Coronavirus Job Retention Scheme (HR guide)


The Coronavirus Job Retention Scheme (CJRS) runs until 30 September 2021.

Extended Job Retention Scheme

The Chancellor has effectively reverted the scheme back to the August provisions, namely, that the Government will cover 80% of furloughed employees’ wages for businesses affected by the COVID-19 restrictions. Employers will be required to pay national insurance and pension contributions.

Government contribution up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked.

This is an enhancement on the tapered system that had been in place over:

  • September when employers had to contribute 10% of wages and
  • October when they had to pay 20%

The Chancellor did note that the level of government contribution would be reviewed in January based on the degree of economic recovery.

The CJRS will be available to employers in Scotland, Wales and Northern Ireland.

What is flexible furlough?

From 1 July, employers have been able to bring back to work any employees who have previously been furloughed for any amount of time and any shift pattern.

Under the flexible furlough provisions, the employer will still be able to claim under the CJRS for such employees’ normal hours not worked but will have to pay in full for any hours worked, and will be responsible for tax and NI contributions on those payments.

To be eligible for the grant, employers will have to agree with their employees any new flexible furloughing arrangement and confirm that agreement in writing.

Key dates for the Coronavirus Job Retention Scheme & Furloughed Workers


Change in CRJS 

10th June 2020 Last date to place employees on furlough.
From 1 July 2020 ‘Flexible furlough’ is being introduced, meaning employees will be able to work part-time and be furloughed part-time. Businesses will decide how that will work in terms of the time split.
From 1 August 2020 Employers will have to pay employee’s national insurance contributions and pension contributions, and can no longer reclaim them through the CJRS.
From 1 September 2020 The Government will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what the employer agreed with the employee)
From 1 October 2020 The Government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).
31 October 2020 Furlough scheme (CJRS) closes.
1 November 2020 Coronavirus Job Retention Scheme extended. Government pays 80% of furloughed employees’ wages. Employers pay NI and pensions contributions.
31 January 2020 Government to review CJRS provisions for claims in February & March.
31 March 2021 Extented Coronavirus Job Retention Scheme scheduled to close.

What if an employee refuses to be unfurloughed?

Many employers are facing an issue with employees being reluctant, or even refusing, to return to work after furlough.

Ordinarily, refusing to come into work would be deemed lawful grounds for disciplinary action, and potentially a dismissal. But the coronavirus pandemic has created exceptional circumstances, and employers are advised it proceed with caution when dealing with such issues.

Each case should depend on the specific facts and circumstances. Taking a one-size-fits-all approach is likely to expose you to potential complaints and even tribunal claims.

If an employee expresses reservations about their return to work, employers should take action to listen to those concerns. Some may be worried for their own health or that of people they are caring for who may be vulnerable or shielding. Discuss these worries and options to accommodate and address their concerns or practical needs, such as continued home working or using annual leave.

Disciplinary action should be considered as a last resort and with professional advice to avoid future legal risk.

The remainder of this article was first published following the launch of the CJRS in April 2020. 

The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government in the wake of the COVID-19 outbreak.

Designed to help employers stave off redundancies, the CJRS is currently being set up to fund wages of those workers who would otherwise be unemployed as a direct consequence of the crisis.

What is the Coronavirus Job Retention Scheme?

Under the scheme, HMRC will pay cash grants of 80% of furloughed workers’ wages up to a limit of £2,500 per month per worker.

Furloughing is when an employee is not allowed to work, but they remain employed and on their employer’s payroll.

The scheme will cover the cost of wages backdated to 1 March 2020. There is no cap on the amount of funds being made available to employers under the scheme.

The scheme is initially being run for three months but may be extended on review.

HMRC has advised the online system is expected to open on 20 April, with the first payments to be made on 30 April 2020.

Under the scheme, employers can reclaim 80% of the amount of salary for the employee. Anything which is not “regular salary or wages” is to be disregarded, eg performance-related bonus or discretionary payments (including tips), any conditional payments (eg where a threshold must be met) and any non-financial benefits compulsory commission from HMRC, as well as basic salary.

The furlough scheme has been extended from 31 May 2020 to the end of June.

Eligibility requirements for the Coronavirus Job Retention Scheme

Business eligibility for the scheme

The CJRS is available to UK employers of all sizes and sectors that were signed up to the PAYE scheme on 28 February 2020.

Employers are to self-certify that it has furloughed employees by claiming via a new HMRC online system.

Worker eligibility for the scheme

Employees who were employed on 19 March 2020 are eligible for furlough, provided the employer had submitted real time information payroll data by that date. The Scheme is not limited to those employees who would otherwise be made redundant, and applies to any who are furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease”.

There must be a written agreement that the worker has agreed to be furloughed. Employers must ensure they have confirmation in writing of the employee’s consent. The worker must remain employed and on the business’ payroll.

The worker cannot carry out any work for the employer that has furloughed them during the furlough period.

How to use the scheme

The first stage for employers is to identify which workers are to be furloughed.

Selecting which workers to furlough will be a commercial decision but employers should follow a fair, well-documented process in making their selection. Priority candidates are likely to be those workers who cannot work from home and who currently have no work.

Employers may then need to look at alternative selection methods such as asking for volunteers or pooling, and in doing so, document the reasoning for the selection to defend against any potential complaints or allegations of discrimination.

Those who have been selected should then be notified and a written agreement signed confirming the employee’s consent to being furloughed. The employer should then retain a record of the written notification for five years.

The Government’s guidance states that usual employment law provisions continue to apply, so technically, employees should consent to being furloughed, unless they have a ‘lay-off’ clause in their employment contract of employment. Employers should check their employment contracts for lay off terms and general provisions allowing the employer to vary contractual terms, or otherwise.

Imposing furlough without making up the 20% shortfall in wage carries more risk but employers may could calculate that this offers more of a cost saving over continued employment.

In all cases, it is good practice to explain the reasons for the decision during a discussion with the individual, including explaining that the alternative is likely to be laid off or redundancy.

The worker will then need to sign an agreement confirming status as furloughed.

Employers are to self-certify the furlough, submitting details via a new HMRC online system for the grants to be paid to the employer.

Coronavirus Job Retention Scheme Employer Questions

Will the payments be taxable?

Yes, workers will continue to pay Income Tax and National Insurance on all payments received through the new scheme.

Will the grants include the cost of employer NI and auto enrol contributions?

The scheme can be used to apply for grants for employer contributions for NI and pensions on the lower of 80% of regular salary or compulsory commission, or £2,500 per month.

Will zero hour contract workers qualify?

All workers paid through PAYE will be eligible, including those who work irregular hours or have zero hour contracts.

To calculate how much such workers qualify for, the 80% grant is applied to either the earnings in the same pay period in the previous year (eg March 2019, April 2019) or to the average earnings in the whole previous 12 months (or fewer if they have worked for less time than
this, including a part month calculation if they were taken in February) – whichever is the higher figure.

Can you furlough someone who has continued to work?

No, the scheme is only available where a worker has already been made redundant due to the crisis or has not been working for their employer.

What about businesses who will struggle to wait until the end of April for the grant?

Employers could consider the following options to see them through to the first payment:

  • Asking or requiring employees to use annual leave
  • Requesting employees to take unpaid leave
  • Requesting employees to reduce their hours
  • Using lay-off or short-time working clauses
  • Allowing employees to take extended, unpaid time off for dependants
  • Considering periods of unpaid Parental Leave
  • Targeted redundancies of employees in probation or with under two years’ service

If looking to reduce workers’ pay, employers should remember the general position that basic pay is fixed under employment contracts and can only be reduced with employee agreement.

Given the extreme nature of the crisis, employers may be considering imposing pay cuts. There are a number of employment law risks to be considered here which can have a longer term implications.

Reducing pay could amount to constructive dismissal, and would be a breach of contract and employees would have the right to bring a claim for the difference in pay.

To mitigate the risks with this course of action, employers are advised to consult with employees and be open about the challenges facing the business and why this measure is being discussed. Also set a time limit and review period to show commitment to a return to normal pay as soon as possible.

You may also consider imposing a contractual variation to reduce pay by dismissing employees and offering them re-employment on lower pay, but this will require careful consideration and handling to avert potential claims and ensure compliance with any consultation obligations that would apply.

Does the employer have to pay the additional 20%?

Employers do not have to meet any shortfall between the 80% grant and the full amount of wage, although this may require some negotiation with the employee in respect of contractual entitlements.

Can we furlough employees that have already been made redundant?

Yes, you would need to re-hire the employees made redundant due to the Coronavirus outbreak and then designate them as furloughed. The scheme will backdate grants to 1 March.

Can furloughed workers be made redundant or dismissed?

Employers can still make workers either redundant or dismiss them while on furlough, or immediately after. The government’s guidance does not specify that employers have to bring furloughed workers back to work after the end of the furlough period.

Payments under the scheme will end if a furloughed worker is made redundant.

However, in both cases, normal redundancy rules and protections will apply. This means following a fair process when selecting and consulting affected employees – which necessarily takes time. For example, where there are potentially more than 20 redundancies, collective consultation will be required and notice must be given to the Department for Business, Energy and Industrial Strategy. Doing so prior to furlough should allow any necessary redundancies to be implemented more quickly post- furlough.

Redundancy also means paying the required notice period, statutory entitlement, annual leave accrual and any enhanced entitlement that may be due. Employers will need to assess the cost benefit of redundancies as a permanent end to staff costs against the short term outlays to meet the legal requirements.

Can workers be furloughed due to caring responsibilities?

Yes, under further guidance issued at the start of April, workers unable to do their job due to caring responsibilities because of coronavirus may be furloughed to allow them to care for their dependants.

This also means parents whose children cannot attend school may be furloughed under the Job Retention Scheme rather than having to take annual or unpaid leave to stay at home and look after them.

Can TUPE’d employees be furloughed?

Advice from HM Treasury states employees who are TUPE’d to a new employer after 28 February will be eligible for furlough.

Is there a minimum period of furlough?

Workers have to be furloughed for at least three weeks to be eligible for the scheme before they can be re-employed.

Employees can be furloughed multiple times, e.g. they can be furloughed, brought back to work, then re-furloughed. Each period of furlough must be at least three weeks.

Can workers do any work during the furlough period?

No, furloughed workers cannot undertake any form of paid work or duties for the employer who has furloughed them. They may, however, carry out activities to further their own development such as home learning or training, or volunteer.

Can workers start a new job while on furlough?

In an expansion to the job retention scheme, the Government has confirmed that furloughed workers can take on other work while laid off. The intention is to allow for labour shortages in some sectors to be ‘plugged’ temporarily by those on furlough.

The guidance notes that this has to be permitted under the old employment contract, or the old employer is to waive any provision preventing the employee from taking on additional employment.

What happens to a probation period during furlough?

It is advisable to pause probation periods during any furlough period by making specific reference within the individual’s furlough agreement.

Do employees still accrue annual leave while on furlough? Can they take holiday while furloughed?

Yes, the individual remains employed and as such they continue to build up their holiday entitlement in the usual way.

Advice from HMRC customer support stated it is possible to take annual leave when on furlough. Further, this must be paid at full pay.

According to the Government’s guidance, furloughed employees are entitled to ‘the same rights as they’ had ‘previously’. As a result, statutory leave should continue to accrue to furloughed employees and on the basis that their right to the holiday has already accrued, they should be paid their full salary for this, rather than 80%. (Whether the Government will subsidise this amount up to 80% has not yet been clarified.) This may be a useful incentive if employers wish employees to take some holiday during lockdown.

Can an employer lay off workers without pay? 

Laying off means sending employees home without work and without pay. This is usually only permitted where there is express provision within the employee’s contract.

Can company directors be furloughed?

Yes, company directors can be furloughed. They cannot perform any work for the company except continuing to perform their statutory duties.

Coronavirus Job Retention Scheme FAQs

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Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.


Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.

Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.

Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.