This guidance has been updated following a HMRC guidance update on 12 May 2020 

In order to preserve jobs and protect the UK economy, the government has introduced the scheme which allows employers to claim a grant of 80% of an employee’s pay up to a limit of £2,500 per month, which if applicable, can be backdated to 1 March 2020 to cover those who have left or who have already been laid off, placed on unpaid leave or made redundant on their reinstatement. The scheme is available in its current form until 31 July 2020 and will then have, as yet undisclosed modifications until 31 October 2020 when it is expected to end. New

The scheme is up and running since 20 April with grants payable approximately 6 days after claim. 


The Job Retention Scheme grant is available to all UK organisations (except those that receive public sector funding for staff costs) with a PAYE scheme and UK bank account, on the basis that jobs are expected to be preserved when ‘normal business’ is resumed.  Employers can self-certify that they have furloughed employees and, as well as the wages element, there is the opportunity to reclaim the employer costs associated with employee pay; i.e. the minimum employer pension contribution requirement under auto-enrolment and employer NIC.

There is no over-riding limit on the amount of grant that each employer can claim but it can only be used to provide payments to employees engaged, and where an RTI submission has been made on their behalf, on or before 19 March 2020. There is no scope at this time to cover a reduction in work, hours or pay of an employee although this is likely to be a feature of arrangements after 31 July designed to support a return to work for those that have been furloughed.  A new employer is eligible to claim in respect of employees of a previous business transferred if either the TUPE or PAYE business succession rules apply. New

If you are a Director or Manager of a company you are not disqualified from the JRS. Directors or Managers can continue undertaking their statutory duties while furloughed, such as filling out company accounts etc.

Furloughed Workers 

To benefit from the Scheme grant, an employer needs to have designated affected employees as ‘furloughed workers’ for a period of at least three weeks.  Although the language is new, that is the same as laying employees off.  You can furlough workers if you have the right to do so under the contract (a lay off clause) or, if not, with the agreement of the affected employees.  Clearly this new scheme will make it much easier to obtain that agreement. Workers can be furloughed multiple times, with periods of working interspersed, but each separate instance must be for a minimum of three consecutive weeks.

The scheme aims to support all those employed through the PAYE system regardless of their employment contract, including apprentices, directors and those on agency or zero-hours contracts.  Fixed term contracts can be renewed in order to furlough workers. For those without fixed regular salaries, the 80% grant is applied to the higher of: (1) the earnings in the same month in the previous year; or (2) the average earnings from the 2019/20 tax year (or average of monthly earnings since they started work if employed for less than a year).  A pro-rata calculation of earnings applies if they were taken on in February.  For all workers, regular contractual payments of overtime, fees. commissions and bonuses can be included in the calculation of the grant.

Company directors, other office holders and other salaried members of LLPs can be furloughed.Decisions in relation to company directors should be formalised in writing in the company's records. During the period of the furlough, directors must limit their activities on behalf of the company to the minimum statutory duties.

All furloughed workers may undertake voluntary work or continue to be employed by other organisations.

There is nothing to stop you paying more than the grant to your employees if you are willing to bear the additional cost.  The payments made to employees are subject to tax, NIC and pension deductions through the payroll in the normal way.  Holiday pay ‘accrues’ as normal during the period in which a worker is furloughed, although holiday can be taken during furlough if an employer funds a top-up to the usual rate of payment.  A separate announcement by the Government has stated that it will amend regulations to allow annual leave (up to four weeks) to be carried over into the next two years. More information available here

Sample Letter for Furloughing Workers

If you want to use this scheme you must issue a letter to employees along the lines of the attached. Letters must be retained with business records for five years.

Employers cannot furlough those:

  • on unpaid leave prior to 1 March
  • on sick leave or self-isolating and paid SSP (although they can switch to furlough instead or be furloughed after that) 

Employers can claim through the scheme for earnings related contractual pay for those who qualify for maternity, adoption, paternity or shared parental pay.  Those who cannot work due to caring responsiblities can be furloughed.

Any training required during a period of furlough must be paid at the rate of at least National Minimum Wage and this may therefore require a top up of a grant-based furlough payment.

Salary sacrifice impacts the rate of pay applicable for calculation of the furlough payment and non cash benefits must be excluded.

There is no requirement to bring a furloughed employee back to work after the period of furlough and employees can still be made redundant during furlough or subsequently subject to the usual redundancy rules, protections and notice.  The grant will cease at the point of any redundancy.  More information on redundancy can be found at:

Claims Process

To claim, an employer needs information about their PAYE scheme, employees furloughed, claim period, amount of claim, bank account and contact details.  HMRC retains the right to retrospectively audit the claim.  A step by step guide to making a claim is here.

One claim can be submitted for each 3-week period and payments of the grant are made by BACS.

Agents can make the claim for you if they are authorised with HMRC to act on your behalf.  If we are not authorised with HMRC, we can still check all the details of your claim. We are ready to help you and as your entitlement to claim the grant and the accuracy of your calculations will be subject to audit by HMRC, our support is led by our Employment Taxes Consultancy team.

There may be a time lag between making these payments and reclaiming the money from the Government.  In the meantime, support in obtaining short and medium term funding can be found here. 

Full guidance on the Government scheme is available here

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