27th March 2020

Coronavirus Job Retention Scheme and how we understand it will work on what has been released as at 27 March 2020  

The following is Revel Accountant’s understanding of the Government’s policy and how the Coronavirus Job Retention Scheme will work based on the information published so far.

This post is not an alternative to taking bespoke advice that considers the specifics of your circumstances.

There is employment law to navigate here, upon which you should take legal advice.

So what does this scheme involve?

An employer 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.

HMRC advise that to be eligible for the grant employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

HMRC advise that you will need the following to claim:

      1. your ePAYE reference number
      2. the number of employees being furloughed
      3. the claim period (start and end date)
      4. amount claimed (per the minimum length of furloughing of 3 weeks
      5. your bank account number and sort code
      6. your contact name
      7. your phone number
      8. HMRC will retain the right to retrospectively audit all aspects of your claim.


You can only submit one claim every 3 weeks, being the minimum period of furlough for an employee. Claims can be backdated until the 1 March if applicable. Other than this you can bring people back from furlough or furlough more employees as work levels vary.  The same employee could be furloughed more than once, providing each furlough period is at least 3 weeks long.

Furloughed members of staff must not work for the employer during the period of furlough. However, a furloughed employee can take part in volunteer work or training, provided it does not generate revenue. Employees undertaking training 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.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary -subject to the terms of the employment contract you agreed.

It is available to employees who were on the payroll on 28 February 2020. If employees were not on the payroll at this date, they will not qualify. Anybody who was on the payroll on 28 February 2020 and has since been made redundant can be rehired and put on the scheme. Anyone hired after this date, is not eligible.

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.

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. Save as discussed in point 1, there are no further details on the application process at the moment. The online system is not up and running either, with current reports advising that it won’t be ready until end of April. Claims then need to be verified, and then processed.

The employer will pay the employee through payroll, and report payments to HMRC using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be re-negotiated, but that is a matter for employment law.

The scheme will be administered by HMRC:

  • All employees must be designated as furloughed employees.
  • Employers will submit claims to HMRC through a new online portal.
  • As the system will take time to build, businesses should look to the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime.

The maximum grant will be calculated per employee and is the lower of:

  • 80% of ‘an employee’s regular wage’ and
  • £2,500 per month.
    Plus the associated employers’ national insurance contributions (NIC) on this amount and the minimum automatic enrolment employer pension contributions on that wage.

Fees, commission and bonuses should not be included.

This gives a maximum cap of £2,500 +£245 (employers’ NIC) + £59 (auto- enrolled pension contribution) = £2,804 of total possible grant that can be applied for per employee per month.

How to calculate the regular wage?

For Full time and part time employees:

Use the employee’s actual salary before tax, as of 28 February to calculate the 80%. Fees, commission and bonuses should not be included.

For employees whose pay varies:

If the employee has been employed for a full twelve 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 2019-20 tax year

Apart from the initial claim where there may be a backdating element, all claims should be made at the point of a payroll submission and the amounts claimed should correspond to the payroll submission.

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.

You can choose to top up the employee’s salary, but you do not have to.

Guidance from HMRC:

If you are new to Revel and are keen to find out more, please call our consultant Will Bolter FCCA MAAT ATT  (our designated COVID-19 response advisor) on 07379 451484 or contact us by email here.