Understanding the UK Coronavirus Furlough Scheme

UK coronavirus furlough schemeAlso known as the UK Coronavirus Job Retention Scheme (CJRS), the UK’s coronavirus furlough scheme is designed to support employers and employees by temporarily subsidizing wages for people who can’t do their jobs. The scheme allows employees to stay on the payroll even though they aren’t working.

  • April 20 is when applications were first accepted.
  • Pay can be backdated up to March 1.
  • The furlough program is expected to run until at least the end of June.

Key Components of Wage Replacement

According to Howden, Asinta’s UK Partner, the following items are important for employers to understand.

Employers can recover, by way of a grant from Her Majesty’s Revenue and Customs (HMRC):

  • The lower of 80% of a furloughed employee’s regular wage, or £2,500 per month.
  • Associated Employer National Insurance contributions.
  • Minimum automatic enrollment pension contributions on that reduced wage.

The CJRS only applies to employers on the PAYE payroll as at March 19, 2020:

  • This is a change from the previous cut off point of February 28, 2020.
  • This doesn’t mean that employees who started after this date can’t be furloughed.
  • If they are, the employer can’t reclaim he wage costs under the CJRS scheme;

Employers can, but are not obliged to ‘top up’ their payments. Employers who do can’t claim the additional wage cost under the CJRS. Read more on the subject on Howden’s website.

Helpful resources

CIPD is the UK’s professional body for HR and people development. Their furlough guide discusses eligibility, employee furlough agreements, and how to apply the scheme to your workforce among other things.