Covid-19: Coronavirus Job Retention Scheme Update

June 2020
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On 29 May Chancellor Rishi Sunak announced changes to the Coronavirus Job Retention Scheme (CJRS) which will take effect from 1 July and through to October. On 12 June HMRC produced further detailed guidance. 

Eligibility and Conditions

To become or remain eligible for the furlough scheme UK businesses must have been adversely affected by the Covid 19 outbreak.  Employees who are furloughed must have been registered for PAYE with that employer at or before 19 March 2020. Employees who are shielding are eligible.  Employees on parental or maternity leave are not eligible but may become so on returning to work at the end of their leave, providing leave started before 10 June 2020 and they were on payroll prior to 19 March.  Those on unpaid or sick leave may qualify providing they have been on furlough before 30 June.

In the first phase of the scheme a condition of receiving the furlough grant was that employees on furlough could not do any work for the employer.  They can accept alternative temporary employment elsewhere or voluntary work, with the agreement of their employer. From July furloughed employees may return to work for their usual employer on a part time basis, to enable firms to phase in full time working while observing social distancing. 

Employers will not be able to furlough any new employees after 10 June nor may they increase the number of employees on furlough after 1 July above the highest number furloughed in any prior 3-week period. From July the furlough period will be a minimum of one week. Employers may still rotate the employees on furlough to accommodate a phased return to work, providing they have been furloughed before 30 June.  

CJRS Grant

For July the CJRS grant will continue at 80% of wages up to a monthly cap of £2,500, employer NI contributions and employer statutory pension contributions (3% of pay between £520 and £2,500 per month). Thereafter it will reduce as shown in the table below with employers asked to make up part of the payment.

Month  Split of employment cost between CJRS and employer 

  CJRS- 80% wages up to £2,500 per month
  Employer-NICs and pension contributions 


  CJRS-70% wages up to £2,187.50 per month
  Employer- 10% wages up to £312.50 per month, employer NICs and pension contributions


  CJRS- 60% wages up to £1,875 per month
  Employer- 20% wages up to £625 per month

NB The wage cap on the grant is proportional to the contractual hours not worked. 

Where the CJRS grant is below £520 per month no employer pension contributions will be payable. 


The furloughed pay is subject to income tax deducted via PAYE and employee national insurance. Employees who wish to benefit from the employer auto enrolment pension contribution must continue to pay their minimum 5% employee contribution. Employees who seek to reduce this may do so but will have opted out of the auto enrolment pension scheme and will no longer be automatically entitled to an employer contribution. They may request to re-join later and must be permitted to do so within 12 months of opting out. Employers are encouraged to waive this moratorium.

Employers are free to top up wages to full contractual pay and to continue to provide pension contributions above the statutory minimum where these are part of the benefits offered. Where pension payments are to be reduced to the statutory minimum, furloughed employees need not be consulted but they must be informed. Contributions must return to the full contractual amount when furlough ends. 

Salary sacrifice pension payments

Where pension schemes use the salary sacrifice funding method, which saves employees and employers national insurance and provides income tax relief at the full rate at source, the employer is obliged to pay all the pension savings as an employer contribution. Contractual entitlement to pension contributions will be based on pre furlough salary. However, the reference salary for the purpose of the CJRS grant is based on post sacrifice pay. This will leave a shortfall between the employer pension contribution required and the CJRS pension grant received. Employers cannot net this off the CJRS grant, all of which must be passed to the employee after PAYE deductions for tax and national insurance. Salary sacrifice pension contributions can be suspended but can only be reduced with employee consent. Employers must avoid putting any pressure on employees to opt out of statutory minimum pension provision as this could lead to censure and fines from The Pensions Regulator. 

Partial return to work

From July employees may work part time for the employer and will receive their full contractual pay on a pro rata basis. Correspondingly the grant payable from the CJRS can only cover the hours not worked. Where salary sacrifice is used to pay pension contributions, the sacrificed amount may be deducted from that part of pay for the hours worked.  It cannot reduce either the CJRS grant, which must be paid in full, nor leave the employee receiving less than the National Minimum Wage or National Living Wage for the hours worked. Employers should check that this notional minimum hourly rate is still being paid after any salary sacrifice request is implemented. It may be necessary to restrict the amount an employee is allowed to invest in their pension through salary sacrifice whilst they are on furlough.

Our webinar “The Devil Is In The Detail” explained the issues surrounding furloughed employees and salary sacrifice pension funding and you can access it here.

You may also wish to visit our previous blogs on the Job Retention Scheme and Pay and Pensions.

If you would like to receive ongoing updates on the CJRS scheme and pension savings please email

Kay Ingram                                      
Director of Public Policy 

Please remember, no news or research item is a recommendation or advice to buy. LEBC Group Ltd is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment or product for your circumstances, please contact an adviser. All investments can fall as well as rise in value, so you could get back less than you invest. All information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation, are subject to change. Taxation advice is not regulated by the FCA.

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