘furloughed’. 


The scheme will be open to all employers with a PAYE payroll scheme that was created or started before 28 February 2020.

Any UK organisation with employees including apprentices can apply: businesses, charities, agency workers paid via recruitment agencies and public authorities. 

To be eligible, furloughed employees must: 

  • UPDATED: have been on your payroll and HMRC notified on or before the 19th March 2020 (initially 28th February 2020).
  • be on any type of contract: full-time, part-time, agency or zero-hour contracts
  • not be on unpaid leave (unless this occurred after 28th February)
  • not be working reduced hours
  • not be on sick leave or self-isolating; such employees get Statutory Sick Pay but can be furloughed after this. 
  • be furloughed for a minimum length of 3 weeks

Employees made redundant since the 28th February 2020, are also covered if they are rehired by the employer before the 19th March 2020.

The government have now clarified that the grant can also be claimed by the following individuals as long as they are paid via PAYE:

  • Office Holders: furlough arrangements should be adopted formally as a decision of the company or LLP.
  • Company Directors: furlough arrangements should be formally adopted at a board meeting as a decision of the company; and minutes recorded in the company records. Directors can still fulfill their statutory obligations but cannot perform any revenue generating work or provide other services to or on behalf of the company whilst furloughed.

Plan for Cash 

The below information will be useful when preparing your cash flow forecasts and overall plan for cash. 

What’s covered by CJRS? 

The following specific amounts are expected to be covered by the government grant but further government clarification is needed.

Employee’s wages 

For full-time and part-time employees, the employees’s gross salary, as of 28th February 2020 should be used when calculating the 80% government grant due under this scheme. 

For variable pay employees such as those on zero hour contracts and other flexible arrangements, you can claim the higher of:

  • the employee’s earnings from the same month in the previous year
  • the average monthly earnings from the 2019-20 tax year 

If a variable pay employee has been employed for less than twelve months, you are able to claim the average of their monthly earnings since they started working for you (or pro-rate for their earnings if they started in February 2020). 

If you’re employee is furloughed for only part of a pay period, the grant will be prorated. Claims are made based on the period the employee starts furlough and therefore finishes work rather than the date the decision was made or an agreement drafted.

Employer’s national insurance and pension contributions 

The government have confirmed that employer national insurance contributions and the minimum automatic enrollment employer pension contributions (currently 3%) are both covered by the grant in addition to 80% of an employee’s regular salary. 

You still need to pay Employer National Insurance and pension contributions on behalf of furloughed employees.

Further guidance will be announced on how this should be calculated before the scheme goes live. 

Bonuses, commission and other pay elements 

The grant covers regular payments you are obliged to pay your employees only. This includes wages, past overtime, fees and compulsory commission payments but excludes discretionary bonuses, tips, commission and non-cash payments.

Holiday, maternity, sick pay 

Further guidance is awaited on employees on holiday, maternity, sick or self-isolating. 

If employees are eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules and payments apply. If you offer enhanced contractual pay on Maternity Leave, this is a wage cost, and can be claimed through this scheme. This principle will also apply to employees who qualify for contractual adoption, paternity or shared parental pay. 

Employees on sick leave or self-isoalting are entitled to Statutory Sick Pay but can be furloughed after this.

Benefits in Kind and Salary Sacrifice

The salary you calculate should not include non-monetary benefits including taxable benefits in kind. 

Similarly, benefits provided via salary sacrifice schemes that reduce the employee’s taxable pay should also not be included.  

What do I need to pay ‘furloughed’ employees? 

The current guidance around the CJRS talks about “reimbursing” employers for wage costs.

The government have now confirmed that employers will need to pay their employees the lower of 80% of their normal wages during any lay off period or £2,500 per month in order to apply for the grant. This could cause short term cash flow issues in the interim (see cash flow below). 

New guidance confirms that the employer would not have to make up the remaining 20% of a ‘furloughed’ employee’s wage and it would be at the discretion of the employer whether to top up an employee’s salary beyond the minimum amounts set out above. 

The national minimum wage does not need to be considered when determining what to pay furloughed employees as it’s an entitlement for the hours they are working; which will be zero if furloughed.

The Apprenticeship Levy and Student Loans should be paid as usual and are not covered by the Job Retention Scheme. 

Apprentices must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

Other cash flow considerations 

The Coronavirus Job Retention Scheme will be backdated to cover the cost of wages from the beginning of March to the end of June. The Chancellor will extend the scheme for longer if necessary.  

UPDATED: HMRC launched the scheme on 20th April 2020 and has promised to pay furloughed wages within 6 days of applying. 

This could therefore create short term cash flow challenges; the extent of which would become more clear after finalising cash forecasts. Businesses who require assistance to fix short term cash flow issues may be able to obtain finance through the Business Interruption Loan scheme. Your bank should be the first port of call before considering other options such as Capitalise: 

Submit one application to up to 10 lenders who operate the Coronavirus Business Interruption Loan Scheme

Plan for Staff

The below information will be useful when preparing your plan for staff in regards to COVID-19.

Staff Considerations 

Rather than having to lay off staff, this should help SMEs retain some of their workforce. With the scheme backdated to the beginning of March, employers can also retain any employee who has been laid off since 28th February 2020, if they are rehired by their employer. 

Employees should not undertake any revenue generating work for their employer while they are ‘furloughed’. The fact that the employer is unable to give its employees any revenue generating work for the time they are ‘furloughed’ is what allows them to claim up to 80% of the employee’s wage for all employment costs (up to £2,500 a month). 

This means employees can still take part in volunteer work or engage in training whilst being furloughed; so long as it does not provide services to or generate revenue for the company.

If an employee has more than one job, they can be furloughed for both jobs or just one job. If they are furloughed from one but not the other, an employee can still receive furloughed payments from the first employer whilst working for, and receiving normal wages from the second employer.

What’s the process 

Employee’s contracts should first be reviewed for any existing clauses that allow the employer to be laid off if there is a downturn in work. 

If there is no such clause, express consent from the employee to be furloughed will be required. A written agreement between the employer and employee should be produced which explains the reasons and circumstances for the change in employee status and explain any other relevant provisions such as time-frames. An agreement regarding the level of wages paid whilst ‘furloughed’ will also be required as part of any agreement.

The government have now said this written agreement must be kept for a minimum of 5 years.

It’s our view that employees are unlikely to complain about still being able to receive 80% of their wages while not at work and employees should be informed of this in order to offer them some reassurance during this difficult time. 

Note if you have more than 20 employees whose contracts need to be changed a more formal consultation process will need to be done and we recommend legal advice at this point.

Employers will then need to submit information on furloughed workers to HMRC via an online portal.

UPDATED: the government will start accepting applications on the 20th April 2020.


HMRC have setup an online portal and started accepting applications from Monday 20th April.

You will be able to submit one claim at least every 3 weeks.

The government have confirmed you will need the following: 

  • your Government Gateway ID and password
  • be enrolled for PAYE online via your Government Gateway
  • your ePAYE reference number
  • enrolled for PAYE online – this can take up to 10 days
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • a UK bank account number and sort code
  • your contact name
  • your phone number 

Need support with your COVID-19 Action Plan? 

Concerned about the impact the coronavirus is having on your business? 
Need help understanding what Government Support is available?

Book a free Business Health Check with a Chartered Accountant who will help answer your questions and review what solutions and financial support are available to your business: Book Now 

Read our free resource on how to access the Coronavirus Government Support announced for businesses so far: Read Now 

Access our free COVID-19 Action Plan to understand what areas of your business you need to review: Download Now 

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