What is the Coronavirus Job Retention Scheme?

On 20 March 2020, the Chancellor announced a package of support for businesses affected by the coronavirus (COVID-19) crisis, including grants available under the Coronavirus Job Retention Scheme.

The scheme is intended to support employers to continue paying employees who would otherwise be made redundant or put on an unpaid period of lay-off. It is open to all employers with a PAYE scheme, including public-sector employers and charities.

Under the scheme, if a worker is designated as a "furloughed worker", a grant will be available from HM Revenue and Customs (HMRC) to reimburse the employer for 80% of the wage costs relating to the worker, up to a maximum of £2,500 per month. Payments can be backdated to 1 March 2020. The worker should not perform any work for the employer while on "furlough leave".

Unless the employer has a contractual right to lay off workers, it will need to obtain the worker's agreement to be placed on furlough leave. This is unlikely to present an issue in most situations, if the worker is aware that the alternative is redundancy or a period without pay.

Employers do not have to top up the worker's wages so they are paid in full, but can choose to do so.

The Chancellor stated on 20 March 2020 that the system for administering reimbursements is expected to be in operation "within weeks". The scheme will initially be open for three months, but may be extended.

HMRC has published further details of how the scheme will operate in its guidance Claim for your employee's wages through the Coronavirus Job Retention Scheme.