Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure GB-2020-10/216 – Updated – measures in United Kingdom
Country | United Kingdom , applies nationwide |
Time period | Temporary, 01 March 2020 – 30 April 2021 |
Context | COVID-19 |
Type | Legislations or other statutory regulations |
Category |
Employment protection and retention
– Income support for people in employment (e.g., short-time work) |
Author | Claire Evans (Warwick University) and Eurofound |
Measure added | 31 March 2020 (updated 18 January 2021) |
The Coronavirus Job Retention Scheme was announced by the British government on 20 March 2020 in the context of more stringent lock-down measures which entered into force on 23 March 2020. The scheme introduced a legal mechanism that allows businesses to retain employees without the need to work but to still receive a minimum level of salary. The purpose is to reduce redundancies and to avoid people being laid off without pay. Lay off (without pay) is the usual vehicle open to employers when they wish to retain employees but have no work for them to do. Under the job retention scheme, all UK employers will be able to access support from the government to continue paying part of the salary of those employees.
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers/employees for at least three months starting from 1 March 2020. It is designed to support employers/employees whose operations have been severely affected by coronavirus (COVID-19). Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs to enable them to continue paying these wages, up to €2,820 (GBP 2,500) a month. The government will also cover the associated Employer National Insurance contributions and minimum automatic enrollment employer pension contributions on that wage. Employers/employees can use this scheme anytime during this period.
Employers who have just made workers redundant (because of the emerging impact of coronavirus) can hire them back and place them on furlough and claim the benefit.
The following updates to this measure have been made after it came into effect.
17 December 2020 |
On the 17 December, the Chancellor announced that the CJRS would be extended until the 30 April 2021. It had been intended that the Jobs Support Scheme (see https://webdirect.eurofound.europa.eu/fmi/webd/DataCollectionCorona) a less generous provision, would have replaced the CJRS in 2020. |
08 September 2020 |
It was reported on the 8 September that HMRC has revealed that up to GBP 3.5bn in Coronavirus Job Retention Scheme payments may have been claimed fraudulently or paid out in error. HMRC told MPs on the Public Accounts Committee it estimates that 5-10% of furlough cash has been wrongly awarded, either through deliberate fraud or administrative error. HMRC is currently reviewing 27,000 'high-risk' cases where abuse or fraud has been suspected. A number of arrests have already been made. |
08 July 2020 |
In an Emergency Summer Statement to the House of Commons, the Chancellor of the Exchequer announced that businesses will be paid a bonus of GBP 1000 for every furloughed employee they bring back to work, if they are continuously employed until January 2021. The bonus will apply to employees paid enough to reach the lower earnings limit for national insurance contributions (an average of GBP 520 in each month from November to January). This is an attempt to ensure that people are undertaking 'decent work' and 'not just returning for the sake of it.' It is estimated that the scheme will cost GBP 9 billion if all employers take advantage of it. |
12 June 2020 |
On the 12 June 2020, the Government released a raft of further guidance concerning the Coronavirus Job Retention Scheme (CJRS), with the changes to be implemented from 1 July 2020. The new and updated guidance sets out who will be eligible from 1 July 2020 and explains how “flexible furlough” will operate. From the 1 July, employers will be able to bring back furloughed workers on a flexible pattern (ie for any amount of time and on any work pattern). Employers will be able to claim a CJRS grant for the hours which flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period. If an employer wishes to flexibly furlough staff, they will need to obtain their employees’ agreement and keep a written agreement that confirms the new furlough arrangement. This agreement must be kept for 5 years. Employers must also keep records of how many hours their employees work and the numbers of furloughed hours for 6 years. Also from this date, employers will only be able to claim a grant for employees who have already been furloughed for three consecutive weeks between the 1 March and the 30 June. Thus, the last date an employee could have started furlough for the first time was the 10th of June. Companies are thus no longer able to furlough new employees, unless they have returned from maternity, shared parental, paternity or parental bereavement leave after the 10 June. These employees can be furloughed after 10 June provided that:
From 1 July, the number of employees that employers can claim for in any single claim period cannot exceed the maximum number of employees that the employer claimed for under any claims ending by 30 June. For example, if an employer previously submitted three claims between 1 March and 30 June 2020, in which the total number of employees furloughed was 20, 30 and 50 employees respectively, the maximum number of employees that the employer can furlough in any single claim from 1 July 2020 will be 50. The scheme has been extended until the 31st of October. The Government will continue to pay 80% of wages up to a cap of GBP 2,500 in July, as well as national insurance and pension contributions. However, from the 1 of August, the level of government grant provided through the scheme will be limited and employers’ contributions will rise. The timetable for changes to the scheme is as follows:
Employers will continue to able to choose to top up employee wages above the 80% total and GBP 2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked. Wage caps are proportional to the hours not worked. (Source: HM Government, 2020). |
The scheme has been criticised for excluding workers starting in a new job after the 28 February 2020 cut off point (and before the government announced the lock down measures). The scheme is set to be up and running by the end of April 2020 with the possibility of claiming payments in arrears.
By the 19 July (the latest available data), the total number of jobs furloughed was 9.5 million, with 1.2 million employers utilising the scheme, at a total cost to the government of GBP 29.8 billion (HM Government, 2020).
On the 18 September, the Government published data on the scheme's operation up until the 31 July (although figures for 31 July are provisional and subject to revision as additional claims for the period are received). The main findings are that:
As of the 13 December, the total value of claims made by that date was GBP 46.6 billion. The Government released the most recent data on the scheme in December 2020. The main points from the analysis, covering the period to 31 October are that:
Workers | Businesses | Citizens |
---|---|---|
Employees in standard employment
Workers in non-standard forms of employment |
Applies to all businesses | Does not apply to citizens |
Actors | Funding |
---|---|
National government
|
National funds
|
Social partners' role in designing the measure and form of involvement:
Trade unions | Employers' organisations | |
---|---|---|
Role | Informed | Informed |
Form | Not applicable | Not applicable |
Social partners' role in the implementation, monitoring and assessment phase:
Please note that the UK does not have formal institutional settings for involvement in the design, implementation and monitoring of policies although often, there will be information exchange and consultation, conducted on informal bases (this exists in addition to formal responses from the social partners to official consultations).
It is reported that the Chancellor held discussions with both the CBI and the TUC before launching the raft of emergency measures at the start of the epidemic. Therefore, there will have been discussion but there is no information available on these.
The introduction of the scheme was welcomed by both the TUC and CBI in press releases on 20 March 2020.
However, on the 7 July, the TUC responded to the Chancellor’s announced changes to the scheme. It argues that the ‘job retention bonus’ only extends the furlough scheme in less generous terms. It states that the bonus is a better option than a ‘cliff edge end’ to the scheme, but that it won’t be sufficient to help the hardest-hit businesses, nor will it help those workers who are shielding or whose caring responsibilities mean they can’t return to their workplace.
The CBI continues to be supportive and had published a guide to the furlough scheme for business.
Citation
Eurofound (2020), Coronavirus job retention scheme, measure GB-2020-10/216 (measures in United Kingdom), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/GB-2020-10_216.html
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