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Coronavirus Job Retention Scheme: A Summary

Date: 24/03/2020 | COVID-19, Healthcare, Commercial Property, Corporate, Employment & HR, Dispute Resolution, Energy & Natural Resources, Environmental, Planning, Residential Development, Construction, Business & Professional Services, Blogs

Key elements of Scheme:

  • Backdated to 1 March, employers can seek reimbursement from HMRC for staff they have designated as “furloughed” due to Coronavirus.    
  • Furloughed workers must be formally designated as such, through an HMRC online portal (yet to be set up as 23 March) as those who remain on payroll but are not carrying out any work for the business due to the Coronavirus.
  • The scheme is to be accessed via an HMRC online portal and will be a reimbursement scheme – salary/wage will have to be funded by the employer and then claimed back.    
  • The scheme will cover 80% of the salary/wage up to £2,500 per month per employee. Employer can top up the 20%, but this is not mandatory. (Details have not yet been provided regarding how average wages will be calculated for those on irregular shift or pay patterns.)

The expression “furloughed” means “on leave of absence”. An individual designated as furloughed, will continue to be an employee with all employment rights.


  • Employer must designate employees as furloughed.
  • The right to designate as furloughed needs to comply with the terms and conditions of employment. This is likely to mean the employer will have to agree the arrangements with each employee and should get written agreement to a variation of the terms and conditions of employment. This should be uncontentious as the alternative might be formal lay off with no pay or redundancy, but there may be some difficult staff.
  • An employee designated as furloughed cannot then work during the furlough period. If a designated employee returns to work before the furlough period ends, they are no longer furloughed; and the employer will not get the subsidy
  • The employer must pay the staff and then claim the subsidy.  This will obviously have cash flow implications until end of April (or perhaps the beginning of May).
  • Higher paid employees will have a material reduction in income.
  • The employer needs to take care to avoid appearing to act in a discriminatory fashion in choosing which employees to designate.
  • There may be issues where employees furloughed are at home on 80% and others are working with all the commute costs earning just 20% more. A furloughed employee could, in cash-in-hand terms be better off.

You can read further practical information on how to furlough employees in our separate briefing note or contact Alan Strain if you have any questions. 

The Government has published information on support for business, which contains sections on the Job Scheme:https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-job-retention-scheme

This note is based on information available as at 23 March 2020.

The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.

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