FAQs on furlough and the Government’s Job Retention Scheme which aims to provide employers with an alternative to redundancies. The Job Retention Scheme has been extended until the end of September 2021.
These FAQs relate to the Job Retention Scheme and its operation from March to October 2020. The Scheme will operate under adjusted rules from November 2020. We continue to publish these FAQs as a historical snapshot of the rules of the Scheme but for an up to date explanation of how the Scheme will work from November 2020 including important changes to previous rules and further adjustments as announced in the Budget in March 2021, see our article Extended Job Retention Scheme (Furlough) FAQs (November 2020 onwards).
The Job Support Scheme, which was intended to replace the Job Retention Scheme from 1 November will not now be used.
These FAQs deal with the mechanics of furloughing workers under the scheme in place from 1 March 2020, which closed to new entrants from 30 June 2020. This means that no employees can be furloughed if they had not previously been furloughed at some point between 1 March 2020 and 10 June 2020. The situation differed for employees who return from statutory family leave after 10 June 2020.
These FAQ also deal with making claims under the scheme.
Our separate FAQs, Flexible Furlough under the Job Retention Scheme, deal with the mechanics of the flexible furlough scheme.
What is the Job Retention Scheme?
By designating employees as “furloughed”, you will be able to recover 80% of your wage costs through the Job Retention Scheme until the end of August 2020. This means that your furloughed employees will still receive at least 80% of their wages, even though they are not carrying out any work. It is a way of avoiding unpaid lay off or redundancy and allows you to keep employees on until you can provide work again.
Two Treasury Directions have been released which set out how claims will be dealt with under the Scheme. The first Treasury Direction was issued by the Chancellor on 15 April 2020 and applies to claims submitted before 22 May 2020 which are not compliant with the second Treasury Direction.
The second Treasury Direction was issued by the Chancellor on 22 May 2020. It amends and effectively replaces the first Treasury Direction in respect of claims made on or after that date, or in relation to earlier claims that would have been compliant with the second Treasury Direction in any event.
What is a “furloughed” employee?
The word furlough generally means a temporary leave of absence from work. A furloughed employee is someone who, rather than being dismissed for redundancy by their employer or being put on lay off, is kept on the payroll during a period where the employer cannot offer any work for them. Employers can use our letter explaining job retention scheme to put employees on furlough for the first time but this must be done before 10 June 2020 due to the closure of the scheme to new entrants. On 9 June 2020, the Chancellor confirmed that employees who are returning from certain types of family leave in the coming months are not subject to the 10 June cut-off date where they are returning to work for an employer who has previously furloughed employees. This will apply to those who return from maternity, paternity, adoption, shared parental and parental bereavement leave.
From 1 July, the scheme will allow employers to bring furloughed employees back to work on a part-time basis and still receive some financial assistance. Because of this, furlough may not necessarily always mean that the employee will do no work at all for the employer.
Do I need to get employees to agree to the furlough?
Unless there is a term allowing furlough in employees’ contracts, you will need to obtain agreement from employees to designate them as furloughed and reduce their pay (if that is what you want to do — you may decide to furlough and keep on 100% pay by topping up the Government grant). An addition to Government guidance on 23 April 2020 stated that a collective agreement between employer and employee will be sufficient as evidence.
You will need to agree the pay reduction with employees as part of the agreement to furlough, because normal employment law principles apply.
On 15 April 2020, the Government released a Treasury Direction on the Scheme. It stated that employers must have agreement in writing that the employee will cease to do all work for the duration of furlough.
Employers should confirm the employees' new status and obtain their consent in writing, including confirmation that the employee will cease all work in relation to their employment. Records should be kept for five years.
The second Treasury Direction clarifies that agreement to cease all work can be done by either obtaining the employee’s consent in writing or by the employer confirming the agreement in writing. This measure is intended to cover those employers who did not obtain written agreement from employees before placing them on furlough provided that the employer complies with all other requirements of the second Direction. The second Direction requires that written agreement or confirmation:
specifies the main terms and conditions on which the employee will cease work
is incorporated (expressly or impliedly) into the employee's contract
is made in writing or confirmed in writing by the employer (including by electronic means such as email)
is retained by the employer until at least 30 June 2025.
When the new rules are implemented, for any flexible furlough which takes place during the period commencing on or after 1 July, will employers need to get fresh agreement with furloughed employees if their furlough is to continue?
As employees must cease all work for their employer while on furlough under the current rules, it is likely that furlough agreements include a requirement that the employee does not carry out any work for the employer during their furlough period. The change to terms and conditions is that furlough means no work and 80% pay (unless topped up). A fresh furlough agreement will be needed, which permits the employee to work during furlough and sets out the circumstances in which the employer can require the employee to work.
It seems that a new Treasury Direction will be needed to cover the post-July period because the one currently in place only sets out the terms of the current version of the Scheme.
Do I have to collectively consult if 20 or more employees are involved?
On 3 August 2020, the Government guidance on Advance Notification of Redundancies was amended to state that there is no requirement to carry out collective consultation, or notify the Secretary of State using the required HR1 form, when furloughing staff if employers are not contemplating dismissing the employees for not accepting the variation of terms. Collective consultation will still be needed if the employer does contemplate dismissing 20+ employees as a result of not accepting the change in terms.
Who will the Scheme apply to?
The Scheme is open to all UK employers that had a PAYE scheme in place on 19 March 2020, is enrolled for PAYE online and has a UK bank account. Any organisation with employees can apply, including charities, not for profit organisations and recruitment agencies.
While the Government has said they do not expect many public sector employers to furlough employees, there is no complete bar on this. The guidance says “In a small number of cases, for example where organisations are not primarily funded by the Government and whose staff cannot be redeployed to assist with the coronavirus response, the Scheme may be appropriate for some staff.”
What’s the specific position on early years, education and children’s social care?
On 17 April 2020, guidance was released which deals specifically with early years, children’s social care and education. There are various types of support open to these industries. However, the Government expects that all relevant organisations should first consider any potential options to reduce their operating cost and secure commercial loans eg. Business Interruption Loans, before seeking to use the Coronavirus Job Retention Scheme or seeking specific support from the Department for Education (DfE).
Educational settings that are in receipt of some public funding should only furlough employees if they meet the following conditions:
the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
the employee would otherwise be made redundant or laid off
the employee is not involved in delivering provision that has already been funded
(where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
the grant from the Coronavirus Job Retention Scheme would not lead to financial reserves being created.
The Government is developing an online tool that will support the education, early years, and children’s social care sectors, in working through this guidance, and understanding the different funding and financial measures available to support them, and their workforce, through this period of disruption caused by coronavirus.
Below is some more specific guidance per sector.
Early years providers
On 17 March 2020, the Chancellor confirmed that the government will continue to pay local authorities for free early years entitlement places for 2, 3 and 4-year-olds to support providers at this time.
A private provider should only furlough employees, and therefore seek support through the Coronavirus Job Retention Scheme, if they meet the conditions set out above.
If it is difficult to distinguish whether staff are funded through free entitlement or private income for the purposes of meeting the first three conditions, then an early years provider can access the JRS to cover up to the proportion of its paybill which could be considered to have been paid for from that provider’s private income. This would typically be income received from ‘parent-paid’ hours, and excludes all income from the government’s free entitlements (or “DSG income”) for all age groups. In line with the conditions of the scheme, providers should initially use the month of February 2020 to represent their usual income in calculating the proportion of its paybill eligible to be covered by the scheme. Providers should adjust these proportions in subsequent furloughing applications if their income from the Government’s free entitlements changes, but are not expected to make any adjustments in relation to changes in parent-paid income.
If a provider’s average monthly income is 40% from DSG and 60% from other income, the provider could claim CJRS support for up to 60% of their paybill.
This would be done by furloughing staff whose usual salary/combined salaries come to no greater than 60% of the provider’s total paybill.
These proportions could change in subsequent furlough applications as a result of Dedicated Schools Grant (DSG) income changing (but not where income from parents increased or decreased). For example, if this provider subsequently receives additional DSG income from a local authority as a result of providing additional hours of childcare, such that its new DSG income would represent 55% of its total income in February 2020, then its maximum use of the furlough scheme should, from that point, be reduced to 45% of its paybill.
Children’s social care
As placements will continue to be needed, local authorities will continue to pay fees to children’s social care providers so the Government would expect providers not to furlough staff.
In the rare circumstances that providers feel they have no choice but to furlough staff, they should only seek support through the Scheme if they meet the conditions above.
Funding for residential care will continue.
Mainstream state-funded schools
The Government do not, in general, expect schools to furlough staff. However, schools may have a separate private income stream (for example, catering, sports facilities lettings, or boarding provision funded by parents in state boarding schools). Where this income has either stopped or been reduced and there are staff that are typically paid from those private income streams, it may be appropriate to furlough staff. Schools should first seek to make the necessary savings from their existing budget or consider options to redeploy these staff before furloughing them. Only after all other potential options have been fully considered should schools furlough those members of staff and seek support through the Scheme subject to the 5-point criteria above.
Where these conditions are met, schools should receive a grant from the CJRS which is in line with the proportion of its paybill which could be considered to have been funded by a school’s private income.
If a school’s average monthly private income stream (for example, from parent-paid school meals) provides 4% of the schools’ overall income, the school could claim support through the CJRS for up to 4% of its paybill, after exhausting options to meet costs from existing budgets and redeployment. This would be done by furloughing staff (for example, catering staff) whose usual salary or combined salaries are linked with the income lost and come to no greater than 4% of the provider’s total paybill.
Schools are not expected to consider each stream of private income separately so a school should consider its total income from private sources, as a proportion of its overall income, and the pay of all the staff it proposes to furlough, as a proportion of its total paybill.
Supply teachers and other contingent workers in state-funded schools.
Where schools are the workers’ direct employer
Schools will continue to receive their budgets for the coming year as usual, regardless of any periods of partial or complete closure. This will ensure that they are able to continue to pay for staff and meet their other regular financial commitments.
The Government expects schools to ensure any employees funded by public money continue to be paid in the usual fashion from their existing staff budgets, and not furloughed.
Where schools have live assignments with contingent workers and where the school is the workers’ employer, schools should continue to pay these workers from their existing school budgets and not furlough them.
Where schools have terminated contracts with contingent workers due to coronavirus earlier than the original terms set out, and where the school was the workers’ employer under that contract, schools should reinstate these contracts on the terms previously agreed, as long as the contractor is not already accessing alternative support through another government support scheme.
Where schools are not the workers’ direct employer
Schools are advised to refer to all parts of the Procurement Policy Note 02/20 (PPN 02/20), which provides guidance for public bodies on payment of their suppliers for the purposes of ensuring the continuity of critical service during and after the coronavirus (COVID-19) outbreak.
Where schools have agency workers on live assignments who can continue to work, they may continue to make previously agreed payments for the supply of workers in line with the approach set out in PPN 02/20. Agencies who receive money for workers in line with this guidance should not furlough these workers, and should follow the open book accounting rules set out in PPN 02/20 to provide schools with proof that workers are continuing to be paid as normal.
Where schools have agency workers on live assignments who cannot continue to work due to coronavirus (COVID-19), schools and agencies should refer to the guidance set out in Procurement Policy Note 02/20: Contingent Workers Impacted by COVID-19.
The supplier relief guidance covers the length of existing live assignments up to the end date that had been previously agreed. It does not require these assignments to be extended further if the resource will not be required.
Where agency workers are not on live assignments with schools, or where a previously agreed assignment is due to end, schools and agencies should discuss any further demand for the worker. If there is no further demand, the employer can apply to furlough the worker via the Scheme. Once a worker has been furloughed, they become unavailable to work and cannot provide services for their employer for a minimum of 3 weeks. Schools and agencies should bear this in mind when discussing ongoing resource requirements and agencies should keep this under regular review. Please refer to the supplier relief guidance for more information.
High needs funding
High needs funding will continue to be paid to the following types of setting, whether from local or central government:
local authority-maintained schools (mainstream, special and pupil referral units)
academies and free schools (mainstream, special and alternative provision)
non-maintained special schools
independent schools, including independent special schools
independent alternative provision
high needs places in further education (FE) colleges and sixth form colleges
special post-16 providers
Teaching and non-teaching staff (administration, operations, maintenance and catering) should not be furloughed where they are funded from continued high needs funding, and where necessary and feasible, should be available for redeployment within settings and in other settings to assist in maintaining provision for vulnerable children and young people, and the children of critical workers.
State-funded residential special provision is delivered in various types of setting, including state-maintained schools, non-maintained special schools, independent schools and special post 16 institutions. While the educational costs will continue to be funded from the DSG, the residential costs are met from social care budgets. Local authorities will continue to receive funding for social care provision and should continue to pay residential costs so that the employment and payment of staff supporting children and young people who require residential provision can continue.
As with colleges, special post-16 institutions may rely on non-grant income for young people with EHC plans. If such income has ceased or reduced, it may be appropriate for special post-16 institutions to seek support from the Scheme to furlough staff who are working on activities relating to those non-grant income streams.
Mainstream independent schools
Independent schools have been asked to remain open for the children of critical workers and the most vulnerable children. Independent schools are, in general, funded by fee income paid by parents. Since schools have closed to the majority of pupils, they, like other businesses, may be facing a sudden and substantial loss of income. These institutions should access support schemes in order to retain staff and enable the school to reopen fully in due course.
However, if there are any activities for which schools continue to receive public funding, such as looked after children placed by a local authority, or local authority support for pupils with EHC plans, the Government expects schools to use that money to continue to pay those staff in the usual fashion and, therefore, not furlough them or seek support via the Scheme.
Independent special schools
Local authorities will continue to receive their high needs budgets and should continue to pay top-up and other high needs funding to independent special schools, so that the employment and payment of staff supporting children and young people with SEND can continue. Some independent special schools also have pupils who are funded privately instead of under an EHC plan. These institutions should only access support schemes in relation to the proportion of staff that is not supported through public funding, and only to the extent that the school is facing a loss of income because the children have been withdrawn by their parents leading to a loss of fee income.
Further education and apprenticeships
Where the provider is continuing to receive public funding through any of its usual routes, they should continue delivering this provision where feasible, including through remote delivery. They should not furlough staff whose salaries are paid from continuing Education and Skills Funding Agency (or any other public) income. This applies to both teaching and non-teaching staff.
The Government recognises that many providers rely on funding from a mix of public sources and other income streams such as fees, employer contributions and commercial income. Where public income has reduced or non-public income has ceased or reduced, it may be appropriate for providers to seek support from the Scheme to furlough staff. Providers should only furlough employees if they meet the five conditions above.
If it is difficult to distinguish whether staff are funded through continuing public funding, for the purposes of meeting the first three conditions, then the total proportion of teaching and non-teaching staff (based on gross payroll) that are retained (for example, not furloughed) should, as a minimum, be equivalent to the continuing public income, as a proportion of all income that the provider usually receives. For example, if the only source of public funding is through a grant, and non-grant income makes up 25% of total income, then this should be the total maximum proportion of staff (based on gross payroll) that could be furloughed.
Where providers consider furloughing staff, they should ensure that they take a fair and reasonable approach to part-time, sessional and temporary staff, reflective of good HR practice and legal requirements.
The Government expects that in most circumstances, HE providers will be able to continue paying their staff as usual because HE delivery has largely moved online, and staff are maintaining key services, including those for students remaining on campus.
If HE providers meet the criteria for financial assistance such as the Coronavirus Business Interruption Loan Scheme (CBILS) they should consider applying for these. Where those schemes are not appropriate, HE providers are eligible for the Job Retention Scheme. HE providers should only furlough employees and seek support through the Scheme if they meet the 5-point conditions.
If it is difficult to distinguish whether staff are funded through public or commercial income for the purposes of meeting the first three conditions, and some staff will be funded through multiple sources, as a guiding principle, HE providers should not seek to furlough a higher proportion of their wage bill than could reasonably be considered to have been generated through commercial income, including from non-public research grants and contracts. It is likely that decisions on whether to furlough staff will need to be taken on a case by case basis.
Where research work has been paused (for example, where grant holders have requested a no-cost extension to UK Research & Innovation grants) and, therefore, providers are not able to receive payments towards staff costs for a period, resulting in a loss of income due to ceased or reduced delivery of research programmes, providers should consider their eligibility and apply for the wide range of financial support that HM Treasury has already announced for businesses, including the Scheme, in line with the above conditions.
When would I use the Scheme?
The Government guidance for employers says that the Scheme is for employers who have been severely affected by the coronavirus..
However, all employers are eligible to claim under the scheme and the Government recognises different organisations will face different impacts from coronavirus.
The Treasury Directions say that the Scheme is to help “employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease”. The employer guidance still says that it is for employers whose “operations have been severely affected by coronavirus”. It goes on to say “It is designed to help 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.” On 12 June, the employer guidance was amended to follow suit with the Treasury Direction, now saying “If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees…”. Provided there is a connection between putting employees on furlough and the consequences of COVID-19, the purpose of the scheme will be met. We do not think that HMRC will do a forensic analysis of every employer’s situation.
When does the Scheme start?
HMRC’s online portal through which you can make the claim launched on 20 April 2020. The scheme can be backdated for furloughed employees from 1 March 2020. The scheme will close to new entrants on 30 June 2020 except for employees who are returning from maternity, paternity, adoption, shared parental and parental bereavement leave in the coming months where they are returning to work for an employer who has previously furloughed employees. Except where that exemption applies. From 1 July, the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
Whose wages can I claim?
To be eligible, the individual must be PAYE, must have been on the payroll on 19 March 2020, have been notified to HMRC on an RTI submission on or before 19 March 2020 and have been furloughed for the first time before 10 June 2020. However, on 9 June 2020, the Government confirmed that employees who are returning from maternity, paternity, adoption, shared parental and parental bereavement leave in the coming months where they are returning to work for an employer who has previously furloughed employees are not subject to this cut-off date. Full-time, part-time, temporary and zero hours and fixed-term staff can all be included as long as they are PAYE. Office holders, (including directors), salaried members of LLPs, agency workers and those who fall into the employment status category of ‘worker’ can be included.
Previous guidance had contained a starting cut-off date of 28 February 2020 meaning that employers could not furlough, and claim the wages of, anyone who started after this date. The guidance was updated on 15 April 2020 to provide a new cut-off date of 19 March 2020.
As stated above, from 1 July 2020, the scheme is only available to those who have been furloughed by 10 June 2020, save for eligible employees returning from certain types of family leave including maternity leave.
In order to qualify, employees must have been on furlough for the minimum period at any time in the period from 1 March to 30 June 2020.
For employees that meet the criteria above, the number of employees you claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June.
For example, an employer had previously submitted three claims between 1 March 2020 and 30 June, in which the total number employees furloughed in each respective claim was 30, 20 and 50 employees. Then the maximum number of employees that employer could furlough in any single claim starting on or after 1 July would be 50. The only exception to this rule is where employees return from certain types of family leave after 10 June; they can be furloughed for the first time after this date provided they meet the usual criteria and the employer has previously furloughed employees.
What happens to employees who have been transferred under TUPE?
Government guidance published on 30 April 2020 confirms that employees who were subject to a TUPE transfer after 28 February 2020 can be furloughed and the new employer can claim for their wages, to the prescribed amount, via the Scheme. This reverts the position back to that which had been in place before 15 April 2020, which is when the Government amended their guidance to state that employees who had been transferred after 19 March could be claimed for under the Scheme. For now, the position is this: employees transferred after 28 February 2020 can be claimed for provided they are on the “new” employer’s payroll, and an RTI submission made, on or before 19 March 2020.
How much can I claim?
Originally, the Scheme allowed you to claim for 80% of wage costs to a maximum of £2500 per month per employee, in addition to employer’s national insurance and pension auto-enrolment contributions.
In June and July, the Government covered 80% of wages up to a cap of £2500 as well as employer NICs and pension contributions for the hours the employee didn’t work. Employers had to pay employees for the hours they worked under a flexible furlough arrangement which was permitted from 1 July.
During August, the Government paid 80% of wages up to a cap of £2500 and employers paid employer NICs and pension contributions for the hours the employee does not work.
During September, the Government paid 70% of wages up to a cap of £2187.50 for the hours the employee did not work. Employers also paid employer NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2500.
During October, the Government pays 60% of wages up to a cap of £1875 for the hours the employee does not work. Employers also pay employer NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2500.
The reference here to the hours the employee does or does not work relates to the fact that employers are now permitted to bring furloughed employees back to work on a part-time basis under the flexible furlough scheme and still claim from the scheme for the days the employee would usually work but has not worked, to the maximums set out above. Employers are not required to bring furloughed employees back part time. They can keep employees on “full” furlough (provided they had completed three weeks of furlough prior to 1 July 2020) but must pay the increased employer contributions.
As furloughed employees can return to work on a part-time basis from 1 July, the new caps are proportional to the hours not worked.
What do we use as the starting point for employee pay?
Salaried employees’ pay is that which they earned in the last pay period prior to 19 March 2020.
Guidance published on 15 April 2020 clarifies that, if, based on previous guidance, you had calculated your claim based on the employee’s salary as at 28 February 2020 (and that differed from their salary in their last pay period prior to 19 March 2020), you can choose to still use this calculation for your first claim.
The situation for those with variable/irregular pay is different. If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, you can claim for the higher of either:
the same month’s earning from the previous year, or
average monthly earnings from the 2019–20 tax year.
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
In line with other employees, claims for employees furloughed on return from family-related statutory leave, sick leave, sabbatical and unpaid leave should be calculated against their salary, before tax, not the pay they received while on family-related statutory leave.
What is covered in terms of elements of pay?
The Government guidance is that commission, bonuses and discretionary payments are not included when calculating pay. All elements that you are obliged to pay your employees including wages, past overtime, fees and compulsory commission payments can be included.
Will the payment be taxable?
Yes, payments you make to furloughed employees will be subject to PAYE and National Insurance contributions.
Will I be able to recover Employer’s NI contributions and pension contributions under the Job Retention Scheme?
Employers remain liable for Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees. Until the end of July, the scheme covered the Employer National Insurance contributions associated with the (capped) wages, plus minimum automatic enrolment employer pension contributions in respect of the (capped) wages. However, since 1 August and until the closure of the scheme, employers will have to fund both Employer NICs and minimum automatic enrolment employer pension contributions; this will no longer be claimable under the scheme.
Do I have to pay 100% of the wages in order to claim?
No. An employer can choose to top up to 100% but does not have to. Those who choose to top up can still only claim the maximum available under the scheme (80% until the end of August/70% in September/60% in October).
Do I have to meet minimum wage with the 80%?
Minimum wage applies to hours worked. So, if employees are furloughed and do not work and 80% of their normal earnings would take them below the NMW, this is fine.
How will I apply for the reimbursement?
You can make one claim at least every three weeks using the HMRC online portal, open from 20 April 2020. To claim, employers will need:
employer PAYE scheme reference number
the number of employees being furloughed
National Insurance Numbers for the furloughed employees
Names of the furloughed employees
Payroll/employee number for the furloughed employees (optional)
their Self Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference, Company Registration Number or Employer Name (as appropriate)
the claim period (start and end date)
amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
their bank account number and sort code
their contact name
their phone number
Employers will need to calculate the amount they are claiming. Remember that from August 2020, employers cannot claim for employer national insurance and pension contributions.
Employers can’t make more than one claim during a claim period, so when preparing to make a claim they need to decide the length of the claim period. This means they should include all of the employees that they want to furlough for that claim period, because they won’t be able to make another claim for the same period or one that overlaps, and they can’t make changes to their claim once it is submitted. In deciding what their claim period is, it helps to think about how frequently they run their payroll.
There is also now a ‘save and return’ option, meaning if employers do not have all information they require, they can save and come back to the claim later.
They should retain all records and calculations in respect of their claims, including records of the amount claimed for each furloughed employee and the period for which each employee is furloughed and a claim made under the scheme.
If employers have fewer than 100 furloughed staff they will be asked to enter details of each employee they are claiming for directly into the system - this will include their name, National Insurance number, claim period and claim amount, and payroll/employee number (optional).
HMRC will provide a file upload template to complete for claim periods starting on or after 1 July.
If there are 100 or more furloughed staff the employer will be asked to upload a file with the information rather than input it directly into the system. HMRC will accept the following file types: .xls .xlsx .csv .ods.
The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional).
If employers use an agent who is authorised to act for them for PAYE purposes, they will be able to make a claim on the employer’s behalf. If the employer uses a file only agent (who files their RTI return but doesn’t act for them on any other matters) they won’t be authorised to make a claim and employers will need to make the claim themselves. The file only agent can assist employers in obtaining the information they need to claim (listed above).
If an agent makes a claim on the employer’s behalf, the employer will need to tell them which bank account they would like the grant to be paid into.
Since 1 July, claim periods cannot overlap calendar months.
The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the existing scheme.
Claims under the scheme for furlough periods ending on or before 30 June 2020 had to be submitted by 31 July 2020; it is no longer possible to make a claim for any period falling before 30 June. In addition, from July, employers cannot make claims that cross calendar months, so the employer will need to make a separate claim for the period up to 30 June.
What if I have already just made redundancies or employees have recently left?
You can re-hire and furlough any ex-employees who have left provided they fit into the following criteria, but it’s entirely your choice. You can re-hire and furlough someone who left after 28 February 2020 provided they were on your payroll on 28 February 2020 and had been notified to HMRC on an RTI submission on or before 28 February 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 28 February 2020. You can also re-hire anyone who left on or after 19 March 2020 but they must have been on your payroll on 19 March 2020 and have been notified to HMRC on an RTI submission on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. Other employees may be in the position where they are serving out their notice of redundancy but have not yet left the company. Employers may choose to withdraw the redundancy notice and place the employee on furlough instead. Employers can use the letter to withdraw a redundancy and offer furlough. On 17 July 2020, the government confirmed that furlough claims can be made for statutory, and contractual, notice periods. However, grants cannot be used to substitute redundancy payments.
How long does furlough last?
Under scheme rules that applied until the end of June 2020, furlough had to be taken in minimum blocks of three weeks in order to be eligible for the funding. The final date by which an employer could furlough an employee for the first time was 10 June, save for employees who are returning from maternity, paternity, adoption, shared parental and parental bereavement leave, or a period of mobilisation with the Reserve Forces, after 10 June where they are returning to work for an employer who has previously furloughed employees.
Can I rotate employees on furlough?
Yes, it appears so. Employees can be put on furlough more than once so you can, for example, place Employee Set A on furlough while Employee Set B continue to work. Then Set B can be put on furlough while Set A come back to work. Set A can then be furloughed again, etc.
Rotating employees between work and furlough can continue into July and onwards, however, any employee put on furlough from 1 July must have already been furloughed for a minimum of three weeks prior to 1 July 2020 and employers should be mindful of the maximum cap on the number of employees who can be on furlough in each claim period. See Whose wages can I claim for more information on this.
Can the employee undertake any work during furlough?
Under scheme rules which applied until the end of June, the employee could not be working for you at all, or for any linked or associated organisation. If they worked for even an hour (during their minimum three week furlough period) you could not claim the grant for this period.
Since 1 July, employees who have been furloughed can be brought back to work on a part-time basis under the flexible furlough method. The employer pays the full wages for the hours worked and the scheme covers the remaining unworked hours to a maximum level. The employee cannot do any work for the employer during the hours recorded as furlough.
Are all types of work-related activity banned during furlough?
Employees are able to undertake training and do volunteer work, as long as they do not provide services to or make any money for you or any linked or associated organisations. See previous question regarding the arrangements for flexible furlough from 1 July 2020. Volunteer work must be for another employer or organisation. You cannot furlough an employee and then ask them to volunteer for you in their normal role or any other role. If training is done, it is likely that this will need to be online because of the social distancing measures in place. Furloughed employees undertaking training should be paid for the time because this will be work, albeit the kind permitted during furlough.
The second Direction clarifies that there is no requirement for the training to be directly relevant to the employee's employment or agreed with them before being undertaken.
The Treasury Directions provide that work undertaken by a director to fulfil a legal obligation to file company accounts or provide other information relating to the administration of the company is permitted. The second Treasury Direction (which applies to claims submitted on or after 22 May 2020 or before that date if compliant with it) confirms that directors may also make a claim to the Scheme in respect of an employee, and make a payment of salary or wages to an employee without breaching the requirement of the Scheme to cease all work.
Can my employee get another job while on furlough with me?
Your normal rules on employees getting second jobs will still apply; however, you may wish to be flexible in the circumstances. It will be in your best interests to continue any restrictions on other employment which may create a conflict of interest, eg work with a competitor or client. If you do allow your employees to take on other work during their normal working hours, you should ensure that they understand that they must be available for duty when work is available again.
Can I make an employee redundant when they are on furlough?
Although the scheme is in place to prevent redundancies, it is inevitable that some businesses will assess that redundancies are required. The Government guidance confirms that employees can be made redundant while they are on furlough. Redundancy processes are still subject to the normal rules when carried out on furlough and, to prevent an unfair dismissal claim, reasonableness of the decision will be a key factor. This includes the financial position of the employer. As part of the process, employers should consider why furlough, with its ability to claim capped wages from the Scheme, was not suitable in the circumstances.
Is statutory redundancy pay calculated on furlough pay or normal pay, when a redundancy takes place following furlough?
On 31 July 2020, regulations came into effect which require a redundancy payment to be calculated using an employee’s full pre-furlough pay and not the reduced rate agreed during furlough.
Can employee representatives who are furloughed continue with their duties, for example, if the employer is undertaking a redundancy exercise?
While on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. However, in doing this, they must not provide services to or generate revenue for, or on behalf of their organisation or a linked or associated organisation.
How do I select employees for furlough leave?
You must be careful not to discriminate when deciding who to furlough. In some cases it will be all employees, in others it will be certain departments. Where selection does need to take place, it may be appropriate to implement a similar selection period as would be used in a redundancy situation so that the most effective employees remain in work.
What about employees on sickness or self-isolating?
Government guidance released on 9 April 2020 clarified that while an employee receiving SSP cannot be on furlough at the same time, an employer can decide whether to place a sick employee on furlough or on sick leave. The second Direction clarifies that employers can place an employee who is on sick leave or self-isolating onto furlough at any stage; it had previously been understood that furlough could only commence once an original SSP period had ended. Where the employer places a sick employee on furlough, SSP is longer payable and the employee should receive furlough pay. Both the SSP Rebate Scheme, introduced as part of coronavirus emergency legislation, and the Job Retention Scheme can be used for the same employee but not at the same time. The guidance made clear that an employer should not use the Scheme as a way to “top up” sick pay for short term sickness. In any case, the minimum furlough period eligible to claim the grant is three weeks. Employers who decide to place sick employees on SSP cannot claim for wages under the Scheme.
What about employees who are “shielding”?
Previous Government guidance stated that employers can furlough individuals who are shielding if they are unable to work from home and they would otherwise have to be made redundant.
However, updated guidance from 9 April 2020 now simply states that those who are shielding can be placed on furlough when they are unable to work. The “redundancy” criterion has now been removed which widens the circumstances in which a shielding employee can be furloughed. Despite this, the guidance still says that the Scheme is for use by organisations who are severely affected by coronavirus, though it acknowledges that different organisations will face different impacts.
The second Direction confirms that those who are shielding can be placed on furlough.
Government advice to shield is being relaxed. In England and Scotland, shielding is paused with effect from 1 August meaning that employees may return to the workplace from this date. In Wales, it is paused from 17 August. However, local restrictions (whether done by local lockdown or otherwise) may extend shielding for individuals living in those areas past these above dates.
What’s the position with apprentices?
Apprentices can be furloughed in the same way as other employees and they can continue to train while furloughed. However, apprentices must get at least the appropriate minimum wage rate for all the time they spend training which is not covered by the reimbursement.
Where apprentices are furloughed or placed on unpaid leave, or where the nature of their employment changes and no longer supports their apprenticeship, the apprentice, employer and training provider should consider whether a break in learning would be appropriate.
Apprentices can be made redundant; however, specific advice should be taken on this as different rules may apply in different parts of the UK.
Employers who are subject to the apprenticeship levy payment must continue to pay this as normal; it is not recoverable under the scheme.
What’s the position with agency workers?
Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.
Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.
Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.
What’s the position with those with caring responsibilities?
Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed. If the leave is unpaid, see next question.
Can I furlough employees on unpaid leave?
The Scheme cannot be used in respect of employees on unpaid leave ie. unpaid leave is not furlough. For claims made under the first Treasury Direction, employees that started unpaid leave after 28 February 2020 can be put on furlough instead. If an employee went on unpaid leave on or before 28 February 2020, they cannot be furloughed until the date on which it was agreed that they would return from unpaid leave. In respect of claims submitted between 1 March and 21 May 2020, it also states that where the duration of the leave was uncertain because its duration is determinable by reference to a particular circumstance, completion of a particular purpose or occurrence of a specified event, the end date of the unpaid leave is the ending of the circumstance, completion of the purpose or occurrence of the event.
For claims submitted on or after 22 May 2020 or those submitted before that are compliant with it the second Direction:
No claim can be made in respect of an employee's period of unpaid leave between 1 March to 30 June 2020.
An employee cannot be furloughed while they are on unpaid leave during that period.
Where the unpaid leave period began on or after 1 March 2020, an employer could end the unpaid leave earlier than originally anticipated in order to allow them to be put on furlough provided that the usual eligibility conditions are met and it could be shown that doing so was consistent with the exceptional purpose the scheme.
Where the unpaid leave began before 1 March 2020, the employee cannot be furloughed until the date it was agreed the leave would end when it commenced. If that date was uncertain because the end date depended on a particular circumstances, completion of a particular purpose, or occurrence of a specified event, the unpaid leave must still end when that circumstance occurs, the purpose is completed, or the event occurs.
However, the employer and employee could agree to vary the end date of a period of unpaid leave if that agreement was reached after the unpaid leave began and before 20 March 2020.
If such an agreement to vary was reached, the date that agreement was made is taken as the date the unpaid leave began (rather than the actual real date). Therefore, an employee whose period of unpaid leave began before 1 March 2020, but who subsequently agreed between 1 and 20 March 2020 to vary the end date of that leave, is taken as beginning their unpaid leave on the date the agreement to vary was made. This will put them in the category of people who started unpaid leave from 1 March onwards and builds in flexibility to end the leave early and furlough them.
Can I furlough employees working on a visa?
Foreign nationals are eligible to be furloughed, including employees on all categories of visa.
How does furlough interact with fixed-term contracts?
Fixed-term contracts which ended, without extension or renewal, on or before 19 March 2020 will not qualify for the grant once they have ended. Fixed-term contracts can be renewed or extended before their natural conclusion during the furlough period without breaking the terms of the scheme. There is no minimum period which must be left to run on a fixed-term contract to enable it to be renewed or extended, but it must not have ended. The furlough period must be for a minimum period of three consecutive weeks.
Where a fixed-term employee’s contract ends because it is not extended or renewed before its natural conclusion you will no longer be able claim a grant for them once the contract ends. However, an employee on a fixed-term contract can be re-employed, furloughed and claimed for if either:
their contract expired after 28 February 2020 and an RTI payment submission for the employee was notified to HMRC on or before 28 February 2020, or
their contract expired after 19 March 2020 and an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020.
Employees who started and ended the same contract between 28 February 2020 and 19 March 2020 will not qualify for this scheme. This is not specific to employees on fixed-term contracts, the same would apply to employees on all other contracts.
Does annual leave accrue during furlough?
Statutory minimum annual leave entitlement will continue to accrue because the contract of employment is still in existence. You may want to agree that contractual leave in excess of the statutory minimum does not accrue; however, this may present a blocker to obtaining employees’ agreement.
Can annual leave be taken at the same time as furlough?
Yes. On 17 April 2020, the Government confirmed this point. It was also clarified that employers must pay the employee’s normal pay for any annual leave but will still only be able to claim 80% (or the reduced amount of assistance in place at the time the leave is taken) of pay through the scheme. The rest must be topped up by the employer. Normal rules will apply to annual leave requests from employees during furlough which means that employers can refuse the request. Some employers may choose to do this in light of the requirement to “top up” pay to 100% during annual leave.
Guidance published on 13 May 2020 clarified the position with Bank Holidays which fall during a period of furlough. Workers who would normally have worked on the Bank Holiday will simply still be on furlough.
Where the worker would usually have taken annual leave on the Bank Holiday, the employer has two options.
The first option is to confirm that the worker will be on annual leave, and ensure they are paid accordingly, ie normal pay which may include the employer topping up pay from 80% (or the reduced amount of financial assistance in place at the time the leave was taken) if that is the agreed rate of pay during furlough.
The second would be to agree with the worker that annual leave will not be taken on that day and it will be a “normal” day of furlough. Where this happens, the day’s leave will be deferred and the worker must be permitted to take it later on in the year, or carry it over (see next question for new rules on annual leave carry over).
Can I require my employees to take annual leave during furlough?
Yes. This was confirmed in Government guidance published on 13 May 2020. However, the guidance goes on to state that employers should consider whether the purpose of annual leave (rest, relaxation and enjoyment) would be met if the employee was under any restrictions, eg lockdown. However, as lockdown begins to ease, the worker’s argument that enforced annual leave would not serve its purpose is weaker.
It should be mentioned that the Working Time Regulations 1998 have recently been amended to allow for four weeks of leave to be carried over into the next two leave years where it was not reasonably practicable for the worker to take leave as a result of coronavirus. This now means that all statutory minimum annual leave can be carried over, albeit carrying over the 1.6 weeks of additional leave is still subject to agreement by the employer and can only be carried over into the next leave year. Carry over of any contractual leave in excess of the statutory minimum is subject to agreement between employer and employee.
This extension to the carry over rules means that it is less of a concern for employers that employees have a potentially large amount of backed up leave to take once the pandemic passes.
How does furlough interact with maternity leave?
Those about to go on maternity leave will go on leave as normal.
Employees can be furloughed if they are on maternity leave, or other family related leave.
Guidance states that, where employers pay enhanced maternity pay, they can claim for this under the scheme and it does not appear that this would be the case if employees could not be on maternity leave and furlough at the same time. The same applies to pay during paternity, adoption and shared parental leave.
The position on assessing the level of payment to be made during leave was confirmed by the Government on 24 April 2020. Eligibility for Statutory Maternity Pay (SMP) is calculated with reference to earnings during a prescribed 8-week period. New legislation provides that, where statutory maternity leave begins on or after 25 April 2020, entitlement to SMP will be calculated on the employee’s normal, full earnings rather than their furlough pay.
The same applies to paternity leave, adoption leave, shared parental leave and parental bereavement leave.
The cut off date of 10 June does not apply to employees returning from statutory maternity, paternity, adoption, shared parental and parental bereavement leave. You can furlough an employee returning from these types of statutory parental leave after 10 June even if you are furloughing them for the first time. You may do this provided that:
you have previously submitted a claim for any other employee in your organisation in relation to a furlough period of at least three consecutive weeks taking place any time between 1 March 2020 and 30 June.
the employee you wish to furlough for the first time started maternity, shared parental, adoption, paternity and parental bereavement leave before 10 June and has returned from that leave after 10 June.
the employee was on your PAYE payroll on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020.
When calculating the maximum number of employees you can claim for, the number of employees you are furloughing for the first time due to them returning from parental leave should be added to any previous maximum. This means the maximum number of employees you can claim for in these circumstances, is the maximum you claimed for in any one claim before 30 June, plus any employees that you are furloughing for the first time due to them returning from parental leave.
How should I ask staff to come back to work?
It is advisable to provide as much written notice as is reasonably possible. While Government guidance does not outline what should be considered reasonable, employers should consider providing at least one week’s notice. This gives staff time to get their personal situation in order; for example, they may need this time to make arrangements for childcare.
Employers can ask staff to volunteer to come back in off furlough, something that may prove popular if staff have been receiving 80% of their wages. This can be a useful way of managing a situation where employers do not want their staff to all return at once. If too many volunteer, employers should then consider different processes, such as a rota system or asking staff to return part time. Alternatively, they may also need to implement a selection criteria. Any procedure put in place should be non-discriminatory.
What should I do if furlough has paused procedures such as a disciplinary process?
Generally, procedures such as a disciplinary can take place during a period of furlough but it may have been decided to postpone them during lockdown. As workplaces reopen, employers may now wish to recommence them. In doing so, they should consider if all parties required, such as managers and witnesses, are available. Although it is understood that furloughed staff can provide witness statements, it may make the process easier to wait for them to be taken back off furlough. If there are any further delays, these should be clearly communicated, in writing, to all parties.
What steps have been taken to prevent abuse of the Scheme?
Chancellor Rishi Sunak stated in his Government briefing on 8 April 2020, that the Scheme had been put together in a way to prevent spurious claims. HMRC’s Chief Executive, Jim Harra, confirmed measures had been put in place to minimise fraud, which were:
the requirement for an employer to have already been authenticated by HMRC
a four- to six-day payment processing period to allow background checks
checks on employers after a payout has been made to verify a claim was real.
Payments may be withheld or need to be repaid in full to HMRC if the claim is based on dishonest or inaccurate information or found to be fraudulent. A hotline has also been set up on which employees can report employers’ abuse of the system.