A Gordian Knot: Unravelling the Coronavirus Job Retention Scheme

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A Gordian Knot: Unravelling the Coronavirus Job Retention Scheme

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(Up to date: 26 June 2020 / Job Retention Scheme – Timeline).


Actually, Alexander the Great (so it’s said) didn’t unravel the fabled Gordian Knot.  He simply cut through it with his sword.


Much like this knot, the Coronavirus Job Retention Scheme (“JRS”) takes some untangling.  Much like Alexander, we’re here (albeit sans sword) to cut to the heart of the matter – and give you the key “whats” and “whens”.

The pros and cons of the JRS


The JRS constitutes a huge investment from the government and has been a saving grace to many businesses (including many of our own clients).  The statistics are staggering: as of 31 May, more than 1 million employers have submitted claims for 8.7 million employees at a total value of £17.5 billion.


That said, it’s also kept both employers and employment solicitors on their toes.  There have been numerous updates, changes and clarifications – not always well publicised.  I’ve seen it very politely called “a bit confusing”.


With that in mind, here’s what you need to know – in three steps:



Step 1: where do we start – where’s the guidance?


Most of the JRS has now been formalised in Treasury Directions.  It’s also explained in government guidance, which is all available online.  Although not itself legally binding, we have been told that HMRC (which administers the JRS) will act consistently with that guidance.


Unfortunately, there’s no avoiding the fact that you will need to read the guidance yourself.  That said, I’ve made it a little less painful by providing the key links below:


  1. The government policy paper (essentially an overview of the latest changes);
  2. The index page for all government guidance currently published; and
  3. The government factsheet (which includes a helpful table summarising the phased JRS/employer contributions) and a step by step guide.



Step 2: what do we need to do and when?


The JRS continues as normal until 30 June 2020.  It comes to an end on 31 October 2020.


A lot happens between these dates.  Below is an overview of the key changes:



Key Dates



Further Details

1 March – 31 October 2020

Relevant period for the JRS.  Employees can be furloughed and their wage costs reclaimed through the scheme.



The JRS meets wage costs on the current terms (80% of wage costs, capped at £2,500 p.m., plus employer NICs and minimum pension contributions).


10 June

The last date employers could place employees on furlough for the first time.*


*Exceptions: employees returning from statutory maternity, paternity, adoption, shared parental or parental bereavement leave can be placed on furlough after this date – subject to eligibility criteria (including that their employer has previously furloughed employees).  The same goes for armed forces reservists returning from service after that date.


30 June

The JRS closes to new entrants.  See also the 31 July deadline regarding claims for the pre-30 June period.


1 July

Phase 2 of the JRS commences.  Key changes include:


  • Now restricted to (1) employers who have previously use the JRS (2) in respect of employees they have previously furloughed (for at least the minimum three week period) and (3) the number of employees included in a claim is limited to the maximum number of employees included in a previous claim.


  • Claim periods can no longer overlap months and must be for a period of 7+ consecutive days or an “orphan period” (see guidance).  Claim periods and your payroll periods may no longer align.  Claims under the new stage of the JRS can be made from 1 July.


Note: the government has published a reporting template for employers submitting claims for 100+ employees.


1 July

Flexible furloughing commences.


It’s important to familiarise yourself with the flexible furlough guidance (see above). However, key points include:


  • Employees can return on a part time basis for any hours and any shift pattern.


  • Agreements with employees must be for a minimum of one week.


  • Employers are wholly responsible for paying wage costs (subject to the employee’s employment contract) for all hours an employee works.


  • For all hours not worked (compared against the employee’s “usual” hours) you can continue to reclaim their wage costs under the JRS.  The cap on wage costs will be proportionate to the hours worked/not worked.


  • Where employees do some work, employers must submit data regarding each employee’s usual hours and the actual hours worked.


Note: any changes to an employee’s furlough arrangement must be agreed with them and confirmed in writing.


31 July

The last date employers can submit claims for the period ending 30 June.  This separates phase 1 (to 30 June) and phase 2 (the ‘tapering’ phase: 1 July onwards) of the JRS.


1 August

The JRS continues to meet 80% (subject to £2,500 cap) of wage costs.  Employers must now pay all employer NICs and pension contributions.


1 September

Employees remain entitled to 80% of salary (subject to the £2,500 cap).  Of these wage costs (1) the JRS will meet 70% (capped at £2,187.50) and (2) employers must pay the remaining 10% (capped at £312.50) plus all employer NICs and pension contributions.



Employees remain entitled to 80% of salary (subject to the £2,500 cap).  Of these wage costs (1) the JRS will meet 60% (capped at £1,875) and (2) employers must pay the remaining 20% (capped at £625) plus all employer NICs and pension contributions.


31 October

The JRS closes.




Step 3: what if we still have questions?


Don’t worry – you’re not the only one!  If you have any questions about flexible furloughing, or the JRS in general, do get in touch with the Employment Team – we’re here to help.




Download our Employment and HR Guide 2020. Containing key information, stats and dates (updated June 2020)

The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. PDT Solicitors LLP accepts no responsibility for the content of any third party website to which this webpage refers.

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