Update: the latest guidance on the Coronavirus Job Retention Scheme

Following the announcement by the government of the Coronavirus Job Retention Scheme (“CJRS”) on 20 March 2020, there have been many questions raised by both employers and employees regarding furlough leave.

On 4 April, 9 April and 15 April 2020, the government updated their guidance on CJRS to help clarify various matters regarding furlough leave with the aim of addressing these questions. In a further development, on 8 April 2020 the Treasury Committee announced that the online portal for employers to claim reimbursement is due to open on 20 April 2020.

In light of the updates since our last CJRS guidance note, we have provided answers to frequently asked questions which were previously uncertain.

Who is eligible?

Yesterday the government announced a change to the qualification date for the CJRS. The qualification date is now 19 March 2020 (as opposed to the 28 February 2020). This means if the employee (or worker) was on the employer’s payroll on or before 19 March 2020 they can qualify for furlough leave. The change from 28 February seeks to protect those individuals who had just changed jobs before the furlough scheme was announced.

What about individuals who are not employees?

Office holders, salaried company directors and members of LLPs are eligible to be furloughed and receive support through the scheme. Where furloughed, directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company.

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through the scheme, including where they are employed by umbrella companies. Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Can employees on unpaid leave be furloughed?

Employees who are on unpaid leave can be put on furlough leave in the following circumstances:

  • they were put on unpaid leave after 28 February 2020; or
  • they were put on unpaid leave before 28 February 2020 but furlough leave can only commence from the date they were due to return to work from unpaid leave.

Therefore, any employee who took unpaid leave to look after their children following the closure of schools and nurseries, or to care for vulnerable individuals in their household, can be moved onto furlough provided they took unpaid leave after 28 February. Employees who are on unpaid leave because they are shielding can also be furloughed. However, if an employee was on an unpaid leave prior to 28 February 2020 they cannot be put onto furlough leave until the date they are due to return from unpaid leave.

Can you put employees on long-term sick leave on furlough leave?

Yes, the guidance states that employers are able to furlough employees on long-term sick leave. It is the employer’s decision whether to furlough these employees or keep them on Statutory Sick Pay (“SSP”). If the employer furloughs the employee, they will of course cease to receive sick pay. If the employee is put on furlough leave, their pay should be based on their usual pay, not the pay they received whilst on sick leave.

If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.

What happens if a furloughed employee becomes sick?

Furloughed employees retain their statutory rights, including their right to SSP. Therefore, if an employee is ill whilst on furlough leave they must be paid at least SSP. Employers are able to decide whether they keep the sick employee on furlough or pay them SSP.

If a sick employee is moved onto SSP the employer can no longer claim for the furloughed salary. If the sick employee is not moved onto SSP they can remain on the furlough rate and the employer can claim the salary through the furlough scheme. There does not appear, therefore, to be an obvious incentive to move a sick employee onto SSP.

If the employee’s contract of employment states that they are entitled to sick pay equating to 100% of their salary the employee might prefer to be treated as unfit for work. In this situation, the contract will need to be considered carefully. Often, paying an employee full pay whilst unfit for work is discretionary. However, where it is not discretionary, the employer will need to consider varying the contractual sick pay term in the furlough leave agreement. 

Can employees who are shielding be placed on furlough?

Yes, if an employee in unable to work because they are following public health guidance (they are shielding), or if they need to stay home with someone else who is shielding, they can be placed on furlough leave.  

In previous guidance the government had stated that an employee who was shielding could only be placed on furlough leave if they could otherwise work from home. However, this was removed in the 9 April guidance.

Can employees whose employment terminated before the scheme was announced be re-engaged by their previous employer and furloughed?

Yes, the guidance confirms that an employee who “stopped working” for the employer, on or after 28 February 2020 can be placed on furlough leave if they are re-engaged by the employer.

How is salary calculated for employees returning from maternity or paternity leave?

For an employee returning from maternity or paternity leave, who works normal fixed hours, their furlough leave pay should be based on the salary they would now be receiving, including any pay rises that have taken place during their leave.

What is the minimum furlough period?

Any employee placed on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. An employee can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

Can employees work for the employer whilst they are on furlough?

No. You cannot ask your employee to do any work that:

  • makes money for your organisation or any organisation linked or associated with your organisation.
  • provides services for your organisation or any organisation linked or associated with your organisation

They can take part in volunteer work or training.

Can my employee work for a different employer whilst on furlough leave?

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.

What about employee taxes?

Your employees will still pay the taxes they normally pay out of their wages. This includes pension contributions (both employer contributions and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension.

How does an employer make a claim to HMRC for reimbursement?

When the employer is ready to claim they will need to be enrolled for PAYE online and submit:

  • The employer’s PAYE reference number.
  • The number of employees being furloughed.
  • The names and national insurance numbers for the employees being furloughed.
  • The employer’s self-assessment unique taxpayer reference, corporation tax unique taxpayer reference or company registration number.
  • The claim period (start and end date). Claims should be started from the date that the employee finishes work and starts furlough.
  • The amount claimed (for the minimum length of three consecutive weeks).
  • The employer’s bank account number and sort code.
  • A contact name and phone number.

Claims can be backdated to 1 March 2020 if applicable.

The employer will need to calculate the amount they are claiming. Any adjustment to salaries will not be made by HMRC. The claim can only be made at the point at which the employer runs payroll or in advance of an imminent payroll because actual payroll amounts need to be submitted.

Where the employer has an agent authorised to act for PAYE purposes, the agent will be able to submit the claim on the employer’s behalf. However, where the employer uses a file-only agent (who only files their RT1 return but does not act on other matters) that agent will not be able to submit the claim on their behalf.

Reimbursement will be paid via BACS payment to the nominated bank account.

What happens after you’ve claimed?

HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account. You must pay the employee all the grant you receive for their gross pay in the form of money. Furloughed staff must receive no less than 80% of their reference pay (up to the monthly cap of £2,500).

Employers cannot enter into any transaction with the worker which reduces the wages below this amount. This includes any administration charge, fees or other costs in connection with the employment.

How long will it take for HMRC to pay employers after they submit their claims?

On 8 April 2020, HMRC advised the Treasury Committee that it is aiming to pay employers four to six working days after submission of their claim.

The Treasury Committee also stated that the online portal is due to open on 20 April 2020. This means that employers who submit their claim when it opens should receive their first reimbursements by the end of April 2020.

What does the reimbursement cover?

The previous version of the guidance stated that fees, commission and bonuses should not be included in the calculation for what employers can claim. However, the 4 April undated guidance states that the employer can claim for “any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.”

Non-monetary benefits, including taxable benefits in kind, should not be included in the reference salary. This includes benefits provided through salary sacrifice schemes, including pension contributions, that reduce an employee’s taxable pay. The guidance provides that where the employer pays benefits to the furloughed employees, this should be in addition to furlough pay. We do not consider that this prevents an employer from agreeing a variation of benefits during furlough leave.

All of the grant received to cover an employee’s subsidised furlough pay must be paid to the employee in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

What happens when the government ends the furlough scheme?

When the government ends the scheme you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).


The information in this article is provided for general information purposes only. It should not be considered legal advice and you should not rely on this information in making any business, legal or other decisions. MS Rubric shall have no liability to you in respect of the information contained in this article, without limitation, including arising by any breach of contract, arising by tort (including, without limitation, the tort of negligence or negligent misstatement) or arising by a breach of statutory duty.