Your Coronavirus Job Retention Scheme questions answered

Since the launch of the Coronavirus Job Retention Scheme (CJRS) we have had a number of questions regarding how it operates, who can apply and how it will be paid to employers. 
To help you, we have provided answered to some of the most common questions people have about the CJRS. 
What does the CJRS offer?
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers until at least the end of June that is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).
Employers can use the HMRC portal to claim for 80 per cent of furloughed employees’ usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
Is my business eligible? 
Any UK organisation with employees can apply for the scheme including:

  • businesses
  • charities
  • recruitment agencies (agency workers paid through PAYE)
  • public authorities

However, you must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account to access the scheme.
Which employees can benefit from the scheme? 
The scheme applies to employees on a leave of absence, referred to as furloughed workers. These are generally employees who are on the payroll, but who might normally be laid off or made redundant due to a lack of work. 
To be eligible for the scheme, an employee must have been on the employer’s PAYE payroll on or before 19 March 2020 and HM Revenue & Customs (HMRC) must have been notified of a payment through Real Time Information (RTI) by that date.
To be eligible for the subsidy, an employee must not undertake work for or on behalf of the organisation. This includes providing services or generating any revenue. 
How is the scheme applied to someone whose pay varies monthly? 
If the employee has been employed for a full twelve months prior to the claim, you can claim for the higher of either:

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

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. Those who started in February should have their pay calculate pro-rata.
As an employer, it is your responsibility to calculate how much of an employee’s salary you can claim for, including the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to.
Does the scheme apply to directors? 
Yes, directors of a company can be furloughed. The guidance provides an exemption for company directors who are also furloughed employees to carry out duties “relating to the filing of company accounts or provision of other information relating to the administration of the director’s company…”. This may include Companies House submissions and other statutory duties. 
During this period directors should be careful to avoid anything that could be mistaken for work, including posting promotional material on their social media feeds.  
We operate in the public sector, how does the CJRS apply to IR35?
It may be appropriate to furlough IR35 contractors deemed employees “in a small number of cases”.
Public sector organisations have to confirm this with both a contractor’s Personal Service Company (PSC) and the fee-payer and agree between the parties that the contractor will not carry out work for the organisation during the period of furlough.
The fee-payer – usually the agency that pays the PSC – will have to apply for a furlough payment of 80 per cent of the monthly contract up to the £2,500 cap and the employer National Insurance Contributions (NICS).
The fee-payer will then need to pay the furlough payment in respect of wages to the PSC via PAYE and make the necessary tax and NIC deductions.
The PSC will have to report the payment to the contractor as deemed employment income via PAYE using box 58A on the PAYE Real Time Information return.
If a contractor opts to furlough themselves as an employee or director of their PSC, and they are still receiving an income from a public sector organisation, including through the CJRS, they must deduct this income from their reference pay for the CJRS.
An employee was made redundant or resigned before the end of March. Can they be rehired and then furloughed?
If employees were made redundant or stopped working for a business on or after 28 February 2020, they can be re-employed, furloughed and a claim made via the CJRS. 
This applies to employees that were made redundant or stopped working for you after 28 February, even if you do not re-employ them until after 19 March. 
The employee must have been on your payroll as at 28 February and had been notified to HMRC on an RTI submission on or before 28 February 2020.
An employee has indicated that they need to care for another and has asked to be furloughed, can they claim?
Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. 
How does the CJRS work with those employees on Statutory Sick Pay?
If your employee is on sick leave or self-isolating as a result of Coronavirus, they can claim Statutory Sick Pay. The CJRS is not intended for short-term absences from work due to sickness, and there is a three-week minimum furlough period. However, if an employer wants to furlough employees for business reasons and they are currently sick or self-isolating, they are eligible to do so, but these employees should no longer receive sick pay and would be classified as a furloughed employee.
How should I inform employees that they are being furloughed?
HM Revenue & Customs (HMRC) has now made it clear in their latest guidance that employers must confirm in writing to their employee that they have been furloughed. 
If this is done in a way that is consistent with employment law, that consent is valid for claiming the CJRS. 
There needs to be a written record, but the employee does not have to provide a written response. This written record must be kept for at least five years to evidence a claim.
Can apprentices continue to train and be furloughed?
The CJRS allows staff members to undertake volunteer work outside of the business and take part in training courses, as long as the activity doesn’t generate income for the company. Apprentices can be furloughed like any other member of staff.
I am intending to furlough more than 20 employees, are there any special considerations, as with redundancy?  
Collective consultation requirements may need to be considered. This broadly means that where 20 or more employees are to be put on furlough leave and would be dismissed if they do not agree to the resulting change in terms of employment, they should be consulted collectively. 
How do I select who to furlough?
The CJRS is intended for those employees who would otherwise be made redundant and it should, therefore, be offered to those whose roles are not critical to the business. Businesses must follow existing employment law so as not to discriminate against employees.
I only want to furlough my staff for one or two weeks; can I do this?
Employees must be furloughed for a minimum period of three consecutive weeks. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of three consecutive weeks.
How is performance pay, such as tips and bonuses, calculated under the scheme? 
The CJRS does not cover performance-related pay, but employers can voluntarily top up pay to reflect this if they wish to.
Can agency staff and those on zero-hours contracts be furloughed? 
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts to be eligible for the Coronavirus Job Retention Scheme. Depending on the arrangement with the employment agency, it may be down to them to furlough the member of staff.
How does the CJRS apply to maternity pay and shared parental leave?
Those who are contractually obliged to enhanced maternity, adoption or shared parental pay are eligible for the scheme, but not those on statutory maternity pay. They will be paid in the same way and cannot be additionally furloughed.
I have had to reduce the hours of some staff members – can I use the scheme to make up the difference? 
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
Can staff who have undergone TUPE be furloughed? 
New employers since 19 March 2020 can claim under the CJRS if either the TUPE or PAYE Business Succession Rules apply to the change of ownership of the business. Groups of companies that have consolidated their payrolls into a new PAYE scheme after 19 March 2020 can also furlough employees and claim under CJRS.
We have decided to reduce the hours of our workers, can we claim for the difference?
If an employee is working, but on reduced hours or reduced pay, they will not be eligible for the CJRS.
If employees rely on salary sacrifice for employer pension contributions, will HMRC pay the full amount of the employer pension contribution for which the pay is sacrificed?
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Benefits provided through salary sacrifice schemes that reduce an employee’s taxable pay should so not be included in the reference salary. 
An employee has refused to be furloughed, what can I do?
In the majority of cases, it will be in the employees’ interest to accept an offer of furlough as it means that their role would otherwise be made redundant. Employers have a variety of options open to them including reducing their working hours, reducing their pay, short-time working and layoffs and in some cases redundancy. Remember that existing employment rules continue to apply so you must consider whether your actions could lead to a claim for unfair dismissal or discrimination.
How does the CJRS affect holiday pay?
Employees can take holiday whilst on furlough and they should be paid as normal. The Working Time Regulations (WTR) obligates employers to pay time taken as annual leave at the normal rate of pay or, where their rate of pay varies, calculated based on the average pay they received in the preceding 12 weeks. 
The CJRS guidance confirms you can make a grant for an annual leave furlough day in the same way as any normal working day. This would still be paid at 80 per cent of normal rates (capped at £2,500 per month) as you are in effect ‘topping up’ for those annual leave days by paying the difference between that and their normal pay to your employees
Although furloughed employees are not working, they continue to accrue annual leave, as per the terms of their employment contract. 
These questions are part of our far wider FAQ section, which we have launched to support businesses during this period. To have more of your questions answered, please visit our FAQ by clicking here or contact us.

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