Job Retention Scheme (JRS)

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Job Retention Scheme (JRS) – Updated 01/06/20 

The JRS is designed to protect jobs by providing cash to employers who might otherwise be forced to make staff redundant. It is estimated that approximately two thirds of UK businesses are intending to make use of the JRS.

The scheme covers the cost of wages backdated to 1 March 2020 and include workers (including those on zero hour contracts) who were on the payroll at 19 March 2020 and for whom an RTI submission was made on or before that date.  The original cut-off date was 28 February 2020, but was extended by the Chancellor to try and limit the impact on workers who had moved to new jobs in early March. It remains the case, however, that workers will need to have been included in an RTI submission before 19 March. Therefore, for employees for whom no RTI submission had been made before that date, the JRS will not apply.

When the scheme was first announced, the Job Retention Scheme was to operate for an initial period of three months. It is now confirmed that the scheme will end on 31 October 2020 but will close to new entrants from 30 June 2020.

Changes to JRS from July 2020

Various changes will be made to the scheme over the coming months.  From July 2020, employers will be able to furlough staff on a part time basis, enabling them to carry out some work. Whilst back at work, part time employees will need to be paid their usual salary.  An application under the JRS scheme may still be made for the worker’s furloughed hours.  There is no fixed definition of ‘part time’ in this context and further guidance on ‘flexible furloughing’ is expected on 12 June.

Changes to JRS from August 2020

Employers will gradually be required to contribute to the costs of their furloughed employees from August 2020.  The changes are being phased in over three months as follows:

  • August 2020: employers will be expected to bear the cost of national insurance contributions and pension costs for hours for which the employee is furloughed. The Government will continue to pay 80% of furloughed workers’ salary;
  • September 2020: furloughed workers will continue to receive 80% of their normal wages up to £2,500 per month, but the cost will be split between the Government and the employer. The Government will fund 70% of wages up to a cap of £2,187.50 and the employer will fund the remaining 10% of wages (plus national insurance and pension costs) to make up to 80% of wages in total, capped at £2,500;
  • October 2020: the Government will pay 60% of furloughed workers’ wages up to a cap of £1,875. Employers will pay 20% of wages, plus national insurance and pension costs to make up to 80% of wages in total up to the cap of £2,500.

Placing workers on furlough

To claim under the scheme, the employer will need to designate affected employees as ‘furloughed workers’ and notify them of this change. Whilst on furlough, the worker will not be able to carry out any work for the employer.  Guidance should be sought from an employment lawyer as contractual terms vary.  The minimum furlough period is currently three weeks, but employees on furlough can be rotated, so that (for example) one employee is on furlough for three weeks, and then returns to work for three weeks whilst another employee is on furlough.  It is also possible for an employee to be placed on furlough more than once: for example, an employee may be furloughed for three weeks and then return to work for say two weeks, before being placed on furlough once more. A new furlough agreement will be required.

From August 2020, it is expected that employers will be able to furlough employees on a part-time basis to help ease the transition back to work.

Amount of Claim

The amount that may claimed is 80% of the furloughed workers’ wage costs to be made to the employer, up to a cap of £2,500 per month.  The £2,500 payment under the Job Retention Scheme is taxable income for the employee, and income tax and national insurance contributions will be deducted in the usual way. Employer’s NICs and minimum auto-enrolment pension scheme contributions will also be due and the Chancellor has confirmed that these additional amounts can also be reclaimed from HMRC, on top of wages covered under the scheme.  This will save businesses an extra £300 a month for each furloughed worker.


Monthly salary eligible for JRS

(£24,000/12) = £2,000 x 80%



Employer’s NIC

(£1,600 – £7321) = £868 x 13.8%



Minimum employer auto-enrolment pension contribution

(£1,600 – £5202) = £1,080 x 3%




Claim under JRS 1,752.18

1: Monthly secondary employer NIC threshold

2: Monthly qualifying earnings threshold £520


Note that it is open to the employer to top-up the furloughed worker’s pay to 100% of normal wages, however, there is no obligation on the employer to do this.

Making a Claim

Responsibility for paying employees remains with the employer, notwithstanding that staff costs are being reclaimed under JRS.

To make a claim, information on furloughed employees must be submitted to HMRC via a new online portal opened on 20 April 2020.   Payments are expected to take around six days after submission of a claim.

To make a claim, an employer will need:

  • to be registered for PAYE online
  • the employer’s UK bank account number and sort code
  • the employer PAYE scheme reference number
  • the number of employees being furloughed
  • each employee’s National Insurance number
  • each employee’s payroll or employee number (optional)
  • the start date and end date of the claim
  • the full amount being claimed, including employer National Insurance contributions and employer minimum pension contributions
  • contact name and telephone number.

The employer will also need to provide their name, tax reference and (if applicable) company registration number.

A different claims process applies where the employer has furloughed more than 100 employees. In that case, the employer (or agent) will need to upload a spreadsheet showing the full name, NINO, furlough start and end dates and the amount claimed for each employee. Various file formats are accepted by HMRC, for example .xls and .csv.

Agents are able to submit claims on behalf of their clients, provided the agent is authorised to act for PAYE matters. ‘File only’ agents will not be able to make a claim on behalf of the employer company.

Salary/Dividends for Owner-Managers

It has been confirmed that directors can be placed on furlough. Where necessary, a furloughed director is able to discharge necessary functions under company law but can undertake no other work for the company.

Owner-managers taking minimal salary and topping up their income by dividends are eligible to claim 80% of their monthly salary if placed on furlough. Dividends are not covered by the Job Retention Scheme.

Record Keeping

HMRC will be checking claims retrospectively and therefore record-keeping will be key. In particular, businesses should take care to ensure that the employee’s agreement to being placed on furlough is properly documented, and that the employee does not carry out any work for the employer during the period of furlough. The employer should also be prepared to provide evidence that it was necessary to place workers on furlough owing to the impact of the Covid-19 pandemic.  HMRC have said that a hotline will be set up for employees to report situations where they are asked to work whilst on furlough.

Further information on the Job Retention Scheme is available on the Gov.UK website.

If you have any questions, please get in touch with your usual Newby Castleman LLP contact.