What is the Coronavirus Job Retention Scheme?

The Coronavirus Job Retention Scheme (CJRS) is a government scheme designed to help employers retain their staff during the COVID-19 pandemic, even if they have had to temporarily close.

Employers are able to claim a grant from HMRC to cover most of the wages cost of their employees.  The employees remain on the payroll but are not able to work for the employer, whilst the employer is claiming the grant.

Coronavirus Job Retention Scheme For Your Business

The employer should furlough the employee whilst they claim the grant.

Which businesses are eligible for CJRS?

Any employer in the UK is eligible for the scheme, provided that it had a PAYE scheme in operation on 19 March 2020.

What costs does the grant cover?

Employers can claim 80% of the normal pay of furloughed employees up to a maximum of £2,500, plus the employer’s National Insurance contributions and minimum auto-enrolment employer pension contributions.

The grant does not cover benefits-in-kind or additional pension contributions, all money received must be paid to employees.

The employer needs to continue to pay furloughed employees on their normal payroll dates, even if they have not received the grant.  The pay must be taxed as normal.

From August the government expects employers to contribute towards the cost

The contributions are as follows:

• August – the CJRS will continue to pay 80% of wages (but now and in subsequent months, employers will have to pay employer’s national insurance and pension contributions)
• September – the CJRS will pay 70% of wages while employers will pay the remainder.
• October – the CJRS will pay 60% of wages while employers will pay the remainder.

Employees who were previously furloughed will be able to return to work on a flexible part-time basis, though employers will be required to pay the full cost of the time staff are working, including tax and NICs.

The maximum number of employees that can be included in the furlough claim will be no more than the maximum number of employees furloughed under the scheme at any one point to 30 June 2020.

In practical terms, employees must have been included in a furlough grant claim made by 30 June 2020 in order to be eligible to be furloughed under the new scheme- no new employees will be able to be furloughed.

Further guidance on the implementation of the changes to the scheme is expected to be released on 12 June.

This article from the Chartered Institute of Personnel and Development sets it out the process of how to furlough your staff very clearly:

https://www.cipd.co.uk/knowledge/fundamentals/emp-law/employees/furlough