Beyond the Job Retention Scheme – what should employers think about now?

Beyond the Job Retention Scheme

The Summer Economic Update confirmed there will be no extension to the JRS. What actions should employers take before it ends?

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Partner, KPMG Law

KPMG in the UK


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The Job Retention Scheme (JRS) has been vital in preserving employment during the COVID-19 outbreak. The Treasury publication A Plan for Jobs 2020, released as part of the Summer Economic Update, states that over nine million jobs, representing more than one quarter of the UK workforce, have been furloughed. As part of his update, the Chancellor confirmed there would be no further extension of the JRS but, in a welcome development, announced a new Job Retention Bonus for employers who bring furloughed workers back into the business and maintain their employment until at least the end of January. This article considers what actions employers should consider taking as the JRS enters its final phase to ensure claims are robust, any past errors are identified and corrected, and future people costs are managed.

Ensuring ‘flexible furlough’ claims are correct

‘Flexible furloughing’ from 1 July is welcome in letting businesses tailor use of the JRS to their specific ‘back to work’ planning. However, it adds further complexity to already challenging calculations (see our previous article). This is particularly so in the process for establishing the hours a flexibly-furloughed employee would ‘usually’ work in the claim period when calculating the JRS grant. This requires the employer to determine whether employees work ‘fixed’ or ‘variable’ hours, and then source historical data on hours worked (as well as factor in statutory leave periods and time off in lieu), further complicating the calculation.

Stakeholder scrutiny and the possibility of any amounts overclaimed giving rise to income tax charges (see below) mean employers should exercise particular care in ensuring their JRS claims are robust.

Reviewing historical claims

JRS claims for periods that ended on or before 30 June must be submitted to HMRC on or before 31 July.

As well as ensuring final claims under the ‘old’ JRS are submitted on time, employers should confirm that historical claims – including any already submitted under the new ‘flexible furlough’ regime – are complete and correct.

Any amounts that were overclaimed (see our previous article) should be repaid to HMRC, either by reducing a subsequent claim, or by direct payment where no further claims will be made. Any underclaims need to be raised directly with HMRC and potentially before the 31 July deadline.

It is particularly important for employers to identify and disclose any overclaims on a timely basis, as legislation to be enacted in Finance Act 2020 will ‘claw back’, through an income tax charge on the employer, amounts claimed under the JRS which:

  • The employer was not actually entitled to claim (e.g. where the claim was overstated); 
  • Were not used to meet relevant employment costs within a reasonable period; or
  • Due to a change in circumstances (e.g. where, under the previous rules, furloughed workers carried out work for their employer), the employer was not entitled to retain.

Employers must notify any claw back income tax charges to HMRC within 90 days of the later of (1) the event that gives rise to the claw back; and (2) Royal Assent to Finance Act 2020.

Planning future resource requirements

Looking beyond the JRS, employers will need to consider their future resourcing needs and how to manage employment costs.

This could include considering:

  • Reducing labour costs through flexible (e.g. short-time) working, tax efficient reward or redundancies;
  • Accessing alternative funding arrangements such as the new kickstart scheme or enhanced apprenticeship payments; and/or
  • Funding under the new Job Retention Bonus scheme, which will make a single payment to employers of £1,000 for each employee who:
    • Was validly furloughed under the JRS;
    • Earns on average at least £520 per month between November 2020 and January 2021; and
    • Remains in continuous employment until at least 31 January 2021.

Further information on the Job Retention Bonus will be published in July, with detailed guidance expected in the autumn.

For further information please contact:

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