The scheme announced on Friday 20 March provides employers with the support to continue to pay part of their employees’ wages that would have otherwise been laid off. The scheme is open to any UK organisation, including businesses, charities, recruitment agencies (for agency workers paid through PAYE) and public authorities.

You must have set up and used A PAYE payroll scheme before 28 February 2020 and have a UK bank account. Additionally, where companies are in administration the appointed administrator will be able to get access to the scheme.

It is expected that not many public sector organisations will need to use the scheme as they are continuing to provide services in response to the coronavirus outbreak. However, in a small number of cases where organisations are not primarily funded by the government, and staff are not able to assist with the coronavirus crisis, then it may be appropriate to furlough some of these employees.

It is intended for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but it will be extended if necessary. It will cover the cost of wages backdated until 1 March 2020 and will be operational by the end of April.

What employees can I claim for?

Employees must have been on your PAYE payroll on 28 February 2020, including:

  • Full-time employees
  • Part-time employees
  • Employees on agency contracts
  • Employees on flexible or zero-hour contracts
  • Employees who were made redundant since 28 February 2020, if they are rehired by you.

Employees already on unpaid leave cannot be furloughed, unless the unpaid leave started after 28 February. While an employee is on sick leave or self-isolating they should continue to receive statutory sick pay (or contractual sick pay) but they can be furloughed after this. Employees who are “shielding” can also be furloughed.

For employees who have more than one job, each job is separate and separate limits will apply to each job individually. It is possible to be furloughed from one employment and continue to work in another.

Whilst on furlough an employee can undertake volunteer work and training. However an employee must receive at least national minimum wage for the hours spent on training, even if this is more than the 80% subsidy.

If you offer enhanced contractual maternity pay to women on maternity leave this can be included as a wage cost and you can claim through the scheme. This is also available for enhanced payments offered for adoption, paternity or shared parental pay.

To get access to the scheme you need to:

  • Decide who to furlough, if not all members of staff are to be furloughed you should refer to equality and discrimination laws to help you decide who to offer furlough to as this will continue to apply in the usual way.
  • Discuss with the relevant employees that they are to be furloughed. This remains subject to the contract of employment that you have with them. It may be sensible to have a written agreement from them regarding this change in their status and reduction in pay. Legal/employment law advice may need to be sought. You should write to each employee advising that they have been furloughed and keep a record of this.
  • Designate affected employees as ‘furloughed workers’. This is taken to mean that they are employees who would have been laid off due to the impact of Coronavirus.
  • Submit information on furloughed workers and their earnings to HMRC through a new online portal, of which we are expecting details on how to access soon. The information required will be:
    • Your ePAYE reference number
    • The number of employees being furloughed
    • The claim period (start and end date)
    • Amount claimed (per the minimum length of furloughing of 3 weeks)
    • Your contact name
    • Your phone number
  • Calculate the amount to be claimed, but HMRC retain the right to retrospectively audit all aspects of a claim.

How much can be claimed?

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on the subsidised wage. The minimum mandatory employer pension contribution is 3%. Wage costs do not include fees, commission and bonuses.

Full-time and part time employee claims should be calculated with reference to their actual salary before tax as at 28 February. For employees whose pay varies you can claim the higher of:

  • The same month’s earnings for the previous year
  • Average monthly earnings for the current tax year

For employees who have been employed for less than a year, just claim an average of their monthly earnings since they started. For those employees who only started in February, their claim should be based on a pro-rata of their earnings in that month.

Employee’s earning the National Living wage or the National Minimum wage are still only entitled to 80% of their previous salary as they will not actually be working any hours.

Claims can only be submitted once every 3 weeks and this is the minimum length an employee can be furloughed for.

HMRC are working urgently to set up a system for reimbursement as currently existing systems are not set up to enable payments to employers. Employers can choose to top up the payment to the employees to their actual salary but they do not need to.

Employees should not undertake any work for employers while they are furloughed. Employees who are now on reduced hours, or with reduced pay will not be eligible. For employees whose wages are reduced due to this scheme they may be able to receive additional support through universal credit and other benefits.

Employees retain the same rights as they had previously including statutory sick pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments. It may be, once the scheme ends, necessary to consider termination of some employees if their role continues to be redundant.

Employees are still subject to tax and national insurance on the payments they receive from their employer while furloughed as usual.

The payments received by businesses are taxable for income tax and corporation tax in accordance with normal principles.

Further guidance is available at and at