Job Retention Scheme (JRS) FAQs
What is the Job Retention Scheme (JRS) ?
The JRS is a temporary scheme open for at least 8 months from 1 March 2020 which is designed to support employers severely affected by COVID 19.
Which employers are eligible?
Any UK employer, irrespective of size or sector. An employer must have a UK bank account and have started a PAYE payroll scheme on, or before, 28 March 2020.
Where a company is in administration, the administrator will be able to access the JRS.
Where an employer receives public funding for staff costs, or to provide services necessary to the response to COVID-19, the employer is not expected to apply for funding under the JRS.
What does it mean to furlough workers under the JRS?
Furloughed status is not a concept that is recognised in existing employment legislation. Current Government Guidance states that an employee is “on furlough” if they remain on the payroll but are not carrying out work for the employer because of COVID 19.
Are all employees covered under the JRS?
Employees must have been on an employer’s PAYE payroll and notified to HMRC on an RTI submission on 19 March 2020 (this was extended on 15 April from 28 February 2020.) The Scheme covers:
- Full time employees
- Part time employees
- Employees on agency contracts
- Employees on flexible or zero hour contracts
- Employees made redundant since 28 February and prior to 19 March and then re-hired
- Employees on unpaid leave since 28 February
- Employees who are shielding in line with Public Health Guidance or ill (but short term illness should not be claimed under the Scheme)
- Employees who have caring responsibilities (including childcare)
Employees hired after 19 March are not eligible to be furloughed in accordance with the JRS other than in certain limited exceptions where there has been a TUPE transfer or a payroll consolidation after 28 February 2020.
What about employees on fixed term contracts?
Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended before their natural conclusion during the furlough period without breaking the terms of the scheme. There is no minimum period which must be left to run on a fixed term contract to enable it to be renewed or extended. If the fixed term contract ended after 28 February 2020 then the RTI submission must have been notified to HMRC on or before 28 February 2020 to be covered. If the fixed term contract ended after 19 March 2020 then the RTI submission must have been notified to HMRC on or before 19 March 2020 to be covered. Employees that started and ended the same contract between 28 February 2020 and 19 March 2020 will not qualify for the Scheme regardless of whether or not it was a fixed term contract.
How do you furlough an employee?
HMRC guidance states that to be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the Scheme. There needs to be a written record, but the employee does not have to provide a written response. New guidance also states that collective agreement reached between the employer and the trade union is also acceptable for the purposes of a claim. A record of this communication must be kept for five years.
In the absence of a contractual right to lay off, it would be advisable to obtain consent from employees. The easiest way to do this is by email. To impose furlough status without consent is likely a breach of contract, particularly if the employee’s wage is being reduced as a result.
Can employees insist on being furloughed?
No, it is a decision for the employer. However, if an employer were to refuse to put an eligible employee on furlough and instead made them redundant arguably this would be an unfair dismissal as there was a clear alternative.
What can an employer claim under the JRS?
Eligible employers can apply for a grant from HMRC to cover the wage costs of furloughed employees as follows:
- the lower of 80% of the employee’s regular gross pay per month or £2,500 per month;
- Employer National Insurance Contributions (NICs); and
- Minimum automatic enrollment employer pension contributions
Discretionary fees, tips, commission and bonuses are excluded as are additional employer pension contributions above the minimum automatic enrolment amount. However, guaranteed contractual commission and fees can be covered. Enhanced maternity, paternity, adoption and shared parental pay can be claimed up to the limits noted above.
What about employees getting maternity allowance while on maternity leave?
If your employee is getting Maternity Allowance while they’re on maternity leave, they should not get furlough pay at the same time. However, your employee can end her maternity leave early to be put on furlough. If your employee agrees to be put on furlough and end their maternity leave early, they will need to give you at least 8 weeks’ notice and they will not be eligible for furlough pay until the end of the 8 weeks.
What about employees whose pay varies?
Employers can claim the higher of:
• the same month’s earnings from the previous year; or
• average monthly earnings from the 2019-20 tax year.
For employees who have been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, you can claim based on a pro-rata calculation of their earnings so far.
Can I start by paying full pay to furloughed workers and then reduce this to 80% later?
This is possible and employers are free to agree this with employees.
Is the 80% wage grant subject to income tax and national insurance?
Yes, in the same way as normal pay.
When can we claim from?
Claims can be backdated to 1 March 2020 where employees have already been furloughed. However, the grant is only available from when an employee has finished work and started furlough. The Scheme was not in existence on 1 March but this means that employees who were laid-off or sent home and have ceased all work could claim. However, if employees have been working from home then the employer can only claim furlough status from when they stop working.
What if 80% of the employee’s wage would be less than minimum wage?
This is fine as employees are not working anyway. However, employees must receive at least minimum wage for time spent training and, if necessary, this will be at the employer’s cost.
Can employees do any work for an employer when furloughed?
No. When on furlough an employee cannot undertake work for or on behalf of the employer. This includes providing services or generating revenue. Employees on furlough are permitted to undertake voluntary work and/or training provided that employees undertaking online training, for example, must be paid National Minimum Wage or National Living Wage for the time spent training. Voluntary work does not mean that the employee can volunteer their services to continue working for the employer but rather is in relation to voluntary work unconnected to work which is providing services to the employer. The JRS does not cover employees who are working reduced hours or placed on short time working. It is anticipated that changes will be made to the Scheme from August which will provide employers with increased flexibility to bring furloughed employees back part time. However, this is not the case yet. Further details are expected at the end of May.
Can furloughed employees continue to work as union representatives while furloughed?
Yes, recent guidance has confirmed that whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However, in doing this, they must not provide services to or generate revenue for, or on behalf of the organisation or a linked or associated organisation.
If an employer chooses to top up salary by 20% can they request a furloughed employee to do some work for them?
No. Under the JRS employees are not permitted to undertake work even if the employer tops up salary unless they are simply undertaking training or volunteer work as outlined above.
How long can employees be furloughed for?
The JRS is scheduled to run from 1 March 2020 until end October 2020 (as announced on 12 May.) It will continue at 80% until end July with more details on how the scheme will operate after that coming at the end of May.
An employee could be placed on furlough leave for the whole of that period (claims can be backdated if applicable).
The minimum period of furlough leave is 3 weeks. An employer is permitted to submit one claim every 3 weeks. This means that an employer could furlough employees on a rotating 3-weekly basis. Each period of furlough can be extended by any amount of time whilst the employee is on furlough. However, the scheme end date is the last day you can claim for through this scheme.
Can employees who are shielding be furloughed?
Yes, the Government Guidance confirms that employees who are shielding can be furloughed.
Can an employee object to being furloughed?
In the absence of a contractual lay off clause, yes. This means that an employer should consult with employees and seek their consent. In the absence of consent, it may be that there will be a redundancy situation and the normal redundancy rules will apply.
Can an employer re-hire an employee that it has made redundant and then furlough them?
Yes, if the employee was on PAYE payroll on 28 February and prior to 19 March 2020 and they were made redundant or otherwise stopped working then they can be re-hired and furloughed.
If an employee works for two employers can they be furloughed from both?
Yes, an employee could be furloughed by both employers.
Can a furloughed employee obtain another job and while on furlough?
Subject to any restrictions in the employment contract (which could be waived at the employer’s consent), yes the employee can get another job and receive that wage as well as the furlough wage.
Do furloughed employees retain all their normal employment rights?
Furloughed employees remain employed and will retain all of their normal employment rights, for example the right to SSP and the right to annual leave.
What information must an employer submit to HMRC?
An employer will need to submit the following information to HMRC’s online portal, once it is operational:
- your ePAYE reference number;
- the number of employees being furloughed;
- national insurance numbers for the furloughed employees (if you have one or more without a National Insurance number you should contact HMRC);
- names of the furloughed employees;
- payroll/employee numbers for the furloughed employees (optional);
- your Self-Assessment Unique Taxpayer Reference or Corporation Taxpayer Reference or Company Registration Number;
- the claim period (start and end date);
- amount claimed (per the minimum length of furloughing of 3 weeks);
- your UK bank account number and sort code;
- the billing address on your bank account;
- your contact name; and
- your phone number
You will also need to provide either:
- your name;
- your Corporation Tax unique taxpayer reference;
- your Self-Assessment unique taxpayer reference;
- your company registration number.
If the employer is claiming for more than 100 furloughed employees, then it is necessary to upload a file containing each employee’s:
- full name
- National Insurance number
- payroll number (optional)
- furlough start date
- furlough end date (if known)
- full amount claimed
The format of the file you upload must be either:
Employers will need to calculate the amount that they are claiming and should note that HMRC retains the right to retrospectively audit all aspects of the claim.
What happens after the claim is submitted?
HMRC will then check that the claim is correct and pay the claim amount by Bacs into your bank account within 6 working days.
Employers must keep all records for six years including:
- the amount claimed and claim period for each employee
- the claim reference number
- the calculations in case HMRC need more information about the claim
What if I can’t afford to pay employees without receipt of the money from HMRC?
It is still up to the employer to pay the wages to the employee directly. If this is not done, then this will be a breach of contract regardless of whether or not money has been received from HMRC. However, it may be possible to agree with employees that payment will be late. Employees would be within their rights to refuse to consent to this and to make a claim to the Tribunal for unlawful deduction from wages. However, it would take some time for this claim to be processed and, in the circumstances, the employees may be content to wait.
Is it possible to contact HMRC about my claim?
Yes, details are available here https://www.gov.uk/government/organisations/hm-revenue-customs/contact/get-help-with-the-coronavirus-job-retention-scheme but a high number of calls are anticipated and employers are encouraged to only contact HMRC if it is essential.
I am a director of a Limited Company. My salary is made up of dividends and a minimal salary via PAYE. Can I access the Job Retention Scheme for 80% of my salary paid via PAYE and the Self Employment Scheme for 80% of my salary taken by dividends?
In relation to your salary which goes through the PAYE scheme – yes, you can access the Job Retention Scheme for 80% support up to a maximum of £2,500 per month if you were on the scheme as of 19 March 2020. However, as with normal furloughed employees you cannot work for the company. However, there are limited exceptions in relation to doing work which is necessary to comply with statutory duties (e.g. filing accounts etc).
In relation to the balance of your income which is extracted via dividends, unfortunately the Self-Employment Income Support Scheme (SEISS) will only support self-employed individuals (including members of partnerships) however is not extended to directors of limited companies.
Those who do not qualify for the scheme will be able to explore other support including an increase in the Universal Credit allowance, income tax deferrals, £1 billion more support for renters and access to three-month mortgage holidays.
I am a director of a limited company and have an annual pay period. Can I be furloughed?
Yes, those paid annually are eligible to claim, as long as they meet the relevant conditions. This includes being notified to HMRC on an RTI submission on or before 19 March 2020, which relates to a payment of earnings in the 19/20 tax year. The requirement for there to be payment of earnings in the 19/20 tax year applies for any employee being claimed for under the scheme, irrespective of how frequently they are paid (e.g. weekly, fortnightly or monthly). This will be relevant for those on an annual pay period if the last payment notified to RTI was before 5 April 2019 and no further payments were notified until after 19 March 2020. An employer can make their claim in anticipation of an imminent payroll run, at the point they run their payroll or after they have run their payroll.
I cannot be certain if I will be in a position to keep the current levels of staff on my payroll after the Job Retention Scheme closes. Will I have to repay the grant support?
There is no obligation to bring an employee back to work after the period of furlough. If the employer chooses to make individuals redundant the usual rules for redundancy will apply.
Note employees will maintain rights against unfair dismissal and to redundancy payments during the period of furlough.
A number of my employees are part of a salary sacrifice scheme. When calculating the grant due under the Job Retention Scheme do I need to take these deductions into account?
The reference salary should not include the cost of non-monetary benefits provided to employees,including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
I have more than one company. Can this company hire my furloughed staff giving them two wages?
While it is possible for furloughed employees to get a new job the Scheme states that furloughed employees cannot work for a linked organization so this would not be permissible. Specialist advice should be sought before engaging in any arrangement such as this to ensure that you are acting in accordance with the Scheme.
Can I make more than one claim for a time period or amend a claim that I have already made?
Currently this is not possible so employers should take care to get it right first time.
How do I un-furlough staff?
The conditions of furlough, including how long it will last, should be notified to the employee at the time when they are furloughed. Employers should remember that an employee must be furloughed for a minimum period of three weeks before they can be brought back into the workforce. Complications may arise where the employer I seeking to un-furlough some employees, but not others. As with the decision to furlough employees in the first place, the decision to un-furlough them should be on justifiable, non-discriminatory, business grounds. Justifiable considerations may include skills/experience of employees, time spent on furlough (first furloughed first un-furloughed), the amount of work available and the preferences of the employees.
Communication with staff is key and returners will have to be reassured that their return is in accordance with public health guidance. Where possible, working from home should be encouraged.
What is the situation following the Chancellor’s recent decision to extend the furlough scheme?
On 12 May 2020 the Chancellor announced that the Scheme will be extended for a further four months until the end of October. Up until the end of July there will be no changes to the Scheme. From August to October the Scheme will continue for all sectors and regions of the UK but there will be increased flexibility for employers to bring furloughed employees back part-time. Employees will continue to receive the same level of support that they do now but employers will be asked to start sharing the costs of paying people’s salaries. It is not clear if this only applied to furloughed employees that will be working part-time or if it is across the board. The Chancellor has confirmed that further details will be published at the end of May.