Can I furlough my employees using the Coronavirus Job Retention Scheme?
Can I furlough my employees using the Coronavirus Job Retention Scheme?
One of the largest measures put in place to safeguard jobs during the coronavirus pandemic is the Coronavirus Job Retention Scheme (CJRS). Below, we've dug into the details and answered the questions you might have about the scheme.
This information was correct as of 1 June 2020. We are working hard to ensure that all content on our site is up to date, and will make sure that this page is updated when more information is available.
What is the CJRS?
The CJRS is a temporary scheme designed to support UK businesses impacted by coronavirus. It was created to secure people's incomes from March until October, despite the impact of the outbreak on the economy.
On 12 May, Rishi Sunak announced that the scheme would be extended until October 2020 in order to continue to support businesses hit by coronavirus. However, he also announced that from August the Government would start asking businesses to share the cost of the scheme.
Recent updates to the furlough scheme
- The scheme is ending on the 31 October 2020
- Introduction of part-time furlough: from 1 July, you'll be able to bring employees back from furlough on a flexible basis. This means that you can begin to bring employees back based on how urgently you need them. For exampe, you could bring back a full-time employee on a part-time basis, and claim furlough payments for the time they are not working. You'll be responsible for paying your employees wages while they're working, including tax and National Insurance contributions.
- The scheme closed to new applicants on 30 June.
- The amount the Government pays is decreasing: As employees gradually return to work, the Government will begin to reduce the amount of support that they provide businesses with through the scheme. From 1 August, although the Government will still pay 80% of employee's wages, business owners will be required to cover the cost of National Insurance and pension contributions. From 1 September, Government contributions will decrease to 70% with a limit of £2,187.50 per month, and from 1 October Government support will decrease to 60%, capped at £1,875.
What support is offered?
- The government will pay up to 80% of the wages of any ‘furloughed’ employees
- The maximum they will pay will be £2,500 (gross) a month per employee
- The scheme will be backdated to 1 March 2020
- The scheme will cover an eight month period until the end of October 2020 (although the government may extend this scheme further)
- From August, businesses will be asked to share the cost of the scheme
- The scheme will continue for all sectors and regions to help support the gradual transition back to work
Note: You can top up the government’s subsidy if you want to, but there is no obligation to.
What does furlough mean?
While ‘furlough’ isn't a term recognised in UK law, it refers to an employee being temporarily laid off – usually without pay. The arrangement normally assumes the employee will return to their role once the agreed period is over.
But, under the CJRS staff will be kept on the payroll and keep their employment rights during the furloughed period. As above, businesses who make use of the CJRS will be provided with funds by the government to cover part of the wages of their furloughed staff.
Is my business eligible for the CJRS?
Your business is eligible for the scheme if:
- It's a UK organisation
- It has a UK bank account
- It has a PAYE payroll scheme in place that was created before 28 February 2020
- You've enrolled for PAYE online (this takes up to 10 days)
- If you would otherwise need to lay off or make your worker redundant (while there's no way to ‘test’ this HMRC will be looking into any businesses they think are abusing the scheme).
Note: If you, as an individual, have someone working for you (such as a nanny), you can also furlough them if you pay them through PAYE. If you have apprentices working for you, you can furlough them and they can still continue their training.
How do I apply to the CJRS?
To begin with, you will need to notify each employee you wish to furlough. Set up a meeting, video call or phone discussion with each employee to discuss the situation – they will need to agree to be furloughed. You should also make any changes to the employment contract in agreement with them.
The government suggests businesses make their claims during or just before running payroll. This is because you need to claim the exact amounts in your payroll. You are responsible for reducing each employee’s wages to 80%. Claims can be backdated to 1 March for any employees already furloughed.
In order to claim CJRS, you'll need:
- to be registered for PAYE online
- the registered name and address of your organisation
- your UK bank account number and sort code
- your ePAYE scheme reference number
- the number of employees being furloughed and their details: their name, National Insurance number and payroll or employee number
- the claim period (start and end dates for each employee)
- your phone number
- your Corporation Tax unique taxpayer reference, Self Assessment Unique Taxpayer Reference or Company Registration number (whichever is applicable)
After checking your claim, HMRC will pay the amount claimed for by BACS to your UK bank account. You must pay the employee the whole grant you have received for their gross pay.
Making a claim
In order to make a claim, you'll first need to calculate the total amount you're claiming for each employee, including National Insurance and pension contributions.
The easiest way to do this is to use the GOV.UK CJRS calculator.
Once you've worked out how much you'll claim for each furloughed employee, you can start you application. For this, you'll need:
- a Government Gateway ID and password
- an active PAYE enrolment
If you have both of these, you can begin your claim online. Claims should be paid out within six days.
Who can I furlough?
Any employees who are on full-time, part-time, flexible, zero-hours or agency contracts, as long as they’ve been on the company’s PAYE payroll from 28 February 2020. If you’ve made employees redundant since 28 February 2020, you can re-hire them and furlough them.
An employee will need to agree to be furloughed in order for you to make use of the scheme.
Can I furlough myself, as a director?
Yes, as long as you do it through your board of directors. If the board of directors is acting to uphold the statutory duties of one or more of its salaried directors, it can make the decision to furlough those directors.
You must document the decision in the company records, though. And as furloughed director, you can carry out certain duties that directly satisfy your statutory obligations, but they can't generate revenues for the business or provide services to or on behalf of the company.
Can I furlough one set of staff, then another?
Yes, you can furlough people as they become at risk of redundancy so that can happen in stages.
When can I bring them back?
Any employees you choose to furlough must remain so for a minimum of three consecutive weeks.
Can I furlough an employee more than once?
Yes, you can furlough employees multiple times as long as each instance is at least three consecutive weeks.
How does the CJRS scheme work for part-time staff?
If your employees do not have a regular salary (for example they’re on a zero hours or flexible working contract), the government will pay 80% of either:
- earnings from the same month of a previous year
- average monthly earnings for the 2019/20 tax year
- average monthly earnings since they started work
They’ll pay whichever option results in the highest amount.
Do I have to keep employing my staff after the coronavirus crisis?
It's up to you whether you need and can afford to keep employing your staff after the scheme is over.
For further information, visit the Coronavirus Job Retention Scheme page.
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