Why CJRS and Furlough Matter in Recruitment

The UK government's Coronavirus Job Retention Scheme, which ran from March 2020 to September 2021, covered the wages of approximately 11.7 million workers at its peak, representing roughly a third of the UK's private sector workforce. While the scheme has now closed, its legacy is woven into employment records, workforce planning decisions, and a set of legal obligations that some employers are still working through. Staffing agencies and HR professionals working with clients who used the scheme need to understand what it was, how it worked, and what compliance obligations remain.

For recruitment, the CJRS period also created a cohort of workers whose employment histories contain furlough gaps, and understanding how to read and contextualise those gaps is relevant when screening candidates who were employed between 2020 and 2021.

How the CJRS Worked

The Coronavirus Job Retention Scheme allowed UK employers to place employees on furlough leave, during which the employee could not work for the employer, and the government would reimburse 80 percent of wages up to a cap of £2,500 per month. The employer was responsible for administering claims through HMRC's online portal, paying the employee, and then receiving reimbursement. From July 2020, the scheme was made flexible, allowing employees to return to work part-time while still claiming furlough support for the hours not worked.

The compliance obligations attached to the scheme were significant. Employers could only claim for employees who had been on the payroll as of specific reference dates, claims had to match actual payroll records, and furloughed employees had to agree in writing to the furlough arrangement. HMRC conducted compliance checks and is still pursuing employers who overclaimed, with penalties including repayment with interest and, in serious cases, prosecution. The National Audit Office estimated overpayments and fraudulent claims in the range of £5-7 billion, and HMRC's Taxpayer Protection Taskforce was set up specifically to recover those funds.

For staffing agencies, the scheme created a specific complication: temporary workers and contractors placed through agencies were in many cases not eligible for the scheme, or their eligibility depended on how their employment relationship was structured. Workers employed directly by the agency were eligible. Contractors operating through personal service companies were excluded from the CJRS but could access the Self-Employment Income Support Scheme if they met its criteria. This distinction drove some contractors to reclassify their working arrangements, a dynamic that intersected with the IR35 reforms that were delayed from April 2020 to April 2021 in response to the pandemic.

CJRS in Practice

An employment solicitor advising a staffing agency in late 2023 flags that an HMRC compliance review has been opened for furlough claims made in 2020 on behalf of 12 temporary workers. The review centres on whether those workers met the relevant eligibility criteria on the required reference date. The agency's payroll records are complete and accurate, and the compliance manager is able to produce all written furlough agreements within a week of the inquiry. HMRC closes the review with no findings. The compliance manager uses the review as an impetus to archive all CJRS documentation in a structured format with a 6-year retention schedule, consistent with standard employment record obligations, to ensure the agency is prepared for any further inquiries before the compliance window closes.