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What is the Coronavirus Job Retention Scheme and what will it cover?

The Coronavirus Job Retention Scheme will be a government grant designed to reimburse employers for 80% of furloughed workers wage costs, to a cap of £2,500 per month.
Details of the scheme
  • The scheme will be backdated to March 1st
  • It will be open initially for at least three months but extended ‘for longer if necessary’

Who is eligible for the scheme?

All UK businesses are eligible, the Coronavirus Job Retention Scheme (CRJS) will be administered by HMRC.

Employers will need to:

  • Designate affected employees as ‘furloughed workers’ (see further below)
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
  • As noted above the grant is a reimbursement to the employer therefore the employer will make the wage/ salary payment to the furloughed worker and then be reimbursed by HMRC.

When will the scheme be live?

No set date but the following are indications it will not be immediate:

  • HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
  • HMRC are working night and day to get the unprecedented Coronavirus Job Retention Scheme up and running and we expect the first grants to be paid within weeks.
  • If your business needs short term cash flow support, you may be eligible for the Coronavirus Business Interruption Loan Scheme

What is a furloughed worker?

Furloughed workers are “workforce who remain on payroll but are temporarily not working during the coronavirus outbreak” as per GOV.UK news story. We found useful Q&A information on this, see info here.

It is noted that employers will need to notify employees of this change in employment status to be furloughed, but that changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

A furloughed worker must meet the following conditions:

  • They are enrolled for PAYE
  • They are told that they will be kept on the employer’s payroll
  • But they will not be undertaking any work for the employer.

Key questions we still need guidance on from government are in consultation. We will be sending further updates as and when we have more. Further details since this date, announced on the 27th March are here.