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Posted 31.3.20

COVID 19 Job Retention Scheme guidance

The Coronavirus Job Retention Scheme: furlough guidance

(Courtesy of the ICAEW -abridged and updated by Roblins)

25 March 2020: the following is our understanding of this policy and how this will work based on the information published so far. It should not be relied on for advice at this stage but is intended to give an indication of how the scheme will work.

Key policy objectives of the scheme

Overall objective is to keep people at home while enabling employers to retain staff who will be needed when they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core who have the necessary knowledge.

Rules as outlined in official statements released at 23 March 2020

Furloughed members of staff must not work for the employer during the period of furlough.

Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way.

It is available to employees on the payroll at 29 February 2020.

All UK businesses are eligible, 'any employer on the country, small or large, charitable or non-profit' to use the Chancellor's words.

The scheme pays a grant (not a loan) to the employer.

The grant will be paid to the employer through a new online system which is being built for this purpose.

The employer will pay the employee through payroll, using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be renegotiated but that is a matter for employment law. So RTI system reporting of payroll will continue as normal.

Scheme will be administered by HMRC:  Relevant employees must be designated as furloughed employees.  Employers will submit information to HMRC through a new online portal. As this will take time to build, businesses should look to the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime. The narrative used in the information released so far says if your employer cannot cover staff costs due to COVID-19 they may be able to access support. This is is a conditional phrase which may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description.

Maximum grant will be calculated per employee and is the lower of:  80% of ˜wages". The notes published initially, use the phrase wage for all employment costs, up to a cap of £2,500 per month. It is has subsequently been clarified  employers' NIC and pension contributions. due on top of the £2,500 will also be funded. Wages will be determined by reference to a defined period (yet to be announced).  It is a matter for employment law whether the employer is required to pay this top up. Discussions with employees may have agreed that the employee has agreed to a different arrangement during their furlough.


Coronavirus Job Retention Scheme: ICAEW Tax Faculty further details 



The following paragraphs describe our understanding of the scheme and are our proposed guidance for member.

Which businesses are eligible?

1. Eligible businesses include charities and not-for-profit organisations and will include single director companies, although the same rules will apply as to other businesses. The grant applies to all UK based businesses.

Owner/managed companies

2. Many owner managed company director/shareholders pay small salaries and the balance of income as dividends. The scheme does not extend to dividends. Only the salary is relevant to the scheme.

How is payment going to work in practice?

3. We understand that the employer will pay the contractually agreed amounts as required by the employment contract in the usual way. This will involve paying the employee, and HMRC the PAYE and both primary and secondary National Insurance Contributions. The grant will be paid directly to the employer. We do not know how this will operate for employers which use a payroll agency.

4. Employers will claim the grant through a new separate portal to be built by HMRC.

What is the £2,500 maximum grant based on?

6. The earnings period to be used to determine the maximum grant has yet to be clarified. For new employees in particular, options will be needed and also for seasonal staff. 

Will entitlement to other employment benefits continue during the period of furlough?

7. The rules for the grant will not displace the existing employment contract. So for example, we would expect the entitlement to holiday and sick pay would depend on the contract..

Employees eligible

8. Eligible employees are those on the payroll on 1 March 2020. It has yet to be clarified whether or not those re-employed under a new contract will qualify, although the policy intent would seem to support this would be reasonable.

9. We have had many questions asking if workers can be moved in and out of being furloughed if work becomes available to an employer and then ceases again? This has yet to be clarified, but we consider it very likely that they will. HMRC have subsequentky said that furlough leave must be for a minimum period of 3 weeks. The scheme is being designed to allow for flexibility so that furloughed staff can be brought back to work to replace those still working who later become sick. We anticipate that this will be seen as difficult to regulate an anticipate that a minimum period of furlough leave may be built in as a requirement before the person van return to work. So we anticipate that the rules will specifically make provision for:

a. Sickness cover where a continuing employee is now off sick and a furloughed worker can provide cover.

b. Where employees agree to share shifts to enable more of them to continue to be paid.

This will again depend on the employment contracts of those affected.

10. The matter of which employees an employer decides to furlough will be a matter for negotiation with staff and employment law.

11. The impact on job sharing employees and the decision to furlough will be a matter for negotiation with staff and employment law. 

12. We presume that, subject to anything different stated in the employment contract, eligible employees would also include apprentices and agency workers.

13. We do not yet know whether the scheme will include deemed employees under the off payroll working rules.

14. An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead using the usual employment law procedure. 

15. We understand that staff can study while they are being furloughed.

16. It is a condition of the scheme that the employee must do no work at all during the furlough period. The intention of the scheme is to allow employers to pay staff who are without work.  HMRC will of course have visibility of pay records.

Employees with more than one employment

17. While we understand that an employee who is furloughed can do no work at all, our current understanding is that the employee can hold a separate employment with a different and unconnected employer which will be unaffected.

Additional information

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees (https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees)

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses (https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses)

© ICAEW 2020

Back to previous page

  • Welsh Government COVID 19 Economic Resilience FundFriday, June 12, 2020View Article
  • COVID 19 Support for the self employed - Second grantMonday, June 8, 2020View Article
  • COVID 19 Job Retention Scheme changesMonday, June 8, 2020View Article
  • 2019 UK Tax ReturnsWednesday, April 1, 2020View Article
  • COVID 19 Support for Welsh BusinessesWednesday, April 1, 2020View Article


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