Coronavirus Job Retention Scheme

On Friday 20 March 2020, the Chancellor announced a new “Coronavirus Job Retention Scheme” (the Scheme) to help pay people’s wages. Employers will be able to contact HMRC for a grant to cover most of the wages of their workforce who remain on payroll but are temporarily not working during the coronavirus outbreak.

Support for businesses through the Coronavirus Job Retention Scheme

Under the Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis.  This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’.  HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to 1 March and is initially open for 3 months, but will be extended if necessary.

HMRC are working urgently to set up a portal for reimbursement, and aiming to get it done by the end of April.  If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.


All UK businesses are eligible provided that they created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

The employees must have been on PAYE payroll on 28 February 2020 and can be on any type of contract.  The Scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

HMRC guidance on the Scheme

On Thursday 26 March, HMRC published guidance for employers on the Scheme:

The guidance provides much needed clarity on: who can claim, employees you can claim for; how to work out what you can claim, what you will need to do to make a claim, and how often.

How to implement the scheme

It should be noted changing the status of employees to that of a furloughed worker remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

You will need to:

  • Where no work is available for one or more members of staff, and where there is no contractual right to lay staff off, employers should immediately consult (either individually or collectively following usual rules on consultation) with a view to affected staff agreeing to become “furloughed”.
  • If agreement is not reached, employers should take immediate legal advice.
  • If agreement is reached, employers should write to each worker confirming that they are considered to be “furloughed”.  We recommend the letter/agreement confirms at least the following:
    • the date the employee was placed on furlough
    • when it will be reviewed (HMRC guidance states minimum of 3 weeks)
    • each member of staff will receive 80% of their salary up to £2,500 per month less deductions for Income Tax and National Insurance Contributions (and if applicable employee pension contributions)
    • the gross amount of pay per month for the individual employee
    • caveat the payment is being made under the Coronavirus Job Retention Scheme and is subject to change depending upon the rules of that Scheme, and in particular upon the interpretation of rules under that Scheme
    • details of how to keep in contact during furlough
  • Employers should submit information to HMRC about the staff that have been furloughed and their earnings through the new online portal when it is available.
  • Employers should then start to pay staff in accordance with the arrangements.

For advice on the employment law aspects of implementing the Scheme, please contact our employment law specialist, Lucy Churchill, on 01603 677018 or