Posted on: April 21st, 2020

On Saturday 4 April the Government issued updated guidance for employers on the Coronavirus Job Retention Scheme (“CJRS”) along with a separate document for employees. This guidance was then updated again on 9th, 15th and 17th April. In addition, on 15th April, a Treasury Direction was issued setting out the legal framework for the scheme. Below we have set out some of the frequently asked questions and also highlighted some inconsistencies between the Direction and the guidance.. You can read this here:

Please note that this document has been prepared as general guidance and should not be relied on in lieu of taking proper legal advice.  The situation is dynamic and fast changing and it is important to keep up to date and take specific guidance on your particular circumstances.

When can we use the CJRS?

The scheme is open to all UK employers that created and started a PAYE payroll scheme on or before 19th March 2020 (this was originally 28th February), are enrolled for PAYE online and have a UK bank account.  Any such entity including businesses, charities, recruitment agencies and public authorities can apply. 

The Government originally indicated that the scheme was to be used as an alternative to redundancy, layoffs or unemployment. However, the latest guidance says that all employers are eligible and that the Government recognises different businesses face different impacts from the Coronavirus.  In short it is designed to help employers whose operations have been severely affected by Coronavirus or Covid-19 disease and cannot maintain their current workforce.

It is important to note that the Government has consistently indicated it retains the right to retrospectively audit employers and so there is the possibility of clawback from claims based on dishonest or inaccurate information or those found to be fraudulent. As such employers should exercise caution and certainly not abuse the system.

Furlough questions

Which employees can we furlough?

Originally the scheme covered employees  on the payroll on or before 28th February 2020.  However, following the later updates, they must not only have been on the payroll but also notified to HMRC on a RTI submission on or before 19th March 2020. Employees hired after 19th March 2020 cannot be furloughed or claimed for.

Does the scheme cover casual workers and workers on zero hours contract?

The scheme covers all individuals on the PAYE system including any casual and zero hour contract workers who are paid through PAYE.  Likewise it also confirms that workers on fixed term contracts can be furloughed and their contracts could be renewed or extended without breaking the furlough scheme rules.

What about directors and salaried members of limited liability partnerships?

The grant can be claimed for other types of workers provided they are paid via PAYE and are not doing any work.  For example office holders including company directors and salaried members of limited liability partnerships can be placed on furlough.

Directors who are furloughed can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company accounts or other administration.  Both directors and LLP members will need to have the arrangements regarding furlough formally adopted as a decision of the relevant company or LLP.

What about sick workers?

This is an area of inconsistency between the guidance and Direction. The guidance says employees who are off sick can be furloughed (whether sick long or short term). The employee should then be paid the same as other furloughed workers rather than sick pay. However, it also says furlough is not intended for short term absences from work due to sickness but also that short term illness or self-isolation should not be a consideration when deciding whether to furlough an employee. The Direction says that an instruction to place an employee on furlough who is in receipt of SSP only takes effect when SSP ends!

If an employee falls sick during furlough (and lets the employer know!) the employer can decide whether to move them to SSP or to keep them on furlough. If the latter they can continue to claim for them but if they move to SSP they claim for the SSP not furlough salary.  

What about workers who are shielding?

The guidance is clear that workers who are shielding in line with public guidance can be furloughed if they are unable to work from home and would otherwise be made redundant. However, again, the Direction complicates things as it states that someone’s entitlement to SSP must have ended before they are put on furlough. So it would be sensible to take specific advice on this.

What about those with caring responsibilities?

Again yes provided they are unable to work from home and would otherwise be made redundant they can be placed on furlough.

What about employees on maternity or other family leave?

The guidance says that employers can claim for enhanced maternity pay through the furlough scheme which suggests that employers can furlough employees on maternity leave.

If an employee on maternity leave agrees to be furloughed then the employer will be able to reclaim their statutory maternity pay in the normal way.  You will then be able to claim for any enhanced contractual pay on top through the furlough scheme.

Can we furlough foreign nationals with Visas?

Yes the guidance says foreign nationals are eligible but will need to be paid via PAYE.  The position for Tier 2 workers is much more complicated and we suggest you take specific advice but it is now clear that receipt of funds under the furlough scheme will not be regarded as ‘access to public funds’ and therefore a breach of visa conditions.

What about self-employed people?

No the Government has a separate scheme to support self-employed individuals which can be accessed here:

How should we select employees to be furloughed?

The guidance makes it clear that the usual discrimination and employment laws apply and therefore employers should decide who to furlough very carefully.  As a minimum the chosen rationale and ideally evidence should be retained should the need arise in future for justification. Commonly we are seeing businesses look first to those with no work or who cannot work from home, those with declining work streams or who are not in business critical roles. It may be wise to draw up and apply a selection criteria. 

Can we furlough someone who is working reduced hours?

No.  An individual must carry out no work at all if they are furloughed.  An alternative to this would be looking at short term working (if you have the relevant contractual clause) or agreeing a different working arrangement. 

Can we make an employee redundant and furlough others?

It appears that you can.  The guidance clearly says you do not need to place all of your employees on furlough but again we would suggest you proceed with caution as if the ability to furlough someone is available as an alternative to redundancy it could potentially be seen as an unfair dismissal to move straight to redundancy. 

Can we move employees in and out of furlough multiple times?

It appears that you can.  The latest guidance certainly makes it clear that employees can be furloughed more than once.  Each separate furlough leave period must for a minimum of three consecutive weeks although one period can follow another and when employees return to work they must be taken off furlough.  As such it appears that as long as each rotation is for a minimum of three weeks that is fine.

What can we do if we have already made staff redundant?

If you have made redundancies and the employees were on your payroll and notified to HMRC on an RTI submission on or before 28th February, it is possible to rehire those employees and put them straight on the scheme but you will obviously need their agreement to do so. 

What can we do about people that have resigned or been dismissed for non-redundancy reasons?

The latest guidance confirms that you can rehire individuals who have left in other circumstances provided they were on your payroll and notified to HMRC on an RTI submission on or before 28th February and they have left since then.  However there appears to be no legal obligation to do so.  If you decide to rehire anyone and put them on the scheme we suggest you take specific advice about the additional risks that may come with this.  If someone has resigned but not left you may allow them to rescind their notice but again do not need to do so. 

Can staff who TUPE transferred to the employer after 19th March 2020 be furloughed?

Yes. The latest guidance has confirmed that a new employer can furlough the employees of a previous business transferred after 19th March 2020 if either the TUPE or PAYE business succession rules apply to the transfer.


How much is the grant?

HMRC will reimburse 80% of furloughed workers regular wages up to a cap of £2,500 gross per worker per month.  In addition they will reimburse the associated employer national insurance contributions and minimum automatic enrolment contributions on that wage. 

How do we calculate wages?

For salaried employees, you must use the actual salary before tax as of 19th March 2020.  For employees whose pay varies you can claim for the higher of the same month’s earnings for the previous year or average monthly earnings for the 2019 to 2020 year. 

If an employee with variable pay has been employed for less than a year you can claim for an average of their monthly earnings since they started.

An online calculator is also now available at

What happens with salary sacrifice schemes?

The guidance states that post salary sacrifice wages as of 19th March 2020 should be used.  Benefits provided through salary sacrifice schemes (for example pension contributions) that reduce taxable pay should not be included however it is worth noting that HMRC have confirmed that Coronavirus can count as a life event that could warrant changes to salary sacrifice arrangements provided this is reflected as a change in the employment contract. 

What about other payments?

The updated guidance says you can claim for any regular contractual payments including wages, past overtime, fees and compulsory commission payments.  However discretionary bonuses (including tips) and commission payments and non-cash payments are excluded.  It is slightly unclear how overtime and compulsory commission will work as obviously the individuals on furlough will not be working any overtime or earning any commission so some greater clarity in this area would be appreciated.

What is the position on pensions?

You can reclaim the minimum mandatory employer pension contribution on top of the subsidy (i.e. on top of the £2,500 cap). 

The minimum contribution under the author enrolment regulations is 3% of an employee’s income above £520 per month (from 6 April 2020).  Any contributions over and above this cannot be reclaimed so you will need to maintain them unless you agree something different with the employee. 

What about other benefits such as health insurance?

The scheme does not include the cost of non-monetary benefits including benefits in kind.  They will need to be maintained at the employer’s own expense unless something different is agreed with the furloughed employees.

Are furlough payments taxable?

Yes they will be subject to PAYE and national insurance contributions.

Is there any requirement to pay 100% of salary during furlough?

No.  The guidance is clear that an employer can top up the payment if it wishes but does not have to do so.  However whether you do so or not may form part of the negotiations in terms of seeking agreement if you need to do so. 

What happens if the payments are less than the minimum wage?

The guidance has made it clear workers are only entitled to the national minimum wage/national living wage for the hours they are working so whilst on furlough you do not need to apply national minimum wage or national living wage rates.  However the position is different in relation to training.


How do we place someone on furlough?

The guidance in this area has changed slightly and also conflicts to a certain extent with the Direction.

The guidance states that employers should discuss being placed on furlough with staff and make any changes to the contract by agreement. Our view is that in the fairly rare situation that the employer has a contractual cause that allows them to lay staff off without any pay at all the process should gave you the ability to  designate staff as being on furlough leave (as the alternative of lay off with no pay is significantly worse).  Where such a clause do not exist it is clear that changes will need to be made by agreement. The guidance then stated that the employer just needed to confirm this in writing to the employee and keep a record for 5 years.

However, the Direction says that the furlough needs to have been agreed in writing between employer and employee (this could be electronically). Written agreement is clearly more onerous than written confirmation so this has caused some concern. Especially with those who relied on a lay off clause of similar. It seems that the government have backtracked slightly though as the latest guidance (which came out after the Direction) states that so long as consent was obtained in a way consistent with employment law it will be valid for the purposes of the scheme and that a written record does not need to include a written reply from the employee. As such, it appears arguably that any changes made as a result of a contractual clause enabling you to do so ‘may’ still be sufficient. Another area to take specific advice on if you have concerns.

It is worth highlighting that in our experience so far most conversations seeking agreement have been relatively straightforward as in many cases employees will be willing to accept furlough as the alternative such as being made redundant or laid off without pay are significantly worse and that they also appreciate these unprecedented and difficult times.  However if the individual does not wish to be placed on furlough you should take specific advice as compelling them to do this without the contractual ability to do so is likely to be a breach of contract and could result in a constructive dismissal and/or unlawful deduction of wages claim. 

Do we need to collectively consult?

This is a very tricky question as the guidance suggests that if sufficient numbers of staff are involved it may be necessary to engage corrective consultation processes to procure agreement to the changes in the contract.  Again we suggest you take specific advice on this point.

Can an employee insist on being placed on furlough?

No.  It is for the employer to designate them as furloughed. 

Does continuous service continue to accrue during furlough?


Holidays and furlough

Will workers continue to accrue holiday allowance whilst they are furloughed?

We believe the answer is yes as they will remain employed.  Certainly statutory minimum holiday entitlement of 5.6 weeks per year is likely to continue to accrue although the guidance is unhelpful and entirely silent on the issue of holiday.

Can people take holiday whilst furloughed?

For a long time the guidance and the Direction were silent on this issue. However, the latest guidance has confirmed that furloughed employees can be on holiday during furlough which is consistent with the updated ACAS guidance which states that employees should be able to request and take holiday in the usual way.  This means that if employees have pre-booked holidays they will be able to take them and the employer does not need to allow them to reschedule unless it would ordinarily have done so.  Likewise, in our view, it appears as though an employer can require an employee to take holiday during furlough provided they give the usual notice of twice as much notice as the length of holiday.  However the guidance itself is entirely silent on this point so the position may change.

What about Bank Holidays?

If employees have the right to take Bank Holidays off as holiday then it seems this will continue to apply during furlough unless something different is agreed.

What should we pay staff who take holiday during furlough?

We suggest you take specific advice on this as there is no clear answer at this stage (but plenty of commentary).  The employer’s guidance does not confirm this one way or another but the employee’s guidance refers to ‘usual pay’. What is usual pay when staff have agreed to reduced pay is itself open to interpretation. One approach could be to pay 100% of salary for any statutory minimum holiday entitlement.  Alternatively you could pay the reduced furlough leave pay and then offer to top up if government guidance clarifies that this must be done.  Of course any top ups will not be recoverable by the employer.

What happens if our employee accumulates lots of holiday whilst on furlough that they do not take?

The Government have announced that workers will be able to carry over some of their annual leave for the next two years as part of tackling the Coronavirus situation which should give employers some flexibility. 

What can you do on furlough leave?

Can employees work whilst on furlough leave?

Definitely not. The guidance is very clear that they cannot do anything that is work or provides services or makes money for the employer and doing so would invalidate the reclaiming of their salary.  It is therefore important to draw this to the individual’s attention and ensure that they abide by the requirement. It is also clear that no work can be done for organisations that are ‘linked’ to the employer either.

What about training?

Yes.  A furloughed employee can do training if this does not involve providing services or generating revenue.  In fact the guidance encourages people to take training but they must be paid at least the national living wage/national minimum wage or the apprenticeship minimum wage for 100% of the time spent training.  As mentioned this includes apprentices who are not carrying out work but are continuing their training.

Can an employee placed on furlough take another job or work for another employer?

Yes this is allowed under the scheme guidance.  However it remains subject to the individual’s contract of employment and therefore if it is with a competitor or otherwise would be problematic you can still impose restrictions but in many cases you may not wish to do so as it would allow employees to top up any salary.

Does this include volunteer work?

Yes they can carry out volunteer work as long as it does not generate revenue for you.

Ending furlough

How long can we keep workers on furlough?

Currently he scheme will be open for an initial period of  four months from 1st March to 30th June 2020 but the Government have suggested it could be extended again.  To qualify you need to keep staff furloughed for at least three weeks in any one block of furlough.

How do we get employees back to work from furlough?

The guidance is silent so it would be sensible to ensure in the agreement or letter written to the employees that you explain when they may be called back and what, if any, notice you need to give them. 

Can we dismiss someone who is on furlough?

The guidance for employees makes it clear that employees can be made redundant whilst on furlough so that would suggest you can.  However it is not entirely clear what the individuals would be due to be paid for any period of notice.  In addition the guidance is clear that the furlough grant cannot be used to fund a redundancy payment.  Worth highlighting that all normal rights regarding fairness of any dismissal would apply.

When will we be able to access the Government portal to reclaim payments?

The portal went live on 20th April 2020.

Can we backdate claims?

Potentially yes.  Claims can be backdated to 1 March where employees had already been furloughed or where they have been re-employed where made redundant after 1 March and then placed on furlough.  However the guidance is very clear that the grant can only begin when an employee has finished work and started furlough so this is the relevant date not the date they sign an agreement.