Coronavirus Job Retention Scheme

The Government has published further guidance of the scheme. We do not know whether further guidance will published or legislation enacted in the future. We have compiled a list of the main points for employers and will be updating our Q&A blog to reflect the new information as soon as possible.

What can employers claim under the scheme?

Employers can apply for a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included. 

An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

Is there a minimum period of time an employee can be furloughed?

Yes, an employee must be furloughed for a minimum of three weeks.

It is not yet clear whether an employee could be furloughed for three weeks, work a week and then be furloughed again or if furloughed employees can be rotated.

How should you calculate an employee’s earnings?

For full-time and part-time salaried employees, the employee’s actual salary before tax, as of 28th February, should be used to calculate the 80%. 

How should you calculate an employee's pay that varies?

If the employee has been employed (or engaged by an employment business) for 12 months prior to the claim, you can claim for the higher of either:

  • the same month’s earning from the previous year
  • average monthly earnings from the 2019-2020 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

Which employees can be furloughed?

Furloughed employees must have been on the company PAYE payroll on 28th February 2020, and can be on any type of contract, including:

  • full-time employees
  • part-time employees
  • employees on agency contracts
  • employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since 28th February 2020, if they are rehired by their employer.

Employees hired after 28th February 2020 cannot be furloughed or claimed for in accordance with this scheme.

Can employers furlough people who are away from work on other types of leave?

  • Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28th February.
  • Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.
  • Employees who are shielding in line with public health guidance can be placed on furlough.

What are employees on maternity, paternity and adoption leave entitled to?

  • Individuals who are on or plan to take maternity leave must take at least two weeks off work (four weeks if they work in a factory or workshop) immediately following the birth of their baby. 
  • Employees who qualify for Statutory Maternity Pay, will still be eligible for 90% of their average weekly earnings in the first six weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate.
  • If you offer enhanced (earnings related) contractual pay to women on maternity leave, this is included as wage costs that you can claim through the scheme.
  • Employees on maternity and adoption leave can end their leave early either by providing eight weeks’ notice or if the employer and employee agree to allow an earlier date before the eight weeks. The employee can be furloughed on their return to work.

Do employers still have to pay National Living Wage/National Minimum Wage if the employee is furloughed?

  • Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.
  • Therefore, furloughed workers who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
  • However, if workers are required to, for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.


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Author: Sarah Dillon

Director, ESP Law Ltd

Sarah is a litigation expert with over 15 years’ experience. Sarah embarked on her career in employment law as an advocate for an employment law consultancy and continued as an advocate alongside being an employment law advisor for a plethora of reputable UK law firms including: DAC Beachcroft, Ward Hadaway and Richmonds Solicitors, where she was head of the employment department.