Ed Hussey - Menzies Accountant

Ed Hussey –
People Solutions Director
DD: +44 (0)1784 497105

Andrew Brookes - Menzies Accountant

Andrew Brookes –
Employer Solutions Specialist
DD: +44 (0)1252 541244


We have covered below the most common questions we received in connection with the Job Retention Scheme and have provided generic answers that will hopefully help to address some of your concerns.  This is not an alternative to taking bespoke advice that considers the specifics of your circumstances and your employment contracts and we would always advise that you take appropriate advice before acting.

Click the below links to jump to each section

KEY QUESTIONS RELATING TO the extended scheme

What are the key features of the extended scheme from 1 November?

Added 1/11/2020

The extended furlough scheme operates in the same way as the original scheme, i.e.:

  1. Employers can claim, and must pay their employees at least, 80% of their normal pay up to £2,500 per month.
  2. Employers will have to meet employer NIC and pension contributions.
  3. Both flexible furlough and full time furlough are available.
  4. You are still able to ‘top up’ the 80%.

Neither you nor your employees need to have used the previous CJRS Scheme. All employers with a UK bank account and UK Pay As You Earn (PAYE) scheme can claim.

For periods up to 30 April 2021, you can claim for employees who were on your PAYE payroll by 23:59 on 30 October 2020, meaning a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30 October 2020.

For periods from 1May 2021, you can claim for employees who were employed with you on 2 March 2021, provided that they had appeared on a RTI submission to HMRC between 20March 2020 and 2 March 2021. You are not required to have made previous claims for employees prior to 2March 2021 in order to be able to make a claim for a period after 1May 2021.

What are the minimum furlough periods?

Updated 9/11/2020

You can furlough employees for any amount of time or shift pattern and will be able to vary the hours worked – all of course with the agreement of your employees.  Remember to keep detailed records so that you can calculate your claims. Employees can agree to flexible furlough periods more than once.

Is there a break in CJRS coverage between the lockdown periods, or is it continuous?

Updated 03/03/2021

There is no gap in eligibility for support.  The scheme has been extended to the end of September 2021. The percentage of wages that employers can reclaim has varied over the duration of the scheme but returned to 80% from 1st November.  Employers continue to need to pay National Insurance and pension contributions. 

Furloughed workers will continue to receive 80% of their salary until September 2021. As was the case with the scheme last year, however, Employers will need to start contributing from July but this must not affect pay received by the employees

Employers may choose to top up their employees’ salaries to 100%, but they’re under no obligation to do so.

Are there changes to claim periods that I need to be aware of?

Updated 9/11/2020

However, your claim can not straddle two calendar months, i.e. the claim period must start and end within the same calendar month.  If your pay period includes days in more than one calendar month, separate claims will need to be submitted covering the days that fall into each month; each of those claims will need to be calculated separately. Claim periods cannot overlap, and employees claimed for will need to be included in each separate claim made.

You can make a claim in anticipation of an imminent payroll run, at the point you run the payroll or after you have run their payroll, but the deadline for claims to be submitted is significantly shorter (see next question).

When can I claim?

Updated 9/11/2020

You are able to claim from  14 days before the end of a claim period.  For example, a claim to 30 April cannot be submitted before 16 April.

Remember that your claim must be for a minimum 7-day claim window.

Although you can claim in advance, be careful if changes within the claim period mean it is now inaccurate (such as sickness or a change or working hours).  Scheme deadlines  mean there is minimal possibility of increasing claims if you underclaim the first time around (see below).   

You must agree periods of furlough with employees and put in place a written agreement with them in advance to be able to make a claim.

The deadline for claims is tight.  Claims relating to the current month must be submitted by day 14 of the following month.  Historic claims will not be accepted.

Can I amend my claim?

Updated 15/01/2021

You will only be able to amend the amount of your claim if you contact HMRC to do so, within 28 calendar days after the month the claim relates to (unless this falls on a weekend or a bank holiday, when it would be the next working day)

What are the reference dates for pay and hours?

Updated 03/03/2020

Employees eligible for the first CJRS scheme (up to end October 2020) will be eligible for the November 2020 – September 2021 scheme using the same reference pay and normal working hours as previously. 

For anyone who was not eligible for the previous scheme (probably because they started employment on or after 20 March 2020), the reference periods will depend on the reference date.

For those with a reference date of 30 October 2020 (i.e. those who appeared on an RTI submission between 20 March 2020 and 30 October 2020), the reference periods are:

  • on fixed hours / salary – the last pay period ending on or before 30 October 2020
  • whose pay / hours vary – the average between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins on or after 1 November 2020
  • In a change to the previous scheme, fixed salary workers with significant overtime pay will probably be treated as variable pay workers for these calculations rather than fixed pay workers.

For periods starting 1 May 2021 onwards, and for those with a reference date of 2 March 2021 (i.e. those appearing on an RTI submisisons between 20 March and 2 March 2021) there reference periods are:

  • on fixed hours / salary – the last pay period ending on or before 2 March 2021
  • whose pay / hours vary – the average between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins on or after 1 May 2021
  • In a change to the previous scheme, fixed salary workers with significant overtime pay will probably be treated as variable pay workers for these calculations rather than fixed pay workers.

You can only make one claim per period, so it must include all furloughed & flexible furloughed employees even if you paid them at different times.  Claims must be restricted to calendar months and therefore records maintained to ensure that worked days are allocated to the correct calendar month where the payroll straddles the calendar month end.

What data do I need to keep?

Added 1/11/2020

You will need evidence in support of your claims.  This should consist of the furlough agreements with employees, details of the calculations of normal pay (and normal hours for flexibly furloughed employees) together with calculations of furlough pay and evidence of payments made to the employee and the pension company.

Am I able to furlough employees returning from statutory parental leave (maternity, paternity, adoption, shared parental or parental bereavement leave)?

Updated 11/11/2020

Yes, but if your employee decides to end their maternity leave early to enable them to be furloughed (with your agreement), they will need to give you at least 8 weeks’ notice of their return to work and you will not be able to furlough them until the end of the 8 weeks.

If I have consolidated a number of payrolls within my group of companies, can I still furlough the employees?

Updated: 7/01/2021

As hoped HMRC have now corrected their guidance to say that where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme, the new scheme will be eligible to continue to furlough and claim for employees.

Am I able to furlough employees that have transferred under TUPE and on a change of ownership?

Added 1/11/2020

Yes, the new employer is eligible to claim in respect of the employees of a previous business transferred if the TUPE or PAYE business succession rules apply to the change in ownership.

For claims up to and including 30 April 2021, the employees being claimed for should have been:

  • transferred from their old employer to their new employer on or after 1 September 2020
  • employed by either their old employer or new employer on 30 October 2020
  • on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee

For claims from 1 May 2021 onwards, you can claim under the normal rules if the employee was on an RTI submission on or before 2 March 2021. Otherwise, the employe must have:

  • transferred from their old employer to their new employer on or after 1 January 2021
  • been employed by their old employer on 2 March 2021
  • appeared on a PAYE Real Time Information (RTI) submission to HMRC, by their old employer between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee

The process of claiming for employees that transferred under TUPE is very time-consuming.  Where practical, delaying the merger of payrolls until after the furlough claim period ends may be more cost effective than trying to claim for transferred employees.

Please also see the answer above in relation to consolidated payrolls.

How much do employers need to contribute?

Updated 03/03/20

Employers must pay furloughed employees at least 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed (wage caps are proportional to the hours the employee is furloughed).  The Government grant will cover this cost for unworked hours. The employer pays employer NICs and pension contributions, plus any top up to the 80% (capped at £2,500 per month) that you wish to make. 

From July 2021, Government contribution will reduce to 70% with Employers required to contribute 10%.

From August 2021, Government contribution will reduce to 60% with Employers required to contribute 20%.

Under flexi-furlough, you will need to cover the salary for any hours worked.

Care should be taken regarding salary sacrifice because the Government contribution must be paid to the employee in full (other than for tax, employee’s NIC and employee’s pension contributions).  This pay must not be reduced for salary sacrifice and therefore if the salary sacrifice remains in place, the employer may need to top up the wages by a sufficient margin to ensure that the post salary sacrifice gross salary is no lower than the Government contribution. 

Do I need to update the furlough agreements that I have in place?

Updated 1/11/2020

Yes, any new or extended furlough arrangements should have a written agreement in place in advance with the employee. For those where flexible furloughing is going to apply and working hours are going to change, this should be provided in the agreement.

Whilst agreements do not need to be signed, they should be discussed with employees and a written record kept for 6 years. 

The terms of any agreement must:

  • reflect the hours the employee is to work or not work over the period of the agreement
  • allow you to satisfy the terms of CJRS so you can make a claim in relation to hours not worked.

You must keep a record of how many hours your employees work and how many hours they are furloughed (and therefore not working).

Can employees take holiday whilst on furlough, and can I claim for this?

Updated 03/03/2020

Yes.  You can claim the 80% (70% from July, 60% August) grant from the government to cover most of the cost of holidays during furlough.  You need to ‘top up’ their pay to 100% for any holiday hours. 

The CJRS claims process

How do I apply for the support?

Updated 1/11/2020

Guidance indicates that you need:

  • your employer PAYE reference number
  • the number of employees being furloughed
  • National Insurance Numbers for the employees you want to furlough
  • Names of the employees you want to furlough
  • Payroll/works number for the employees you want to furlough (optional)
  • your Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
  • the claim period (start and end date)
  • hours worked and the usual hours an employee would be expected to work in a claim period.
  • amount claimed per employee your UK bank account number and sort code
  • your contact name
  • your phone number
  • you will need to calculate the amount you are claiming.
  • for smaller employers (less than 100 employees) this information is keyed into the portal.  Employers with more than 100 employees are able to upload a file with this information.
  • your calculations must be retained for 6 years and made available to HMRC on request.

Menzies LLP can assist you with these claims, but you may need or prefer to submit the claim through your own Government Gateway account.  We therefore recommend that you apply for this quickly if you do not already have one and that you know your login and password if you do already have one.  This will minimise the risks of delays if your agent is prevented from submitting the claim on your behalf.

How quickly will I receive the payment?

Added 9/11/2020

Payments are made 6 working days after submission to the government portal. 

Should I pay my employees’ next salary or wait to get the grant?

Added 1/11/2020

If your cash flow forecast allows, pay them and – provided you have your furlough agreements in place with your staff – back date your claim to cover the payments made (or part thereof, if you are topping up the grant).  If you do not have the available cash; and can’t get sufficient relief from the other facilities on offer to ease your cash flow, you will have to agree with your employees that it will be paid on receipt from the government.

Claims can be submitted up to 14 days in advance of the end of the claim period, but please watch the requirement to be “sure of the exact number of hours worked” for flexibly furloughed employees which will make it difficult to apply early.

What earnings are included when making claims?

Updated 11/11/20

Wages for hours not worked by the employee; overtime paid against a contractual obligation at a set and defined rate can be included,  plus, non-discretionary fees and commission payments and piece rate payments.  Overtime pay may change a fixed salary employee into a variable pay employee adding complexity to their calculations.

Discretionary bonuses, tips, commissions and non-cash payments should be excluded. Apprenticeship Levy and Student Loans must continue to be paid and are not covered by the Scheme.

Should I submit a claim to the portal as quickly as possible?

Updated 07/11/2020

This will depend on your circumstances and you should consider factors such as: how long since you furloughed staff; how long before you run the payroll again; do you have all of the information to hand; is it more cost effective to wait so you only incur costs for fewer claims; what is your cashflow position; etc.

The requirement to be “sure of the exact number of hours worked” for flexibly furloughed employee makes it difficult to apply early.

Do remember however the deadline, i.e. that claims for the current month must be submitted by day 14 of following month.

I started furloughing employees a few days ago, when can I submit my first claim?

Updated 11/11/2020

Claims cannot be submitted more than 14 days before the end of the claim period.  However, you needed to be sure that you would not be either adding employees to or removing employees from furlough during the remainder of the furlough claim period.  If there is doubt or you wish to retain flexibility then it would be prudent to wait until the end of the claim period before you prepare your claim – providing of course you will be able to meet the claim deadline of day 14 of the following month.

I am due to run the next payroll in a week or so, should I hold off my claim until I run that payroll?

Added 11/11/2020

This will depend on whether you are certain about the hours worked during the claim period.  If no employees are flexibly furloughed in this claim period and you know that none will be brought back to work and no others will be furloughed then you can submit your claim within 14 days before the end of the claim period.  You may wish to hold on if there are more than 14 days before the end of the calendar month so you only need to make one claim in this period.

Your current situation – does the scheme apply to you?

We do not have enough work to keep all employees occupied – should we put the employees on short hours, make some redundancies or use the Coronavirus job retention scheme to furlough some?

Updated 11/11/2020

This will depend on the specific business circumstances, but commercially the starting point is likely to be utilising the Coronavirus Job Retention Scheme in preference to either reducing hours or making employees redundant because this is the only option that currently secures financial support from the Government.  The option to furlough employees on either a full or part time basis means you can try to match you workforce requirements more precisely to your demand and adjust it on a flexible basis as things change.  Make sure however that your furlough agreements cover the way in which you want to use the scheme.

How do I determine whether the business qualifies for the Government support under the Scheme?

Updated 11/11/2020

The scheme is for employers who cannot maintain your workforce because your operations continue to be affected by coronavirus (COVID-19). You should determine what you need to do as a business in order to survive the ongoing restrictions and further lockdown, separate to any consideration of the Scheme.  If staff lay-offs or redundancies are financially unavoidable, we would expect you to be covered given the aims of the Scheme.

Please be aware that there are restrictions for public sector employers, private sector employers that receive public funds for staff costs and private sector employers that are providing goods and services to meet  COVID-19 needs.  While there will be some exceptions to the exclusion, if you potentially fall within these restrictions, please consider your position carefully before furloughing employees.

Can I decide which employees are to be furloughed and which will continue working?

Updated 1/11/2020

Yes, firstly the decision to furlough is for the employer to make – it is not an employee entitlement.  Secondly, deciding who to furlough will depend on the circumstances. You can for example retain the staff whose roles or skills are required for the remaining work while furloughing those whose jobs or skills are not needed due to the downturn in work.  If you need to furlough just a few, out of a group that all do the same work, you should consult with the staff and approach it in a similar way to a redundancy decision.  You may find that they provide a solution, e.g. because some may prefer to be furloughed because they will have difficulty working remotely, whereas others may wish to remain working.  It is also considered appropriate under the scheme to furlough employees who have childcare or other caring responsibilities who may be finding it difficult to work from home, and those who have been advised to shield.

The other alternative is of course to make use of the flexible furlough option and to reduce hours for several employees to spread the effect of the downturn.   You can bring people back from furlough or furlough more employees as work levels vary, and the same employee can be furloughed more than once. Under the Nov20 – Apr21 scheme you can furlough anyone who was paid via PAYE and on your RTI return to HMRC between 20 March 2020 and 30 October 2020, and under the May21 – Sep21 scheme you an include those on your RTI return to HMRC between 20 March 2020 and 2 March 2021.  This means that people who have not previously been furloughed can now be included.

What can I do if I am in the process of making employees redundant – can I change my mind and opt for the job-retention scheme instead?

Updated 01/11/2020

Yes if use of the scheme provides an opportunity to preserve employment. 

What if I have made employees redundant – can I change my mind and bring them back on the job-retention scheme instead?

Updated 06/11/2020

Employees that were employed and on the payroll on 23 September, but later left your employment, can be re-hired and included in the scheme providing you meet the qualifying criteria for the scheme. 

What are my options where I have four employees but only enough work for two?

Updated 1/11/2020

You have the flexibility under the scheme to use a combination of full and part furlough for any of your employees (provided they are eligible) and to make changes to the arrangements whenever needed.  For the sake of your claim, try not to implement complex working hours with multiple changes as you will have to calculate the effect of all the part time furlough elements.

Is it possible to alternate the staff members furloughed?

Updated 1/11/2020

Yes, it will be your decision who you keep working or who you bring back to work and when. Consult with your staff and encourage them to discuss it with each other where possible – their differing circumstances may mean that some will be better served by being on furlough and others not.  They may well provide you with an easy solution.

Are businesses that receive income from public sources prevented from claiming under the job retention scheme?

Added 15/04/2020

The short answer is “yes”, the guidance indicates that the public sector, and private sector businesses securing income from the public sector, are not expected to use the scheme.  If they are part funded by public money (e.g. pre-school nurseries), claims must be proportionate to the amount of private income received.  However, this is probably too simplistic and may not be the case in all circumstances.  We therefore recommend that advice is obtained before assuming that a claim is available, particularly if a significant proportion of the business income is from continuing public sources.

What is the tax treatment of the grant?

Added 15/04/2020

The job retention scheme grant is taxable but given this will be matched by outgoing expenditure on salary paid to the employee, it does not actually increase net profit and result in a tax charge.  Making the grant taxable simply prevents the business from claiming tax relief on the costs that the grant is meeting on behalf of the business.

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The job retention scheme, how to implement and apply

What have the Government said about preventing fraudulent claims under the job retention scheme?

Added 11/112020

Several statements have been made about the risk of fraudulent claims and this has been accompanied by changes to the information required in support of claims under the scheme.  HMRC are actively seeking to detect inappropriate claims and there is an anonymous fraud phone line.  Audits are being carried out to check claims and this will no doubt remain the case.  HMRC publish details of employers who are using the scheme and employees will be able to find out if their employer has claimed for them under the scheme.  We expect public naming and shaming to follow detection of fraudulent claims.

Do I need to agree furlough arrangements with my employee(s) or can I simply tell them it is happening?

Updated 11/11/2020

Furlough is a change to the employment contract and requires a written agreement with the employee. You may already have furlough agreements in place that cover a previous furlough arrangements and these will need updating.  Check, update and communicate with your employees as necessary.  HMRC require you to have evidence of an agreement with the employee and to retain this on your records for a period of 5 years.

Although not a requirement from HMRC, you should ideally have the employee confirm agreement with either a signed document or a consenting email so you reduce the risks of a claim from the employee later.  Where you have multiple employees and only some are to be furloughed, you need to demonstrate that decisions have been taken on a fair, logical and non-discriminatory basis.

Can I pay some furloughed employees more favourably than others?


You should be consistent to ensure that you You should be consistent to ensure that you are not at risk of behaving in a discriminatory way.  If you plan to top up the earnings of some employees to 100%, then we recommend you do this evenly across your employees.  You are not required to top up to receive the grant.

Should I continue to pay 100% of salary even though the Government are only subsidising 80%?

Updated 06/11/2020

You are not required to pay more than the amount you will receive back from the Government.  You can however choose to ‘top up’ that amount.  You need to consider the circumstances as well as the ability of the business to continue to pay the salary.  For example, if you have two employees and only furlough one, the remaining employee may be disgruntled if they are working full time for the same pay as the one not working.  Similarly, paying full pay while on furlough could lead to resistance from some employees to return to work where there is no financial benefit and they could be worse off once commuting costs, etc. are factored in.  The situation may be different if all employees are being furloughed.

Are the payments to furloughed workers still liable to employers NIC, auto enrolment, apprenticeship levy, etc?


The payments to the furloughed employee are treated as normal pay and will be liable to tax, NIC, etc in the same way as salary and wages.

Is the £2500 cap pro-rated for part-time employees?

Updated 11/11/2020

The short answer to the question is that the furlough cap does not have to be reduced in line with normal (pre furlough) part-time working hours (i.e., someone who usually works 50% of the full-time hours is subject to the same cap of £2500 as a full-time worker). This can mean that part time employees can receive a higher proportion of their earnings than full timers who exceed the cap.  This can become even more complicated when flexible furlough is brought into play.

For example: 

Jill normally works 40 hours a week and Jack works 30 hours a week.  Their normal salaries are £4,000 and £3,000 per month respectively.

For a month of full furlough:

Jill will receive £2,500 (£4,000 x 80%, capped at £2,500)

Jack will receive £2,400 (£3,000 x 80% which is below the cap)

For flexible furlough for ease of calculation we have assumed they will work half their normal time and are furloughed for the other half:

 Jill will receive worked pay of £2,000 (4,000 x 50%) and furlough pay of £1,250 ((£4,000 x 80%, capped at £2,500) x 50% for the unworked hours)

Jack will receive worked pay of £1.500 (3,000 x 50%) and furlough pay of £1,200 ((£3,000 x 80%, uncapped) x 50% for the unworked hours)

Disclaimer – This illustration is for demonstration purposes only and ignores the complexities of weekends and other non-working days and the fact that there will be more working days in some months than others.  Normal working hours and furlough pay are based on a 7-day week and ignore the fact that some days are normally unworked.  Every pay period is therefore likely to be different to the above example, but for simplicity of demonstrating the position, we have ignored these complications.

Can I start by paying full pay to furloughed workers and then reduce this later as funds decline?


Yes, and this will be confirmed in your agreement with the employee.   If you agree a furlough based on full pay, then you will need to revisit the agreement to vary the payment entitlement later.  Word your agreement carefully from the outset if you think this is going to be likely.  At the very least the variation would need to be agreed with the employee.

How is payment assessed for those returning from a period of statutory leave?

Updated 11/11/2020

In line with other employees, claims for full or part time employees returning from statutory leave should be calculated against their contractual salary before tax, not the pay they received whilst on statutory leave (this includes maternity leave, paternity leave, shared parental leave, adoption leave, sick leave and parental bereavement leave)..

Claims for those on variable pay, returning from statutory leave should be calculated using reference dates which remain unchanged from the earlier scheme:

  • same month’s earning from the previous year
  • average monthly earnings for the 2019-2020 tax year.

If your employee returns from maternity, shared parental, adoption, paternity or parental bereavement leave and you are claiming in respect of a period that starts on or after 1 November, the normal scheme rules apply.

If your employee decides to end their maternity leave early to enable them to be furloughed (with your agreement), they will need to give you at least 8 weeks’ notice of their return to work and you will not be able to furlough them until the end of the 8 weeks.

How is payment assessed for zero hours workers or those on variable hours contracts?

Updated 11/11/2020

For those employees who’s eligibility is based on the service requirement for the first scheme in March 2020 (regardless of whether furloughed or not) their pay and normal working hours will still be assessed under those scheme rules, i.e.; based on the higher of the pay (after deducting salary sacrifice) for the corresponding month last year, or their average earnings over a period.  The period of averaging remains the 2019-20 tax year. 

For all other employees eligible from 1st November onwards, you should calculate the average wages payable and hours worked between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020 or 1 May 2021 depending on relevant reference date.

Is the £2500 cap gross or net?

Updated 1/11/2020

The £2,500 is the maximum amount that the Government will pay for salary.  Therefore, for employees earning below £37500 p.a. the employer will receive 80% of the normal salary.  For those earning above £37500 p.a., the employer will receive £2,500 per full month of furlough.  Therefore, from the employee’s perspective, this is the gross amount.

Can I provide support to contractors during this period?


Contractors are an independent business and care should be taken before favourable support is provided to them.  The main concern is that this could be indicative of employment thus making PAYE or IR35 applicable.  The other issue is that contractors have usually been paid at a higher rate to reflect the independent business to business relationship. The government has measures to provide income support to self-employed workers and this may be of assistance to some contractors.

Can I increase salaries now to secure a higher level of support from the Government?


The reference period for determining ongoing claims remains unchanged (as 19th March 2020 or an average of previous tax year earnings under the original scheme).  For those eligible for the Nov20 – Apr21 scheme the reference pay period is the last pay period ending on or before 30 October 2020, and for the May21 – Sep21 scheme this will be 2 March 2021;

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Eligible Employees

Furloughed employees must have been on the company PAYE payroll on 2 March 2021 and included on an RTI submission by then, except for those who have joined under TUPE after this date. They do not need to have been previously furloughed.

Are foreign nationals with visas eligible for the furlough scheme?

Added 03/04/2020

The scheme covers all workers paid via PAYE including foreign nationals working for any entity and paying UK PAYE.   There are however potential sponsor compliance issues to consider and while foreign nationals with limited leave are in most cases not entitled to receive public funds, accessing funds through the furlough scheme is not currently prohibited. If you have sponsorship compliance issues to consider, we recommend you seek specialist advice from an immigration advisor.  We can make a referral for you.

Can fixed-term employees be furloughed?


Fixed term workers can be furloughed and their contracts can be renewed or extended during furlough.  If their contract expired after 23 September, they can be re-employed and claimed for as long as the other relevant eligibility criteria are met.

Can apprentices be furloughed?


Apprentices can be furloughed and can continue to train, for which they should receive the appropriate minimum wage. You will be responsible for any shortfall. Further guidance is provided on the government website.

Can directors be furloughed?

Updated 06/11/2020

In theory directors can be furloughed in the same way as other employees.  However, a condition of furloughing is that the individual must not undertake work of any kind for the company during this time. The only exception to this is for statutory duties of the director, but this exception does not extend to anything designed to improve the financial performance of the business.  It is harder for a director to demonstrate that they have not undertaken any work, particularly if they are the sole director. 

It may be necessary for a sole director to notify all suppliers, customers and other business contacts that the business has been suspended pending the end of the Coronavirus crisis.  In many cases this is impractical and undesirable because the director may wish to use this time working on improving the business so that when trading recommences the business performs well quickly.  In these circumstances, furloughing is not permitted.  Remember also that this only relates to PAYE income, not dividends and the Government contribution may be very small meaning the director would rather keep working rather than furlough themselves.

Where some directors, but not all, are furloughed, some legal amendments may be required to reflect the position and protect the directors.  These include a directors’ minute to agree the terms of the furlough and rights and responsibilities during this period so everyone is aware of the risks they are potentially liable to.  Care should also be taken to ensure enough directors remain to form a quorum so the company can continue functioning.

Seeking professional advice is strongly recommended before a director is furloughed.

Can directors with an annual pay period be furloughed?

Updated 06/01/2021

You can claim in respect of employees who are paid annually, as long as they meet the relevant conditions.

You can only claim in advance if the payroll run is imminent, and claims must be submitted by the relevant claim deadline. This means that you might need to pay any annually paid employees earlier than usual for any time they are on furlough.

You must have made an RTI submission between 20 March 2020 and 30 October 2020 notifying HMRC of a payment of earnings to that employee.  This will be relevant for those on an annual pay period if the last payment notified to RTI was before 20 March 2020 and no further payments were notified before 30 October 2020.  In this case there is no qualifying payment to enable a claim under the scheme.  Further changes to qualifying dates are not expected.

A cautionary note for our advice above.  There continues to exist a contradictory statement in the guidance to the answer provided above.  We believe this is now outdated and should have been removed, but as the following statement still shows in guidance dated 1.12.20, our advice is to be aware of the potential for a claim for an annually paid employee to be rejected on this basis:

“Individuals who are paid through PAYE but not necessarily employees in employment law, can continue to be furloughed from 1 July as long as you have previously submitted a claim for them for a furlough period of at least 3 weeks between 1 March and 30 June and submitted a claim for this by 31 July.”

I am a Director but meet the general criteria for furlough (as mentioned above); can I be flexibly furloughed?

Updated 06/11/2020

The difficulty for Directors will be the extent to which you can demonstrate your normal working hours.  If you have a contract of employment / director’s service agreement that contains hours of work, this will provide a basis on which to make your claim.  If you do not have a contract of employment in place and are paying yourself a nominal salary though PAYE, we cannot see how you will be able to justify your normal working hours and therefore the proportion unworked.

I am a director and am unable to take advantage of the Coronavirus Job Retention Scheme (CJRS) either because I cannot stop working, or because I have received dividends rather than salary.  What help is available for me?

Added 03/04/2020

You are in a very difficult situation because you will not qualify for either the CJRS or the self-employment support from the Government.  You therefore need to ensure that the company continues to have the necessary funds available to provide you with an income.  This means that you should consider all the other assistance that the Government has made available to help the cash flow of businesses.  There are several of these but the business interruption loanbusiness rates reduction and delaying tax and VAT payments to HMRC may be the most appropriate.

You may also be able to take personal action to reduce the level of funds you need to draw from the business, for example applying to suspend personal mortgage repayments.

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Apart from salary costs, what do I include in my claim?

Will a company car benefit continue to apply for a furloughed employee?

Updated 08/06/2020

The short answer is yes – unless three things happen:

  1. The employer removes the right to use the car altogether for the period of furlough;
  2. The employee does not use the car for the period of the furlough (evidence should be retained such as a tracker report or dated photographs of the milometer at the start and end of the period demonstrating that the car has not moved at all); and
  3. The period of unavailability must be at least 30 consecutive days to secure a reduction in the annual company car taxable benefit.
  4. The employee returns the keys to the employer thus ensuring there is no possibility of the vehicle being used!

Can I include the cost of benefits in my claim?

Added 06/04/2020

The reference salary must not include the cost of non-monetary benefits in kind, including those provided through salary sacrifice.  Where benefits are provided, they should be in addition to wages paid under the scheme.

However, HMRC agreed that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements.  This means that that contractual changes can be agreed to forego the benefits and increase the reference salary.

Can salary sacrifice payments for cycle to work, etc be deducted from furloughed pay?

Updated 06/11/2020

The employee must receive the full government contribution as gross pay and salary sacrifice must not reduce this.  The furlough pay and the claim from HMRC will be based on the reduced gross pay after salary sacrifice and no further reduction is allowed to this figure for salary sacrifice.  Pay for worked hours or top-up payments can however be reduced for salary sacrifice.  The Government have stated that this qualifies as a “life event” enabling, for example, childcare vouchers to be suspended.  It may be preferable to agree a suspension of the employee’s salary sacrifice until after the furlough period.  Whether the remaining balance should then be collected over a shorter period finishing on the original end date, or the period extended to keep the sacrifice at the same level will depend on what you agree with the employee and other factors such as NMW compliance.

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During Furlough

Am I able to make furloughed employees redundant if I know I will be unable to sustain their roles going forward?’

Updated: 11/11/2020

Yes, but you must follow all the usual requirements for consultation and fair selection.  You must include in your considerations all your employees potentially affected, not just those on furlough.  E.g. you should pool all affected employees who have similar roles, both furloughed and working, when considering who to make redundant. 

In assessing your costs for redundancy and notice payments please note this change from 1st December.  For employees serving contractual or statutory notice periods prior to leaving employment (for any reason), the wages paid as notice pay are not eligible for the furlough grant and therefore should not be included in a claim.

If I make employees redundant, do I base their statutory redundancy pay on their full salary or their furloughed salary?

Added: 03/08/2020

Anyone made redundant whilst furloughed must have their statutory redundancy pay and statutory notice pay based on pre-furloughed salary.  If the contractual notice period is one week or more than the statutory notice period however, this falls outside of this protection and notice pay can be paid at furlough reduced amounts.

Are furloughed employees allowed to work for others, or do volunteer work while not working for me?

Added 06/04/2020

The scheme allows furloughed workers to work for other employers during this period. Indeed, the employer can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.  The employee must not however undertake work or provide services for their employer or any connected business. 

You can however agree any restrictions in your agreement with the employee.  For example, you will not want them working for competitors, but also you may wish to ensure they do not put themselves at risk.  You will also require them to be able to return to work immediately when you need them.

Will holidays continue to accrue during the period of furlough?

Updated 06/04/2020

As employment contracts continue to apply during a furlough, holiday continues to accrue. 

Can people take their holiday allowance while furloughed?

Updated 11/11/2020

A furloughed employee can take paid leave while on furlough and if they do, this must be paid at full rates, not restricted to 80%.  The employer is still able to claim the furlough amount through the scheme but must pay the additional amount and associated National Insurance and pension contributions.

Employees should not however be placed on furlough just because they are on holiday for that period.

There are advantages in employees taking leave during this period because it reduces the problem of significant accrued leave to be taken later, but it does come at a financial cost that the employer may not be able to afford.  You may therefore decide the simplest approach is to cancel and reimburse all holiday booked during furlough and not to accept any requests during the furlough period.  This includes bank holidays.

Alternatively, you could decide that it would be better for employees to use up their holiday allowance rather than storing it up for their return and they may welcome the additional income.

Carry over rules have been relaxed to allow employees to carry over up to 4 weeks’ paid holiday over an extended 2-year period (into 2021 and then subsequently into 2022 if necessary). This is unlikely, however, to apply to those who have been designated as furloughed unless the business was unable to top up their furlough salary to their normal salary to provide for holiday entitlement to be used. The Government guidance outlines that this emergency legislation regarding carry over is designed to help where it has not been ‘reasonably practicable’ for the employee to take holiday e.g. where the workload of that individual was significantly increased due to coronavirus, such as in the case of key workers.

Employers must carefully consider whether their employees are able to take the full holiday entitlement; and make decisions in line with guidance when allowing untaken leave to be carried over.

How do I treat bank holidays for furloughed employees?

Added 11/11/2020

If an employee usually works bank holidays then you can agree that this is included in the grant payment.

If the employee usually takes the bank holiday as leave then you either have to top up their usual holiday pay or give the employee a day of holiday in lieu.

Can I reclaim sick pay as part of the furlough grant?

Updated 11/11/2020

Firstly, a period of short-term illness or the decision to self-isolate should not be used in deciding who should be designated as furloughed.

If employers want to furlough employees that are currently off sick, they may to do so, subject to the agreement of the employee. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee. When an employee is on furlough, you can only reclaim expenditure through the Coronavirus Job Retention Scheme, and not the SSP rebate scheme.

What is the interaction with sick pay if a furloughed worker becomes sick – do they switch to sick pay?

Updated 11/11/2020

This is down to the discretion of the employer who can choose to convert furloughed workers to sick workers.   If they remain on furlough, you can continue to make claims for them, but make sure their furlough pay is not lower than SSP.  If they do move on to SSP, t you may be able to claim the rebate for up to 2 weeks of SSP if it is related to coronavirus.   

Is enhanced maternity/paternity or shared parental pay eligible to be recovered under the furlough grant?

Added 06/04/2020

Statutory payments such as SMP are not recoverable because these costs are reimbursed via national insurance contributions.  If your business tops up the statutory payments to those on family leave, then the enhanced amount of the payment can be reclaimed.

What are my options / obligations if my employee is at home and it is impractical to work because they must care for young children, vulnerable people, etc?

Updated 11/11/2020

If an employee is unable to work because they have caring responsibilities resulting from coronavirus, including employees that need to look after children, they are eligible for the grant and can be furloughed.  Employers are being asked to consider sympathetically requests from employees to be furloughed due to caring responsibilities, but this remains an employer decision based on the business circumstances and is not an employee entitlement.  Employees retain the right to ask for family leave (which is unpaid) or flexible working.  As the restrictions and home schooling continue, employers are encouraged to talk to their staff and understand how to support them.

Ending Furlough

Is notice pay eligible for the furlough rebate?

Updated 29/05/2020

  1. For employees serving contractual or statutory notice periods prior to leaving employment (for any reason), the wages paid as notice pay are not eligible for the furlough grant and therefore should not be included in a claim.
  2. Payments in lieu of notice cannot be reclaimed because it is a discretionary payment. 
  3. The amount of notice pay to be paid and whether this is full pay or furlough reduced pay will depend on the amount of notice due for their statutory versus contractual entitlement.   If an employee is serving their notice period when on furlough, the starting point is that their statutory notice pay is protected, meaning they will be due full pay. If the notice period in their employment contract for dismissal is at least a week more than the statutory notice for dismissal, then the pay protection no longer applies and the position reverts to contractual pay, which will be furlough pay.

How do I bring my employees off furlough?

Updated 29/05/2020

Remember that the principles of employment law still apply, so make sure you act in a fair and reasonable manner.  

  • If you must make decisions about who to bring back and who to leave on furlough, make them on a fair and objective basis.  Take account of personal circumstances in relation to the outbreak (see more notes below). 
  • If you are bringing employees off furlough, there is no prescribed notice period, but make sure you honour any arrangements that were in your furlough agreement and otherwise provide as much notice as possible.   
  • Confirm in writing the date on which you are bringing back the employee from furlough and the position as regards their terms and conditions of employment – either back to normal or incorporating any agreed changes and the relevant dates if these are temporary. 
  • Furloughed employees will not have been doing any work and so will need to be updated on any changes. 
  • You may wish to consider incentives for those returning to work, to create a differential with those continuing furlough.  Take care not to breach discrimination laws here, for example by indirectly discriminating against older or disabled workers without legal justification.   

The above are generic responses based on our interpretation of the guidance to date.  This is likely to change on a regular basis, so please ensure you base any decisions on the latest guidance available.  We can accept no responsibility for any consequences, financial or otherwise, in respect of action taken based on the above.

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