Coronavirus Job Retention Scheme for nurseries

This page includes information on:

  • What the Coronavirus Job Retention Scheme is
    • What are the new rules for the Coronavirus Job Retention Scheme?
  • Can I utilise the Coronavirus Job Retention Scheme for my nursery?
    • Can I still access the Coronavirus Job Retention Scheme for my nursery after 1 June 2020?
    • Can I claim under the Coronavirus Job Retention Scheme as well as claim flexible free entitlement?
    • How should I approach the scheme for my setting(s)?
  • How nurseries can access the Coronavirus Job Retention Scheme
    • My income for February is not typical because of the way half term affects the payments I get for funded places. 
    • What happens if the local authority increases or reduces the amount I get compared with February?
    • I’ve been able to access other grants or support – will that count in my public funded income?
    • What about my non-staff costs? 
  • Furlough
    • I can’t furlough staff to the exact value that I am entitled to using my public to private income split 
    • Can I furlough staff and charge parents a retainer fee?
    • Do I need to bring my staff back from furlough?
    • Can I bring staff out of furlough to cover for staff who have to go into isolation?
    • Can furloughed staff do online training?
    • Can my staff post to social media when on furlough? 
    • Furloughing and apprenticeships
  • Can I apply for the Coronavirus Self-Employment Income Support Scheme?
  • What about fraud?
  • Wales-specific guidance
    • Advice for Wales nurseries from Welsh Government
    • What details can local authorities in Wales ask for when I make a claim for the Coronavirus Job Retention Scheme?
  • Where can I find more information about the Coronavirus Job Retention Scheme?

Template letter to lobby your MP
We urge you to take this up at a local level with your own MPs - using our template letters for MPs - so you can highlight to them exactly what this will mean for your nurseries and staff. 

What the Coronavirus Job Retention Scheme is

Through the scheme all UK employers can access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. You can submit one claim every three weeks, which is the minimum length an employee can be furloughed for. 

To access the scheme you will need to:

  • Designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
  • HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

You can find further information here.​

Chancellor Rishi Sunak announced on 12 May that:

  • Until the end of July there will be no changes to the CJRS – it will continue to pay 80% of the salaries of staff that are furloughed
  • From August onwards it will be more flexible with employers able to bring people back part-time and a top-up from the government’s scheme
  • At this point the cost of the scheme will be shared between employers and government payments
  • The net result will be that those who are furloughed between August and the end of October will continue to receive 80% of their earnings between the government and employers.

What are the new rules for the Coronavirus Job Retention Scheme?

In the guidance set out on 17 April the Department for Education aimed to clarify how early years providers can access the scheme. Since then we have now had further clarity   to some of your questions relating to the CJRS and this guidance.

In this guidance the Government set out how it planned to avoid double funding of staff roles through both the early entitlement funding (EEF) and the CJRS. Where they refer to Dedicated Schools Grant (DSG) funding in the guidance they mean the funding settings get for 2, 3 & 4-year-old places for either 15 or 30 hours of childcare.

The Department for Education have now clarified that you can only furlough staff that can be shown to have been paid for through income other than the Government’s funded hours. This means that if 100% of your children are funded through EEF money you would not be eligible to furlough any staff and if you received no government income at all, you would be able to furlough all of your staff if the other CJRS criteria are met.

We know the reality is a mixed picture and very few childcare providers will be able to demonstrate exactly which staff are paid from each income source. In this scenario providers will need to look at their private and public funded income and allocate the same ratio to their staffing budget. You are then only able to furlough staff who make up the same proportion of your staffing budget, as your non-government income makes up of your overall income. Below is a step by step guide to the process with an income/outgoings hypothetical example.​​

Can I utilise the Coronavirus Job Retention Scheme for my nursery?

Guidance issued on 17 April for England states:

A private provider should only furlough employees, and seek support through the Coronavirus Job Retention Scheme, if they meet the following conditions: 

  • The employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding; 
  • The employee would otherwise be made redundant or laid off; 
  • The employee is not involved in delivering provision that has already been funded (free entitlement funding); 
  • (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child; and 
  • The grant from the Coronavirus Job Retention Scheme would not be duplicative to other public grants received and would not lead to financial reserves being created. 

Can I still access the Coronavirus Job Retention Scheme for my nursery after 1 June 2020?

On the re-opening of childcare settings from 1 June – the scheme is available for any employer “If you cannot maintain your current workforce because your operations have been severely affected by coronavirus”. This guidance hasn’t changed as things stand and is available here. As the scheme stands, staff who are still supernumerary to the levels of demand for childcare places from 1 June will still be eligible to be furloughed as long as they are within the limits of the private:public funding requirements. From 1 June to the end of July the staff you can furlough will still have to be fully furloughed – in that they don’t do work while on furlough. However, if your demand does slowly start to increase you would be able to bring them back one at a time to meet that. In this way the scheme should help support providers to some extent into the end of October.​​ We don’t yet know how the scheme will work after the end of July but the Chancellor has said that there will be more flexibility to bring staff back part time, while still topping their earnings up to 80% through the scheme. This might involve someone returning to do 50% of the hours they were doing before, with a claim for a 30% top up from the furlough scheme. We have been told that the rules around this will be clarified at the end May.

Can I claim under the Coronavirus Job Retention Scheme as well as claim flexible free entitlement?

Childcare providers in Wales and England will not be able to fully access both the early years entitlement funding and the Coronavirus Job Retention Scheme.

If it is difficult to distinguish whether staff are funded through free entitlement or private income for the purposes of meeting the first three conditions as listed above, then an early years provider can access the Coronavirus Job Retention Scheme to cover up to the proportion of its salary bill which could be considered to have been paid for from that provider’s private income.

This would typically be income received from ‘parent-paid’ hours, and excludes all income from the government’s free entitlements for all age groups.

In line with the conditions of the scheme listed above, providers should initially use the month of February 2020 to represent their usual income in calculating the proportion of its salary bill eligible to be covered by the scheme.

Providers should adjust these proportions in subsequent furloughing applications if their income from the government’s free entitlements changes, but are not expected to make any adjustments in relation to changes in parent-paid income.

To illustrate, the guidance offers the following example:
If a provider’s average monthly income is 40% from DSG and 60% from other income, the provider could claim CJRS support for up to 60% of their salary bill.

This would be done by furloughing staff whose usual salary / combined salaries come to no greater than 60% of the provider’s total paybill.

These proportions could change in subsequent furlough applications as a result of DSG income changing (but not where income from parents increased or decreased).

For example, if this provider subsequently receives additional DSG income from a local authority as a result of providing additional hours of childcare, such that its new DSG income would represent 55% of its total income in February 2020, then its maximum use of the furlough scheme should, from that point, be reduced to 45% of its paybill.​​

The Scottish Government has assured us that it is currently seeking further clarification from the UK Government on aspects of this guidance. Following this it will provide further updates to its own guidance as soon as possible.

However, at present (27 April) the Scottish Government can provide the following clarification:

  • The guidance does not prevent childcare providers from receiving support through both: (1) continued payments for statutory (funded) ELC hours; and (2) the CJRS
  • Support cannot be claimed through the CJRS for staff costs that are already covered by other forms of public funding
  • You can access the CJRS to cover up to the proportion of your pay bill which could be considered to have been paid from private income
    The guidance advises that providers should initially use the month of February 2020 to represent its usual income in calculating the proportion of its pay bill eligible to be covered by the scheme
  • For example, if 40% of your average monthly income was from payments for the funded entitlements and 60% from other income, then you could claim CJRS support for up to 60% of your total pay bill. This would be done by furloughing staff whose usual salary / combined salaries come to no greater than 60% of your total pay bill.

Full details of the Scottish Government’s guidance can be found here.

Some nurseries will have put claims in due to concerns about cash flow and you will need to ensure you have approached the scheme reasonably and fairly according to how you see the guidance at the time of your claim. You should look to keep the evidence that backs up your reasoned interpretation so that if ever challenged by HMRC in the future, you can explain your claim.

How nurseries can access the Coronavirus Job Retention Scheme

The online system for making claims opened on 20 April and claims can be backdated until 1 March if applicable. You can expect to receive your furlough grant within four to six days of submitting your claim and the first payments are due to come through by the end of April.

How should I approach the scheme for my setting(s)?

We have had a lot of enquiries from members about the value of the claim they can make. This is because the system of early years funding has become increasingly complicated over the years. It is important to follow a step by step process to get to the right calculation for your setting(s).

In the following process we have included some figures based on the below example. For simplicity we have used rounded numbers and the 40:60 example provided in the Government’s guidance. We know that all settings will be very different and there will be a lot of other variables. A lot of calculations will have to take place for you to be able to make a submission.

Example figures: 

 Income  Outgoings
 Feb 2020  Feb 2020
 Public - £4,000  Staffing - £7,000
 Private - £6,000  Non-staffing - £3,000
 Total: £10,000  Total: £10,000

Using figures from the above example we have suggested a step-by-step process settings will need to use:

  1. Look at February’s income breakdown to calculate % of private and public income. 
    (In the above example it’s 40% public income & 60% private income)
  2. Look at entire wage bill = £7,000
  3. Calculate % of wage bill attributable to private income = £4,200 (this is 60% of £7,000)
  4. Look at the number of staff whose combined staff costs comes up to that level 
    (In the example above you can’t furlough more staff than those who add up to £4,200. Eg 3 employees who cost £1,400)
  5. Furlough those staff whose salary/combined salaries comes up to that level
  6. Submit a claim to the CJRS for those staff who have been furloughed – HMRC has produced a step by step guide for this process
  7. Claim 80% of the salary for those staff furloughed to pass through to employees 
    (In this example the amount claimed would be £3,360 (£4,200 x 80%). HMRC has developed an online calculator for working out what you can claim.)
  8. Check whether there are staff that you have already furloughed which would take you over the threshold 
    (In this example if the staff you furloughed total £4,201 or more then you would have to un-furlough staff to take this under £4,200) 
  9. If you have already furloughed more staff then you are entitled to claim for under the scheme – you will have to un-furlough them and pay 100% of their salaries and staff costs.

Notes:

  • It is not possible to part furlough a role or claim part of the 80% for a furloughed role. A staff member is either on furlough or not. If they are furloughed they shouldn’t do any work for the business related to delivering a service or promoting the setting
  • It is worth noting that we are aware that taking people back from furlough may cause financial pressure on providers while at the same time you are looking at fixed costs. Meanwhile, we are aware that demand for places once lockdown criteria are lifted may not be as high as they were prior to the virus. You may look to review your business’s sustainability and whether you need to look at reduced hours of full time staff or in the most extreme circumstances, laying staff off. If you do this you would need to revert back to the initial step of the process above and what proportion of your remaining wage bill exists.

My income for February is not typical because of the way half term affects the payments I get for funded places. 

The government have said you can look at the normal weeks in February and apply an average across the whole month. For example, if half term week gives a different income than a usual week you can work out your income over the three normal weeks in February and use that to calculate an average for the whole month.

What happens if the local authority increases or reduces the amount I get compared with February?

In responding to questions we have raised on your behalf the government have said that February should be used as a guide month as it was the most recent month not to have been affected by the spread of Coronavirus and the measures to control it. They have said that providers are not expected to make any adjustments to the parent income from February to work out their public to private income ratios. However, if a local authority increases or decreases your funding, this will need to be taken into account. 
We have produced some examples below to demonstrate how you might take this into account. For ease we have used rounded numbers that aren’t supposed to reflect the real complexities settings will face.

Income
Feb 2020
Public - £5,000
Private - £5,000
Total: £10,000
Income Split = 50:50

If local authority income increases to £10,000 during the crisis:

Income
April 2020
Public - £5,000
Private - £5,000 (keep the same as Feb)
Total: £15,000
Income Split = 66.6% (public) to 33.3% private
In this scenario you would need to reduce the proportion of staff furloughed from half your paybill to one-third, using the step-by—step approach above.

If local authority income decreases to £2,500 due to flexibility on Entitlement Funding:

Income
April 2020
Public - £2,500
Private - £5,000 (keep the same as Feb)
Total: £7,500
Income Split = 33.3% to 66.6%

In this scenario if you had furloughed staff to half the value of your paybill you would be able to furlough more - up to two thirds of your paybill. See the Step-by-step approach above.

 

I’ve been able to access other grants or support – will that count in my public funded income?

The government have confirmed that access to grants like the £10,000 small business grant does not affect applications to the CJRS. As a rule, you don’t need to include one of grants or awards in your calculation but if your regular income from public funding changes this should be taken into account.

What about my non-staff costs?

At NDNA we are lobbying for the Coronavirus Job Retention Scheme to recognise fixed costs for providers whether they are open or closed. As soon as the changes were announced we wrote to the Chancellor and also provided members with a template letter for lobbying their own MPs to call for this. We recognise that you have costs associated with running a childcare setting over and above staff but the CJRS and entitlement funding are now only looking at your staff costs.

Furlough

I can’t furlough staff to the exact value that I am entitled to using my public to private income split

In this scenario you will need to furlough the staff that get you as close to the value but remain under that threshold. If you have furloughed staff to the paybill value that takes you over that threshold you will need to bring them back and either furlough another member of staff with lower costs or not furlough to the full proportion that is available to you.

If you are significantly disadvantaged by this rule please contact us as we are constantly providing examples of how the system is disadvantaging providers to the government.

Can I furlough staff and charge parents a retainer fee?

At NDNA we have produced a template letter for settings that want to approach parents for a retainer to ensure they can meet their costs during this crisis. The access to the scheme is based on your income breakdown in February so asking parents for a retainer now won’t affect your income levels for the purpose of claiming from the CJRS.

Do I need to bring my staff back from furlough?

A lot of nurseries will be really worried about the cost of bringing staff back off furlough having been re-assured by Government statements that they would be able to utilise the Job Retention Scheme, even while receiving the early entitlement funding.

The decision being made at the last minute has created a lot of issues for providers as it amounts to a retrospective approach to staff who may have been furloughed from March.

We are looking into the legal implications of this because we know people have made reasonable decisions based on the information available to them – which has now been changed retrospectively.

We will be fighting for the Government to reconsider this decision as we don’t believe they have understood the consequences for providers and the early years sector and their staff.

We know nurseries and their employees are supporting key workers and vulnerable children at this critical time. Early years staff are critical workers supporting critical workers and the Government needs to be finding ways to support them not undermine them.

We will also be using our data on local authorities’ underspends and contingency funds in their early years budgets to argue that these funds should be used to support the early years sector.

NDNA members can call our free legal helpline for support.

Can I bring staff out of furlough to cover for staff who have to go into isolation?

We know how important it is that providers have flexibility to bring staff back from furlough early should existing members of staff become ill and another needs to step in. Hence, the minimum 3 week period does not work for this sector. We have consistently  raised this with Government but they have not taken the opportunity within the latest CJRS guidance to revise this timeframe. We wil continue to raise this issue with them.

Can furloughed staff do online training?

You can ask furloughed staff to undertake training to remain upskilled whilst away from work under the latest guidance of the Coronavirus Job Retention Scheme criteria. 

However, they must be paid at least the National Living Wage (NLW) / National Minimum Wage (NMW) for the time spent training even if this is more than the 80% of their wage that will be subsidised. 

This means that you will need to top-up staff wages to ensure that the additional hours of training (work) they are being asked to do, doesn’t take them below the NLW/NMW thresholds. 

To avoid breaching this requirement and to demonstrate compliance in any potential HMRC audit you may want to set out the time you expect an employee to spend completing online training in a defined period (eg. 4 hours per week / 16 hours per month) and pay them the statutory minimum wage for those hours. If you are confident that the 80% of their usual salary keeps them above the statutory minimum wage then this may not be necessary. 

Can my staff post to social media when on furlough? 

Your staff can post to social media from their personal accounts while on furlough. Staff cannot post to social media accounts using official nursery accounts as this is considered working.

If for example your staff want to collaborate to create pictures to share with children and families, they can do so as this is considered volunteering, but they must not be encouraged to do so by the nursery in the first instance, as this is considered working to benefit the business.

Furloughing and apprenticeships

The Education and Skills Funding Agency (ESFA) is implementing measures to make it easier for apprenticeships to continue and complete in a different way if they need to. However, it may be possible to break and resume an apprenticeship later when that becomes possible. See this here.

See HMRC guidance covering furloughed apprentices here.

 

Can I apply for the Coronavirus Self-Employment Income Support Scheme?

  • You are eligible to apply to this scheme if you have the following:
  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19
  • Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
    • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
    • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

You can claim up to a maximum of £2,500 per month for 3 months but the scheme will not be ready until June 2020. HMRC will contact you if you are eligible. Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating a PAYE scheme. This means if you are not eligible under this scheme, you would need to furlough yourself under the Job Retention Scheme.

What about fraud?

Measures to counter potential fraud and abuse of the scheme include: 

  • The employee must have been on payroll by 19 March
  • The employer needs to have already been authenticated by HMRC
  • There will be a 4 to 6 day processing period to make background checks
  • There will also be checks after grants have been made to verify claims

To be eligible, employees need to be included in an HMRC RTI Submission. It states: “You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.”

For those who have come to you from another job, they can return to their previous employer if they were added to payroll after the cut-off date. 

There will be a whistleblower’s hotline where fraud or abuse of the scheme can be reported (for example, if an employee has been asked to work when on furlough).

Wales-specific guidance

Advice for Wales nurseries from Welsh Government

The Welsh Government has issued advice on the operation of the Coronavirus Job Retention Scheme to public sector organisations and publicly funded bodies and grant scheme managers. 

Childcare provision has certain separate features to other schemes so the Welsh Government has issued additional advice which relates solely to childcare providers.

See the guidance

What details can local authorities in Wales ask for when I make a claim for the Coronavirus Job Retention Scheme?

We are aware of a number of local authorities asking providers for details around the number of staff furloughed, personal information about those staff as well as income breakdowns in relation to Foundation Phase, Flying Start, Childcare Offer and C-CAS funding and the CJRS. Welsh Government guidance does state that you need to inform local authorities when you do make a claim to the CJRS and declare that you are not double funding posts as a result of that claim. However, it doesn’t state that you have to provide further information about the details of that claim. We will be writing to local authorities in Wales to ask what their legal basis is for requesting this personal and private financial information. If you are asked for anything more than a declaration that you’re not double funding roles, you are entitled to request the basis for the local authority requesting that information and the purposes it will be used for. The relevant section is below. We are already challenging the Welsh Government on the second point as it creates more uncertainty for providers than clarity. "Providers getting funding from Childcare Offer Wales, C-CAS or Flying Start

If you are getting funding from the Childcare Offer Wales or Flying Start you can still apply for the Coronavirus Job Retention scheme. When you apply you must tell your local authority:

You are not using the scheme and Welsh Government funding to double fund the salaries of furloughed employees
The payments you get do not (combined with existing and anticipated public funding), mean you get a total amount of public funding that is more than your planned level of income to cover salaries”

Where can I find more information about the Coronavirus Job Retention Scheme?

More information on the Coronavirus Job Retention Scheme is available through our HR partner Citation.

If you have questions on the scheme please send them through to us using “CJRS Enquiry” in the subject to membership@ndna.org.uk and we will share them directly with the DfE for direct answers and either get an official FAQ document to share with providers or direct responses to your enquiries.

NDNA members can call our free legal helpline for support.

We urge you to take this up at a local level with your own MPs and parents. We have produced template letters for parents and MPs so you can highlight to them exactly what this will mean for your nurseries and staff. Parents will want to know how this approach will impact on the staff you are able to retain and the risks posed to your long term sustainability. MPs need to understand how vital your nursery is to the children you look after now but also the future of your local economy if parents are to be able to return to work.

See all coronavirus support