Job Retention Scheme (Furlough) FAQs (03/08/2020)

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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 listed below the most common questions we have 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.

Further guidance is released periodically by the Government and these FAQs are updated accordingly.  However, in the absence of full detailed government advice, some of the following is expressed views and assumptions as indicated, so please take care.


CJRS update following the Government update 12/06/2020

On Friday, 12 June , HMRC set out further guidance on the Chancellor’s previous announcement of changes he is making to the CJRS from 1 July.  His 2 key objectives in doing so were:

  • To taper the financial support available towards the scheme’s closure date of 31 October 2020.
  • To provide for ‘part-time’ furloughing from 1 July so that employees can be brought back from furlough on a gradual basis.

Please see further details of these arrangements here:

These updates are crucial for the gradual re-introduction of staff / teams and will play a significant part in the lockdown exit strategy planning for businesses. (this is a link to the Exit Strategy article)

Information on this FAQs page continues to be relevant, but is being updated to reflect the new arrangements.

Click the below links to jump to each section


The Government have issued the guidance relating to the changes to the scheme and the claim process from 1 July and we have provided clarification on key questions below.

This is not an alternative 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.

What are the key changes to the scheme from 1st July?

Added 12/06/2020

From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim the CJRS grant for the hours not worked.

It is confirmed that anyone for whom a successful CJRS grant claim has been made in the past will be eligible for the new scheme.  This means they must have completed at least a minimum 3-week furlough period between 1 March and 30 June 2020.  They do not need to be on furlough on 30 June.

From 1 July, the number of employees you can include in a claim cannot exceed the maximum number you claimed for under any claim ending by 30 June 2020 (with the exceptions outlined in points 4 and 5 below).

The wage cap of £2,500 will apply proportionately to the hours an employee is furloughed.

Employees who are shielding, or unable to work due to caring responsibilities, or sick whilst on furlough continue to be eligible for furlough, provided they have appeared on a claim for a minimum 3-week period prior to 30 June.

Are there changes to the minimum furlough periods?

Added 12/06/2020

Whereas the minimum furlough period to 30 June was 3 weeks, from 1 July the flexible furlough period can last any amount of time.

Employees can agree to flexible furlough periods more than once.

If a previously furloughed employee starts a new period of furlough before 1 July, it must be for a minimum 3 weeks even if it ends after 1 July. After this, they can be flexibly furloughed for any period.

Note however that after 1 July, you cannot generally make claims that cross calendar months (see next section). 

What are the keys dates and changes to claim periods that I need to be aware of?

Added 12/06/2020

Any claims for the period from 1 July cannot be made prior to that date.

Claims for any periods ending on or before 30 June must be made by 31 July.  Note that a furlough period under the current scheme (minimum 3-week period) could straddle 30 June / 1 July but the claim must be split so that the proportion up to 30 June is claimed separately. 

Provided they have previously completed a minimum 3-week furlough period, you can still re-furlough someone after 10 June and make a claim for the period provided that their 3 consecutive weeks is completed in July.  They cannot however use the flexible scheme until the min 3 weeks is complete.

From 1 July, claim periods must start and end within the same calendar month and must last at least 7 days, unless you’re claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it. Consider the costs of making claims and plan accordingly to keep the costs to a minimum.

Claim dates should match payroll dates wherever possible.  You can only make 1 claim per period, so it needs to include all furloughed & flexible furloughed employees even if you pay them at different times.

What data do I need to keep?

Added 12/06/2020

To make claims under the flexible scheme you will need details of the number of usual hours your employee would work in the claim period, the number of hours they have/will worked and the number of furloughed hours to be claimed in that period.

You should be certain of the hours being worked under the flexible furlough scheme before you make a claim.  Under or over claims can be rectified but will be complicated and time consuming – much better to get it right first time.

Detailed guidance on the calculation of flexible furlough claims is now on the Government website :

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

Added 12/06/2020

These employees can be furloughed after June 10 even if it is for the first time, provided that:

  • You have previously submitted an eligible claim for any other employee/s in your organisation between 1 March and 30 June, and
  • The employee started their statutory leave before 10 June and returned after 10 June, and
  • The employee was on your payroll on or before 19 March 2020 and appeared on an RTI submission on or by that date.

Employees being furloughed in these circumstances can be claimed for in addition to the maximum set out above.

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

Added 12/06/2020

It has been possible for the new employer to claim for employees transferred after 28 February 2020.  Claims from 1 July can continue subject to the minimum prior furlough rules stated above.

Claims can also be made for employees transferred after 10 June 2020 provided that:

  • TUPE or PAYE business succession rules apply.
  • The employees included have previously been furloughed by their prior employer for a minimum of 3 consecutive weeks between 1 March and 30 June 2020.

In this case, the maximum number that can appear on a claim from 1 July can be the maximum number previously claimed by the employer in any one claim prior to 30 June, PLUS the number of employees transferred for whom an eligible claim was made by the prior employer – provided that number does not exceed the prior employer’s maximum cap.

The process of claiming for employees that have been transferred under TUPE is not currently possible through the portal and can be 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.

How much do employers need to contribute from 1st August?

Added 12/06/2020

To remain eligible, employers must continue to 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, despite the reducing grant levels.  Wage caps are proportional to the hours the employee is furloughed.

Grant changes over forthcoming months are as follows.  This is based on full time furlough – the wage cap of £2,500 will apply proportionately to the hours the employee is furloughed.

Employers must pay employees for hours worked.

Employers can continue to top up wages above the minimum furlough pay amounts.

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

Added 12/06/2020

Furlough agreements will need to be updated to account for the extension of the scheme (where necessary, depending upon your original agreement wording) and for those where flexible furloughing is going to apply and working hours are going to change.

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

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?

Added 12/06/2020

The guidance on taking holiday during furlough is currently unchanged, so it appears possible to continue claiming the 80% grant from the government to cover most of the cost of holidays during furlough.  We will be keeping a close eye on this aspect of the guidance though.  

The CJRS claims process

How do I apply for the support?

Updated 20/04/2020

You apply through the government portal here:, but make sure you read the guidance that is sets out in advance of making your claim as making adjustments after the event is difficult and in some cases impossible.

To claim, you will 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)
  • amount claimed per employee (per the minimum length of furloughing of 3 consecutive weeks)
  • 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 must be keyed into the portal.  Employers with more than 100 employees will be 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 or must submit a significant number of claims, especially given the increased information required to make the claim.

How quickly will I receive the payment?

Added 20/04/2020

The updated guidance indicates that funds will be cleared in the employers UK bank account 6 days after the claim is submitted.

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

Added 02/04/2020

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.

You are able to use the portal to claim funds from the Government from 14 days in advance of the end of your claim period.

What earnings will be included when making claims?

Updated 09/06/20

Overtime paid against a contractual obligation to pay at a set and defined rate can be included in claims along with wages, non-discretionary fees and commission payments and piece rate payments.

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?

Added 20/04/2020

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?

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

Updated 05/06/2020

There is no restriction to the timing of a claim other than this must not be submitted more than 14 days before the end of the claim period.  However, you will need to be sure that you will not be either adding employees to or removing employees from furlough during the remainder of this furlough claim period.  If there is doubt or you wish to retain flexibility then it would be prudent to wait until the end of this claim period before you prepare your claim.

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 05/06/2020

Please see the answer to the above question.  You can include the upcoming payroll providing the claim is not to be submitted more than 14 days before the end of the claim period

I do not have National Insurance numbers for some new furloughed employees.  Can I submit a claim now for everyone else and catch up with these employees on the next claim?

Added 08/05/2020

Technically no, the guidance suggests each claim must cover the full amount for all employees.  Therefore. if you submit a claim excluding some employees because you do not have all of their information at the moment then you lose the ability to claim for these employees for this period.  Providing you have all the information by the time of the next claim then you can add them to that claim but only for that claim period, not the first claim period from which they were admitted.  Obviously there is a trade off here between a reduced claim or a delayed claim and you will decide on the basis of the amounts involved and how badly the funds are required.

However, the application of this by HMRC has been unpredictable.  Initially, contrary to the rules, they allowed additional employees to be added to submitted claims by contacting HMRC directly.  This now appears to have reverted to the strict application of the rules with HMRC refusing to add omitted employees.

Not all my furloughed employees have completed three weeks yet, should I hold off claiming until they have?

Updated 08/06/2020

You will want to be certain that all of your furloughed workers will complete the minimum 3-week furlough period before you claim for them.  There is now a facility to deduct overpayments from future claims, but the complexity is best avoided if possible.  There is no simple way of remedying the situation where you are making no or insufficient future claims.    You will know whether this is a real risk or not and will make your decision on whether to delay the whole claim, or to include them on a claim now, based on the likelihood that furloughed employees will be reintroduced to the workforce early.

Can I amend my claim later if I want to add more employees?

Updated 08/06/2020

No, there is no mechanism to amend returns so you should not submit a claim until you are ready unless you are prepared to lose the ability to claim for some employees for this claim period.

Initially, contrary to the rules, they allowed additional employees to be added to submitted claims.  This now appears to have reverted to the strict application of the rules with HMRC refusing to add omitted employees.

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 08/06/2020

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.  In many cases, furloughing some workers and retaining others on a full-time basis is the best commercial choice.  However, this may not be practical, for example where each employee has unique skills and taking any of them out of the workforce puts the business in a position where it is unable to operate.  In these circumstances, short term working may be the only option, but this will not secure Government financial support. You should ensure the employment contracts allow for this and you have employee agreement to reduce the risks of being taken to an employment tribunal.

Note that any staff you want to place on furlough from 1 July 2020 will need to already have completed at least one 3-week period of furlough prior to that date.  Therefore, your options will be limited to short time working, lay-offs, salary reductions or redundancy from 1 July for any staff who have not previously been furloughed.

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

Updated 19/04/2020

The scheme is  for “employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus” As a general start point, you should determine what you need to do as a business in order to survive during this period, 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 the 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.

I have not yet applied under the scheme but my staff were furloughed / laid off since 1 March 2020 – – what should I do in the meantime?

Updated 09/06/2020

You will have until 31 July 2020 to make any furlough claims under the scheme that runs to 30 June 2020, after which it is closed and the new flexible scheme runs from 1 July to 31 October 2020.  Only staff who had completed a minimum 3 weeks of furlough prior to 30 June 2020 will be eligible for that scheme.   

So, if you still need to make your first claim, make sure that you have furlough agreements in place to cover the period from when your staff stopped working and then prepare to make your claim well in advance of 31 July 2020, to allow for the complexities involved in the calculations etc.

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

Updated 06/04/2020

Yes; this will depend on the circumstances so 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 minimum period of furlough until 30 June 2020 is 3 weeks.  From 1 July, under the new scheme, it will be 1 week.  Other than this you can bring people back from furlough or furlough more employees as work levels vary.  The same employee could be furloughed more than once providing each furlough period is at least the required minimum length of time. 

From 1 July only employees who have already completed a minimum 3-week period of furlough will be eligible for a claim under the new scheme, and your claims will be limited to the maximum number of employees on any claim you submitted under the scheme that closes on 30 June.  This will be a factor as you plan your use of the scheme from 1 July.

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

Confirmed & Updated 09/06/2020

This will not be possible after 10 June 2020 as the employees will not have the opportunity to complete a 3-week furlough before the current scheme closes, and only employees who have done so will have access to the new scheme from 1 July 2020. 

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

Updated 08/06/2020

Until the end of June 2020, reducing the hours of all the affected employees is not possible for the purposes of the job retention scheme.  The job retention scheme could however be used to furlough two of the employees while retaining the other two in the business. Bear in mind however that you will not be able to furlough anyone for the first time after 10 June 2020.

Please follow our advice for consulting and selecting fairly any employees to either furlough or continue working.

The new job retention scheme from 1 July will be more flexible and may enable you to furlough all four employees on a part-time basis providing they have all been furloughed for a minimum 3-week period prior to 30 June.

Is it possible to alternate the staff members furloughed?

Updated 03/04/2020

This has been possible under the current scheme on the basis that each period of furlough was a minimum of 3 weeks.  Under the new flexible scheme starting 1 July, this may continue to be possible (we await more detailed guidance to be certain) and the minimum furlough period drops to 1 week.  In addition, of course, you will be able to bring employees back for part weeks and claim furlough support for the proportion that they remain at home. 

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 – 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 also private sector businesses securing income from the public sector, are not expected to use the scheme.  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.

We are a Medical Company which supplies the NHS and is classed as essential work due to the Covid-19 crisis.  If we have to furlough workers at any time due to the crisis will we be entitled to support from the Government to enable us to continue paying wages or does the ‘no recourse to public funds’ rule come into play?

Added 30/03/2020

The guidance indicates that these businesses should not be furloughing workers but should continue to pay them from income received from public funds.  This indicates that these businesses are outside of the scope of the scheme.  The Government want to ensure essential supplies continue unabated during this period and this is the reason relief is not available. 

However, in the “real world” it is possible that while some parts of the business fall into the category of providing essential services, other parts of the business may not.  It seems unreasonable that the Government would not provide relief to prevent employees in “non-essential services” aspects of the business from being made redundant.  Obviously, action should be taken to reassign employees to crucial services where possible. 

The statement also casts doubt on the usual availability of relief enabling a business to furlough employees who are shielding in line with direct government advice or those that cannot work due to caring responsibilities.  In conclusion, there is doubt about the availability of Government support and we urge the Government to issue further clarification.  Even if further clarification provided, the answer to this question is likely to very much be driven by the specifics of the situation and careful consideration of the position in advance of decisions is essential.

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 (salary, pension contributions and Employers National Insurance) 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.

Back to top.

The job retention scheme, how to implement and apply

Basics of the scheme

Employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.  Details on how to calculate the claim have been amended multiple times.

You must have created and started a PAYE payroll scheme on or before 19 March 2020 and have a UK bank account. You must also enrol – if you have not already – for PAYE online.

  • Furloughed employees must have been on company PAYE payroll and pay declared on an RTI submission on or before 19 March 2020.  Employees hired after 19 March 2020 cannot be furloughed.  
  • Regular past overtime can be included in claims along with wages, fees and compulsory commission payments. 
  • Discretionary bonuses, tips, commissions and non-cash payments should be excluded.
  • All of salary element of the grant must be paid to employees as gross salary, the employer must not withhold any of this element, for example against a salary sacrifice agreement.

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

Added 15/04/2020

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.  It is evident that HMRC will be actively seeking to detect inappropriate claims.  The initial suggestion was that audits will be carried out later to check claims and this will no doubt remain the case.  However, the significant increase in information to be provided at the time of the claim suggests that a much higher degree of scrutiny will now take place before the funds are released. 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?


You are likely to be in breach of their employment contract if you simply impose this on them.  It needs to be agreed – and ideally signed – 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.

You may have furlough agreements in place that cover the scheme in place until 30 June.  These agreements may well need extending and amending to cover the operation of the new scheme from 1 July.  Check, update and communicate with your employees as necessary.

Can I pay some furloughed employees more favourably than others?


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.

Can I recoup salary paid since 1 March (for example if I sent my employees home on full pay for a period), or is the scheme only retroactive to compensate employees that have been unpaid since then?

Confirmed & Clarified

If you can demonstrate that workers were laid off or made redundant any time from 1 March 2020 due to coronavirus, you will have an opportunity to obtain the grant to support continued salary payments to them.  If laid off employees received reduced or no pay (other than the Statutory Guaranteed Pay) during March, you can pay them their missed pay at the amount you can reclaim under the grant and contact them to let them know that they can be furloughed instead and this will be backdated to the date they stopped working.

Remember that you must make all claims under the scheme in place from 1 March to 30 June 2020 by 31 July 2020.

Will the Government pay 80% of the salary for an employee’s reduced hours?

Updated 08/06/2020

Under the scheme that closes on 30 June, No. Under this scheme a furloughed worker is not permitted to work at all in the business, you cannot furlough some of the employee’s hours. 

However, the new flexible scheme from 1 July will allow previously furloughed employees to work part-time but there are conditions attached to this new scheme.

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


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.  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 prorated for part-time employees?


No, the amount is based on the salary, not the number of hours worked.

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


The furlough must be agreed between employer and employee and must not be imposed.  This agreement will set out the terms and these must be satisfied.  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?

Added 15/04/2020

Statutory leave includes maternity leave, paternity leave, shared parental leave, adoption leave, sick leave and parental bereavement leave.

In line with other employees, claims for full or part time employees returning from statutory leave after 28 February 2020 should be calculated against their contractual salary before tax, not the pay they received whilst on statutory leave.

Claims for those on variable pay, returning from statutory leave should be calculated using either the:

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

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

Updated 08/06/2020

Their pay is to be based on the higher of the pay (after salary sacrifice) for the corresponding month last year, or their average earnings over a period.  The period of averaging is the average pay for the 2019-20 tax year or date of furlough if before 5 April 2020, or from the date the employment started if later than April 2019.  Please consider which elements of pay are considered and which are excluded when making these calculations.

Is the £2500 cap gross or net?

Updated 08/06/2020

The £2,500 is the maximum amount that the Government will physically 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 month.  Therefore, from the employee’s perspective, this is the gross amount.

The Government will also contribute the basic employer auto enrolment pension contribution of 3% and the employers National Insurance Contribution of up to 13.8% on the claimable furlough salary in addition to the salary amount.

The HMRC suggested calculation has changed several times in recent weeks.

These arrangements remain in place for claims relating to the period up until 31 July.  From 1 August 2020 there is a gradual tapering of the financial support available, as set out above.

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 announced 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 support will be based on salaries as at the last RTI submission up on or before 19 March 2020 and therefore subsequent changes will be ineffective in securing additional Government support.

Is it possible to furlough more employees if work dries up more than expected?


This was possible under the scheme that is to close on 30 June 2020.  However, from 1 July your claim will be limited to the highest number of employees on any of your previous claims.

Back to top.

Eligible Employees

After 10 June, no employees are able to be furloughed for the first time as they will not be able to complete the minimum 3 week period before the current scheme closes on 30 June and the new flexible scheme opens on 1 July.  The new scheme is only available for employees who have previously completed at least one 3-week period of furlough.

Furloughed employees must have been on the company PAYE payroll on 19 March 2020 and included on an RTI submission by then, except for those who have joined under TUPE after this date.  Employees hired after 19 March 2020 cannot be furloughed.  However, employees who were made redundant or who stopped working for the employer on or after 28 February ould have been rehired and placed on furlough.

I have employees who have joined the Company after 19 March 2020, are they eligible for the furlough scheme?

Updated 08/06/2020

Employees hired after 19 March, and those hired before this date but not included on an RTI return by 19 March, are not eligible for furlough, except for a TUPE transfer and payroll mergers.  Employees who have transferred under the Transfer of Undertakings (Protection of Employment) regulations (TUPE) after 19 March will be eligible to be furloughed despite not being on this payroll at the relevant date. There are currently no further details of how this will work or how those with variable income will have their pay calculated in the absence of the necessary past pay data. The guidance will be updated accordingly.

TUPE transferred employees cannot currently be reported on the online portal and must be added manually via a call with HMRC.  This makes the process slow and much more time consuming.

Are foreign nationals with visas eligible for the furlough scheme?

Added 03/04/2020

The scheme will cover 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.  However, if their contract ends without immediate renewal you can no longer include them in a claim.

Can apprentices be furloughed?


Apprentices can be furloughed and can continue to train, for which they should receive the appropriate minimum wage.  Further guidance is provided.

Can directors be furloughed?

Updated 17/04/2020

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.

Please note, there may be cases in which a director cannot be furloughed if they are on an annual payroll that does not meet the relevant conditions. If the timings of the payroll mean that last payment notified to RTI was prior to 5th April 2019, and no further notifications were made until after 19th March 2020, the latest guidance indicates that a director in this situation would not be eligible for the scheme.

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

I am a director and am unable to take advantage of the Coronavirus Job Retention Scheme (CJRS) either because I cannot completely 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.

Back to top.

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. HMRC have just announced (3 months after the scheme started) that they do not regard the above as sufficient to remove the car benefit and in addition to the above they require the physical return of the keys 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?

Added 03/04/2020

The simple answer is yes, but whether this is worthwhile will depend on whether furlough payments are being “topped up” or not.  If the payments are being topped up by more than the amount of the salary sacrifice then it is possible to reduce the gross payment by the amount of the salary sacrifice.

However, if the payment is not being topped up to a higher amount than the Government contribution then there is no advantage in reducing the salary because this simply reduces the contribution from the Government by the same amount and provides the employer with no additional funds with the employee remaining in an even worse financial position.  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.

Back to top.

During Furlough

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

Added: 03/08/2020

Yes, but you must follow all the usual requirements for consultation and fair selection.  You must include in your considerations all of 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. 

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

Added: 03/08/2020

The Government closed a potential loophole with fast-track legislation on 31 July, which ensures that 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 longer than the statutory notice period, however, this continues to fall outside of this protection.

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

Confirmed & Clarified

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 09/06/2020

The treatment of holiday has now been clarified in the guidance.  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.

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 the bank holidays in April and May.

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. 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.

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

Updated 19/04/2020

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.

The guidance has now been updated to clarify the position for those off sick. If employers want to furlough employees that are currently off sick or being shielded, they are eligible 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 15/04/2020

This is down to the discretion of the employer who can choose to convert furloughed workers to sick workers if they choose.  This would mean that the job retention scheme relief ceases to be available until the employee is furloughed again, but you may be able to claim the rebate for up to 2 weeks SSP.   

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 06/04/2020

Talk to the employee and be as flexible as possible as regards hours etc if they want to continue working.  You may also discuss furloughing the employee if they agree.

Ending Furlough

Is notice pay eligible for the furlough rebate?

Updated 29/05/2020

We now know that the guidance for employees says that they can be made redundant while on furlough.  Therefore current opinion is that employees can be given notice or paid in lieu while furloughed,  (although the guidance does not explicitly say this).  Equally, reclaiming notice pay under the furlough scheme is not specifically in the guidance from HMRC.  However, it is sensible to conclude:

  1. Employers should be able to reclaim notice pay if an employee is given notice during furlough, for those weeks of notice which fall within the furlough period.
  2. Employers cannot, however, reclaim any extra “top up” to usual pay which may be legally required.
  3. We do not think that you can reclaim payments in lieu of notice under the scheme, because it is a discretionary payment.  So notice pay should be paid as normal during the period of notice, rather than terminating the contract immediately and paying in lieu.
  4. The amount 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.
  5. 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 of 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 have to 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 on furlough.  Take care not to breach discrimination laws here, for example by indirectly discriminating against older or disabled workers without legal justification.   

What other things do I need to consider in bringing employees back to work?

The above are generic responses based on the information and understandings available to date.  Given the legislation and official specific guidance is not yet available and the fact that these are generic answers that do not consider your unique position, we can accept no responsibility for any consequences, financial or otherwise, in respect of action taken based on the above.

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Ed Hussey - FCIPD

Director, People Solutions

Ed Hussey is Menzies People Solutions Director providing specialist outsourced HR consultancy to help businesses retain, reward & develop their employees.