The Coronavirus Job Retention Scheme: Updated FAQs for UK Employers

Last updated: 22 December 2020

The situation is moving very rapidly. We will seek to update these FAQs as further developments occur and as the Government produces any new regulations and further guidance or new legislation.

Current Government guidance is available on their website and ACAS guidance can be found at here. There still remains many questions and uncertainties surrounding the updates to the scheme. Here, we do our best to help by filling in as many gaps as possible.

The questions and answers in these pages are for general information only and must not be used as a substitute for legal advice. You should always take legal advice which is tailored to your specific circumstances.

 What is the Coronavirus Job Retention Scheme?

Put simply, the Coronavirus Job Retention Scheme (“CJRS”) is a benefit introduced by Government aimed at protecting jobs given the economic impact of the restrictive measures put in place to tackle the global COVID-19 pandemic.

The CJRS was first introduced in March 2020 and has evolved over time.So far, there have been three iterations of the scheme:

  1. the original scheme, as introduced in March 2020 (the “Original CJRS”);
  2. the flexible CJRS, which came into force on 1 July 2020 and was expected to end on 31 October 2020 (the “Flexible Furlough Scheme”); and
  3. the extended CJRS which took effect on 1 November 2020 and which is due to end on 30 April 2021 (the “Extended CJRS”).


 What does “furlough” mean in the context of the scheme?

“Furlough” basically means temporary leave of absence. The purpose of the CJRS is to incentivise employers to retain employees on paid temporary leave rather than making them redundant.

Through HMRC, the Government has been subsidising the earnings of furloughed employees under the CJRS (initially up to 80% of earnings, capped at £2,500 per month per employee (see question 14 below).  As such, all amounts claimed under the scheme must be passed to the employees in respect of whom they are claimed.

The amounts paid out under the scheme are a grant, not loan, so employers do not need to repay them.


 Where are the underlying rules and guidance for the CJRS?

The Government has so far produced four Treasury Directions which form the legal framework of the CJRS:

  1. Treasury Direction dated 15 April 2020 (applied to CJRS claims made before 22 May 2020);
  2. Treasury Direction dated 20 May 2020 (issued/published on 22 May 2020);
  3. Treasury Direction dated 25 June 2020 (issued/published on 26 June 2020) (this set out the rules in relation to the Flexible Furlough Scheme); and
  4. Treasury Direction dated 12 November 2020 (issued/published on 13 November 2020) (this set out the rules of the Extended CJRS and applies until 31 January 2021.  A further Treasury Direction is expected in relation to the period after 1 February 2021).

The Government has also produced (and maintained through updates) a series of guidance pages on the CJRS and how it operates.  The most notable pages for employers are:

There also guidance on how to repay CJRS grants if you have over claimed, or wish to repay the grant for another reason (because your business has not been as badly impacted by the pandemic as you had initially feared, for example).

There are separate guidance pages aimed at employees.


Which employers are eligible to apply?

Extended CJRS

The scheme is currently open to all UK employers (small, large, charitable, non-profit and for-profit) which were operating a PAYE payroll scheme on or before 30 October 2020 and which have a UK bank account.In principle, all employers are eligible to claim under the scheme.Employers do not need to have claimed under the CJRS before 31 October 2020 in order to claim now.

Claims in respect of periods ending on or before 31 October 2020

As above but, for the period between 1 July 2020 and 31 October 2020, claims could only have been made by employers who had previously furloughed employees before 1 July 2020 and submitted a CJRS claim in respect of them by 31 July 2020.


 When will the scheme end?

The scheme is due to close on 30 April 2021.

Adjustments (reductions) to the amount of grant that may be claimed under the CJRS began to come into force on 1 August 2020 (when employers became liable to pay employer National Insurance Contributions and pension contributions in respect of furloughed employees).

Further adjustments took effect on 1 September 2020 and then from 1 October 2020.However, the position now is as it was in August 2020 (see question 14 below). 


 Can we now furlough employees we have never furloughed before?


Yes.  This is a new aspect of the Extended CJRS.

Previously (i.e. under the scheme in force until 31 October 2020), the last date on which employees could have been furloughed for the first time was 10 June 2020.The only exceptions to this were employees returning from statutory family-related leave (i.e. maternity, shared parental, paternity, adoption or parental bereavement leave), or returning army reservists.

 Is there a limit on the number of employees we can furlough?

No, not under the Extended CJRS that applies from 1 November 2020.

For CJRS claims made in respect of periods up to and including 31 October 2020, there was a limit on the number of employees that could be furloughed.The total number of employees you could have claimed for in any claim period could not exceed the maximum number of employees you claimed for in any claim period up to 30 June 2020.

For example, if the maximum number of employees you claimed for in a single claim period up to 30 June was 50 employees, you could not claim for more than 50 employees in any single claim period after 1 July, up to and including 31 October 2020.There were exceptions to this rule in that employees returning from statutory family leave and returning army reservists did not count towards the cap.This cap was removed under the rules of the Extended CJRS.


 Is there a maximum or minimum period for which employees must be furloughed?

Until 30 June 2020, any employees placed on furlough must have been furloughed for a minimum period of at least three consecutive weeks (which is why the last date on which an employee could have been furloughed for the first time was 10 June 2020 under the Original CJRS and Flexible Furlough Scheme).

There is no such minimum requirement from 1 July 2020.However, subject to certain exceptions, the period that employers can claim for in any claim period must be for a minimum of seven calendar days.

There is no maximum period for which employees may be furloughed (subject to the scheme closure date of, currently, 30 April 2021).


Who can be furloughed?

Any employee who was employed by you and on your payroll on 30 October 2020 can now be furloughed.  That means you must have made a PAYE Real Time Information (“RTI”) submission to HMRC in respect of them between 20 March 2020 and 30 October 2020

You may also re-employ and furlough an employee who was employed by you before 23 September 2020 but was made redundant or stopped working for you on or after that date.   

Between 1 July 2020 and 31 October 2020, you could only claim the furlough grant in respect of employees who had been successfully furloughed at any point in the period between 1 March and 30 June 2020.

Employees - general

As mentioned above, you can claim in respect of employees (full-time, part-time, flexible, zero-hours) who were employed on 30 October 2020 and who were on your PAYE payroll on or before that date. 

Foreign nationals may also be furloughed.  CJRS grants are not counted as “access to public funds” and employees on all categories of visa may be furloughed.

New starters (i.e. those who commenced employment after 30 October 2020) cannot be furloughed.

Employees who have already been made redundant

If you made employees redundant, or they stopped working for you, on or after 23 September 2020, you may re-employ and furlough them under the CJRS.

Employees on fixed term contracts

If an employee’s fixed term contract has not already expired (i.e. they were employed by you on or before 30 October 2020), it can be extended or renewed and the employee can be furloughed. 

If a fixed term employee’s contract expired on or after 23 September 2020, you can re-employ them and then place them on furlough.


Apprentices may be furloughed in the same way as other employees and can continue to train whilst furloughed.  However, apprentices must be paid at least the Apprenticeship Minimum Wage/National Minimum Wage/National Living Wage, as appropriate, for all the time they spend training.  This means you have to “top-up” the furlough grant you receive in respect of their pay to the appropriate minimum wage. 

Agency workers (including those employed by umbrella companies)

Agency workers may be furloughed if they are paid through PAYE.

Furlough should be agreed between the agency (as the deemed employer) and the worker, though this should also be discussed with the end clients involved. 


If we have already made employees redundant, to we have to re-employ them and place them on furlough now that the scheme has been extended?

No.  Employers may re-employ employee employees who were made redundant after 23 September 2020, but are under no obligation to do so.


How does the Flexible Furlough Scheme work?

From 1 July 2020, employees can be moved to a part-furlough/part-work arrangement.  This means employers can bring back their furloughed employees for any amount of time and on any work pattern.  This flexible arrangement has been retained under the Extended CJRS. 

Employers need to pay part-furloughed employees their wages as normal in respect of the hours they work and claim the furlough grant in respect of the hours they are furloughed.  They will therefore need to calculate the usual hours of work of those individuals and their furloughed hours before they can calculate the amount of the furlough grant they will claim in respect of them (there is detailed guidance on how to do this).

Worked examples (prepared by HMRC) of how to calculate the amount of furlough grant an employer should claim for an employee who is flexibly furloughed can be found here


Can we “un-furlough” employees if they are required to work and then “re-furlough” them, or rotate employees who are on furlough?

Yes.  Depending on the needs of your business, you can:

  • keep all furloughed employees on furlough;
  • bring back (“un-furlough”) some or all employees on furlough completely (i.e. require them to return to their normal working pattern);
  • un-furlough some or all employees on a part-time basis; or
  • un-furlough/re-furlough employees on rotation (e.g. require half of a team to return to work one week while the other half are on furlough and then switch the following week, etc).

This flexibility has applied since 1 July 2020 and is retained under the Extended CJRS.

You will need to make sure that any decisions regarding the approach you take (particularly if that involves rotation, or un-furloughing some employees and not others) are made objectively and in a non-discriminatory way. 

You will also need to make sure that any new working arrangements are agreed with the employees in question and their employment contract (or any existing furlough agreement) amended accordingly.


We were not able to update our furlough agreements or put new ones in place before 1 November 2020 – can we still furlough employees with effect from 1 November 2020?

Yes, as long as the retrospective written agreement was put in place by the end of Friday 13 November 2020 and provided the employees in question were effectively on furlough (i.e. did not do any work for you) from 1 November 2020.


What can we claim under the CJRS?

Employers may claim the amount of a furloughed employee’s regular wages subject to the limits set out below.

Between 1 November 2020 and 30 April 2021

80% of wages (subject to a cap of £2,500 (gross) per month per employee).Employers are liable to pay employer’s National Insurance Contributions and minimum automatic enrolment pension contributions in respect of furloughed employees.

HMRC provides worked examples of calculating the amount of employees’ pay employers can claim for, which can be found here.

Previous levels of the grant

Up to 31 July 2020

80% of wages, subject to £2,500 (gross) per month per employee, plus associated employer National Insurance Contributions and pension contributions.

Between 1 and 31 August 2020

80% of wages (subject to the same cap), but employers were liable to pay employer’s National Insurance Contributions and pension contributions in respect of furloughed employees.

Between 1 and 30 September 2020

70% of wages, subject to £2,187.50 (gross) per month per employee.

Employers had to contribute the shortfall to the original grant (so 10% up to £312.50) to ensure that employees still got 80% of their wages (subject to the £2,500 cap), plus employer National Insurance Contributions and pension contributions.

Between 1 and 31 October 2020

60% of wages, subject to £1,875 (gross) per month per employee.

Employers had to contribute the shortfall to the original grant (so 20% up to £625) to ensure that employees still get 80% of their wages (subject to the £2,500 cap), plus employer National Insurance Contributions and pension contributions.


How are “regular wages” calculated?

Salaried employees

The calculation is based on regular payments (wages) you are obliged to make.In most cases this is simply salary, but could also include other payments that are non-discretionary (non-discretionary commission payments or fees, for example).

For employees who were on your payroll on or before 19 March 2020, you should use the same calculation as before.That is, their salary before tax (i.e. gross salary) as at 19 March 2020.This applies even if you did not furlough the employee before 31 October 2020.

For other employees, you must use their salary before tax as at 30 October 2020.

Employees with varied pay

For employees whose pay varies (because they work irregular hours, for example), how you work out their “usual wages” depends on when they were on your payroll.

For employees who were on your payroll on or before 19 March 2020, you must claim the higher of:

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

For all other employees, the calculation should be based on the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020.

There is an online calculator to help you work out how much can be claimed as wages, National Insurance Contributions and pension contributions.

 Is commission, overtime, bonuses and tips included in the “regular wages” calculation?

Government guidance states that the amount you should use when calculating 80% of your employees’ wages for hours not worked (i.e. the amount of grant you will claim under the CJRS) should be made up of the “regular payments you are obliged to make”.  This includes wages, non-discretionary overtime, non-discretionary fees, non-discretionary commission/bonus payments and piece rate payments.

Discretionary bonuses, tips and non-cash payments are not included.


How are salary sacrifice amounts treated?

The wage calculation is based on employees’ post-salary sacrifice wages and benefits provided through salary sacrifice arrangements cannot be claimed for.

Normally, employees cannot switch freely out of most salary sacrifice arrangements unless there is a life event.HMRC has confirmed in its guidance that COVID-19 counts as a “life event” that could warrant changes to salary sacrifice arrangements, if an employee’s employment contract is updated accordingly.


Are benefits in kind included?

No.  The cost of providing non-cash benefits – such as health insurance, gym membership, etc – is not included in the scheme and cannot be claimed for. 

However, you will need to maintain such benefits as normal, unless something different is agreed with the furloughed employees.


Do we have to pay furloughed employees the balance of their normal earnings (i.e. the amount not covered by the furlough grant)?

No.  However, if you have been “topping up” the grant to full pay under your current furlough agreement with an employee and no longer wish to do so, depending on the wording of that original agreement, you will need a new or amended furlough agreement in place reflecting that change.


What if employees’ furlough pay means they are effectively receiving less than the National Minimum Wage/National Living Wage

Furloughed employees may be paid just the furlough grant amount, even if that means they are receiving less than the National Minimum Wage (the idea being that, since they are not working, they are not entitled to pay).

However, time spent training whilst furloughed is treated as working time and employees must be paid at the appropriate National Minimum Wage in respect of such periods.

See question "9"  on the position regarding apprentices.


What happens if we cannot afford to pay the wage costs employers are required to cover (i.e. employer National Insurance Contributions and pension contributions)?

The contributions that employers are required to make in order to receive the CJRS grant are mandatory. 

If you cannot afford to make those contributions, you will need to consider other options, such as redundancies or varying the employees’ terms and conditions of employment (to reduce pay or working hours, for example).


Can we make employees redundant whilst they are on furlough?

Yes, provided you do so in accordance with the usual rules, including consulting with employees before final decisions are made.

For claim periods relating to November, you can continue to claim the grant for a furloughed employee who is a serving a statutory notice period, but you cannot use the grant to substitute redundancy payments (see also Question 23 below). 

It is unclear whether employers could claim for employees who were serving a contractual notice period in November.  The employer guidance only refers to statutory notice, but the guidance aimed at employees, states that the employer can claim the grant in respect of statutory or contractual notice. It is hoped that HMRC will clarify this point in further guidance.

If you make an employee redundant, you should base their statutory redundancy pay and notice pay on their normal wage, not their furlough wage.

 If an employee’s employment is terminated whilst they are on furlough, can we claim the CJRS grant in respect of their notice pay/period?

Yes, for claim periods up to and including November 2020, but not beyond that.As mentioned, although employers can claim the furlough grant in respect of statutory notice, it is currently unclear whether they can claim in respect of contractual notice.

For claim periods starting on or after 1 December 2020, you cannot claim the grant for any days during which the furloughed employee is serving a contractual or statutory notice period (including people serving notice of retirement or resignation).


Is there a time limit on when we have to claim under the scheme?

Yes.   For claim periods ending on or before 31 October 2020, claims must have been submitted by 30 November 2020.

For subsequent periods, the deadlines are as follows:


Claim for furlough days in

Claim must be submitted by

  • November 2020
  • 14 December 2020
  • December 2020
  • 14 January 2021
  • January 2021
  • 14 February 2021
  • February 2021
  • 14 March 2021
  • March 2021
  • April 2021
  • 14 April 2021
  • 14 May 2021

HMRC may accept claims made after the relevant deadline if you had a reasonable excuse for failing to make a claim in time and you then claimed without delay after the excuse no longer applied.  However, HMRC will not consider reasonable excuses in advance of a claim deadline. 


25. Do furloughed employees continue to accrue annual leave?

Yes, furloughed employees continue to accrue their holiday entitlement because they continue to be employed whilst furloughed.

However, as part of the furlough agreement with the employee, you can seek to agree to reduce any enhanced contractual holiday entitlement beyond the statutory minimum (5.6 weeks’ holiday per year for full-time employees) to reflect the fact that the employee has been on furlough.

Taking the Government guidance into account, the position on annual leave for furloughed employees can be summarised as follows:

  • Employees can take holiday whilst on furlough without breaking the period of furlough.  To do so, they should give you notice of their holidays in the usual way.
  • If any employee is flexibly furloughed, any hours taken as holiday during the claim period should be counted as furloughed hours, rather than working hours.
  • Employees should not be placed on furlough for a period simply because they are on holiday for that period.
  • You have the ability to restrict when holiday can be taken if there is a business need to do so.
  • You can require employees to take holiday while on furlough and the usual notice requirements will still apply.  However, before doing so, you should consider whether in reality, in view of the restrictions, such as the need to socially distance or self-isolate, they would be able to rest, relax and enjoy leisure time.

Specific guidance with further details has been issued on the subject of holiday and holiday pay during furlough.


26. How is holiday pay treated?

Employees should be paid holiday pay in accordance with the Working Time Regulations.That is, despite being on furlough, they should be paid at their normal rate of pay or, where the rate of pay varies, pay calculated on the basis of average pay received by the employee in the previous 52 working weeks.This means you will have to “top up” the furlough pay as necessary to ensure that this is the case.


27. What about employees on family-related leave?

Employees on statutory family-related leave (i.e. maternity, shared parental, paternity, adoption or parental bereavement leave) are subject to the normal rules in relation to such leave and pay.

However, you may need to calculate your employee’s average weekly earnings differently for these purposes if your employee was furloughed and then commenced leave on or after 25 April 2020.Broadly, the principle is that those earnings should be calculated based on the pay those employees would have received had they not been furloughed.This effectively means that those employees do not lose out if they are on a lower rate of furlough pay during the period for calculating their statutory family-related leave pay (statutory maternity pay, for example).

You can claim for enhanced contractual pay for employees who qualify for maternity pay, adoption pay, paternity pay, shared parental pay or parental bereavement pay. This means that, in relation to maternity pay (for example), you would reclaim statutory maternity pay in the usual way and the portion of the enhanced maternity payment through the furlough scheme.


28. What about employees who are on or returning from family-related leave?

On family-related leave

The normal rules for maternity, paternity, shared parental, adoption or parental bereavement leave and pay apply.

You may need to calculate an employee’s average weekly earnings differently for these purposes if they were furloughed and then started claiming statutory parental pay on or after 25 April 2020.  There is separate guidance on this.  Essentially, the adjustments to the calculation are aimed at making sure that employees’ eligibility for the relevant statutory pay and earnings-related rate of that pay is not affected if their wages are lower than normal because of being furloughed.

If you offer enhanced contractual pay for family-related leave, you can claim for the enhanced elements of that pay through the furlough scheme.  For example, if someone is on maternity leave, they can also be simultaneously furloughed and you can claim any enhancement to statutory maternity pay under the furlough scheme.  You would reclaim statutory maternity pay in the usual way and then the furlough grant in respect of the enhanced element under your contractual scheme.

If your employee is receiving Maternity Allowance while they are on maternity leave, they should not receive furlough pay at the same time.

Returning from family-related leave

If your employee returns from statutory family-related leave on or after 1 November 2020, the normal scheme rules apply and they may be furloughed, provided they agree to this.

For claim periods up to and including 31 October 2020, you could furlough employees returning from statutory family-related leave (with their agreement) provided the employee was on your payroll on 19 March 2020 and you successfully furloughed and claimed the furlough grant in respect of any other employee sometime between 1 March 2020 and 30 June 2020.

When calculating furlough pay for returning staff, you should base the calculation on their normal salary and not the salary they received while on leave.  If their pay is variable, furlough pay should be based on their pay for the same month’s earnings in the previous year, or average monthly earnings for the 2019/2020 tax year. 

Also, employees may elect to return from maternity leave early to enable them to be furloughed (if you agree to this).  If they wish to do so, they must give you at least eight weeks’ notice of their return to work.

29. What about employees who are unable to work because they are shielding or have caring responsibilities?

If an employee is unable to work because:

  • they are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance (i.e. are shielding); or
  • they have caring responsibilities resulting from coronavirus, including employees that need to look after children

they are eligible for the grant and may be furloughed.

Updated guidance on shielding can be accessed here.


30. What about employees on sick leave, or who are unable to work due to self-isolation?

The guidelines state that if an employee is on sick leave or self-isolating as a result of coronavirus, they will be eligible for Statutory Sick Pay (“SSP”), subject to other eligibility conditions being met.The furlough scheme is not intended for short-term absences from work due to sickness.

The guidelines also state that short term illness and isolation should not be a consideration in deciding whether an employee should be furloughed.

However, if you want to furlough an employee for business reasons and they are currently off sick, you may do so in the same way that you furlough other employees.In those circumstances, such employees would be classified as furloughed and no longer receive sick pay.In other words, you cannot claim under the SSP rebate scheme and under the furlough scheme in respect of the same employee for the same period.


31. What about employees on long term sick leave?

Employees who are on long-term sick leave may also be furloughed and it is for the employer to decide whether to furlough such individuals.


32. What if an employee becomes sick whilst furloughed?

Furloughed employees retain their statutory rights, including the right to SSP. This means that they must be paid at least the SSP when they are sick.

It is for the employer to decide whether to keep such individuals on furlough, or move them to SSP.If they keep the employee on furlough for the period they are sick, they may continue to claim these costs through the furlough scheme.However, employers cannot claim under the SSP rebate scheme and under the furlough scheme in respect of the same employee for the same period.


33. Can we furlough employees we have inherited by operation of TUPE?

Claim periods ending on or before 31 October 2020

The new employer (transferee) may claim the furlough grant in respect of the employees of the previous business (transferor) transferred if:

  • the employees transferred by operation of TUPE or the PAYE business succession rules apply to the change in ownership (i.e. a “business transfer” under TUPE); and
  • the employees being claimed for have previously been furloughed and the furlough grant claimed in respect of them by the transferor. 

The maximum number of employees the new employer/transferee may claim for will be the total of both:

  • the maximum number of employees that the transferee claimed for in any one claim ending on or before 30 June 2020; and
  • the number of employees that transferred to it who have been furloughed and furlough grant claimed in respect of them by the transferor between 1 March 2020 and 30 June 2020, subject to the maximum cap the transferor was subject to.

Claim periods after 1 November 2020

The new employer/transferee may claim the furlough grant in respect of transferring employees if TUPE or the PAYE business succession rules apply to the change in ownership.

The employees being claimed for must have been:

  • transferred to the transferee on or after 1 September 2020;
  • employed by the transferor or the transferee on 30 October 2020; and
  • an RTI submission to HMRC must have been made in respect of them by either the transferor or transferee between 20 March 2020 and 30 October 2020.

The wording under the previous and current guidance and Treasury Directions seems to suggest that employees who transfer by operation of the “service provision change” provisions of TUPE (as opposed to “business transfer” provisions) are not covered by the furlough scheme.


34. What is the position regarding LLP members?

LLP members who are designated as employees for tax purposes (i.e. salaried members) may be furloughed.

To furlough a member, the terms of the LLP agreement may need to be varied by a formal decision of the LLP.   The variation could, for example, reflect the fact that the member will not perform any work for the LLP whilst on furlough leave and the effect this will have on their remuneration from the LLP.

Self-employed partners with taxable profits below the £50,000 annual threshold may be eligible for support under the Coronavirus Self-Employment Income Support Scheme.


35. What is the position regarding company directors and office holders?

Office holders can be furloughed, provided that the income they receive for holding their office is paid through the PAYE payroll.

As office holders, salaried company directors are also eligible to be furloughed.Where one or more individuals’ furlough is decided by the board of directors, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company during hours in which they are recorded as being on furlough (directors’ duties under the Companies Act 2006), the Government guidance confirms that they may do so, provided they do no more than would reasonably be judged necessary for that purpose.They should not carry out work that they would carry out in normal circumstances to generate money for the company.

Company directors on furlough should therefore be very careful not to cross the line by carrying on their normal work. In practice, furlough might only be a realistic option for directors in certain companies whose business simply cannot continue during the crisis.


36. What about self-employed consultants and other independent service providers?

Assuming they are not on your PAYE payroll then the furlough scheme will not apply to these categories of workers, but they may be eligible to apply for support under the Coronavirus Self-Employment Income Support Scheme.

Workers providing personal services to your business (other than through a business or profession), who are not your employees but are paid through your PAYE payroll, may be furloughed.


37. Can furloughed employees do any work for us whilst on furlough?

Not until the Flexible Furlough Scheme came into effect on 1 July 2020. Until then, employees could not do anything that provides services or makes money for the employer that had furloughed them, or for an organisation associated or linked with that employer.If they did carry out such work for you or an organisation associated/linked with yours, you may be required to repay the furlough grant.

The Flexible Furlough Scheme rules which came into force on 1 July 2020 – and still apply - mean that you have the option (after that date) to furlough employees for any amount of time and on any work pattern you wish based on the needs of the business.So, if you need an employee to work some, but not all of their usual working hours, it is possible for you to achieve that through flexible furlough.

However, it is important to bear in mind that employees should not be carrying out any work for you (or an organisation associated/linked with yours) during the hours they are recorded as being on furlough.

It is important to draw this rule to the attention of the employees you intend to furlough so that they are aware not to do anything that could jeopardise your ability to claim under the scheme (i.e. work whilst furloughed).


38. What can employees do whilst furloughed?

Furloughed employees may:

  • take part in training (the purpose of which must be to improve employees’ effectiveness in your business or the performance of your business.  The guidance states that employees should be encouraged to undertake training, but that undertaking the training should not provide services to or generate income for you or an organisation linked or associated with your organisation);
  • undertake voluntary work for another employer or organisation;
  • work for another employer (if their contract of employment with you allows them to do so);
  • carry out their duties as manager or trustee of an occupational pension scheme; and
  • carry out their duties as trade union or non-trade union representatives for the purposes of individual or collective representation of employees or other workers.


39. How do we select who to furlough?

You will need to assess your requirements for employees to carry out work of particular kinds over the coming months. In some cases, where the business essentially needs to be temporarily closed, your requirements are likely to be only for a very small skeleton team. In other cases, where substantial business is likely still to be coming in and can be conducted safely and viably, you may only wish to furlough a small proportion of your workforce.

You should seek to apply fair and reasonable selection criteria, very much along the lines of a redundancy exercise, although rapidly executed. The selection criteria should usually be based on retaining the skills and experience that you need to keep going, as against those you do not anticipate needing in the next few months.

You should seek to consult with employees to the extent that this is practicable.

Where non-furloughed employees will be required to work from home it would in our view be reasonable to take into account the extent to which employees may not be able to work effectively from home, for example due to child care requirements. However, there are obvious potential discrimination risks in this area. You should not assume, for example, that female employees with young children will be unable to work effectively, or that they will necessarily be the primary carers.


40. Do employees have to agree to being furloughed?

Strictly speaking, yes.

The guidelines state that employers should discuss the matter with staff and make any changes to their employment contract by agreement.The guidance is clear that, when making decisions in relation to the process (including which employees to furlough), equality and discrimination laws will apply in the usual way.

The guidance also states that, in order to be eligible for the furlough grant, employers must have confirmed to their employee in writing that they have been furloughed, but employees are not required to provide a written response to such confirmation.

This effectively means that any necessary changes to employees’ terms and conditions of employment to reflect any furlough arrangement must be agreed to by the employee.

Employers are required to keep a written record of the furlough agreement (and any subsequent amendments to it) for five years. 


Can employees insist on being furloughed?

No.  It is for the employer to designate which employees to furlough.


41. Will furloughed employees be gaining continuous service (for the purposes of statutory rights such as unfair dismissal and redundancy payments) while on furlough?

Yes.  The contract of employment will remain in place throughout the furlough period.  Employees will therefore remain in continuous service for statutory purposes if they are placed on furlough leave.


42. What documentation are we required to keep?

The current guidelines state that employers should keep a copy of all records for six years, including:

  • the amount claimed and claim period for each employee;
  • the claim reference number for your records;
  • your calculations in case HMRC need more information about your claim;
  • for employees you flexibly furloughed, usual hours worked including any calculations that were required; and
  • for employees you flexibly furloughed, actual hours worked.

You should also keep a copy of the furlough agreement and any documentation amending its terms for five years and make it available to HMRC upon request.  However, it is advisable to retain such documents for longer given the requirement to keep the other records for six years. 


43. How do we claim under the scheme?

Claims should be made through the Government’s online portal

You will need to have a Government Gateway user ID and password, which would have been assigned to you once you registered for PAYE online (which you must also do in order to claim).


44. When will we receive the money once we submit a claim?

The guidelines state that once you have made a claim:

  • you will receive a claim reference number;
  • HMRC will then check that your claim is correct; and
  • pay the claim amount by BACs into your bank account within six working days


45. What if the company has gone or is going into administration?

Where a company is being taken under the management of an administrator, the administrator can furlough and claim for employees.

In relation to claim periods ending on or before 31 October 2020, the administrator may only furlough employees who have been successfully furloughed at any time between 1 March 2020 and 30 June 2020.

The guidance states that administrators should only use the furlough scheme if there is a reasonable likelihood of rehiring the workers.


46. What about public sector organisations or organisations with employment costs funded through the public sector?

According to government guidance, if you have staff costs that are publicly funded (even if you’re not in the public sector), you should use that money to continue to pay your staff and not furlough your employees.  This is because the majority of public sector employees are continuing to provide essential public services and/or contributing to the response to the coronavirus outbreak.

However, organisations can use the furlough scheme if they are not fully funded by government grants and the guidance states that they should contact their sponsor department or respective administration for further guidance.


47. Are there additional issues to consider if I want to furlough an employee who is sponsored under Tier 2 of the immigration system?

Please see our UK Immigration FAQs. These also cover the temporary provisions currently in force on right to work checks.


48. What happens if we do not comply with the strict conditions for applying for the furlough grant (for example, if employees do undertake the odd task for us whilst they are on furlough)?

This would be a breach of the furlough scheme rules and the Government has introduced provisions dealing with this within the Finance Act 2020, which came into force on 22 July 2020. 

The new provisions provide for a new tax band on companies, effectively giving HMRC powers to recover monies from a business where it is proved that a claim under the furlough scheme did not meet the strict criteria set out by the Government.  In other words, if HMRC discover that employees on furlough were carrying out work for you, you will be required to repay the furlough grant you received in respect of those individuals (in the form of a tax), plus a penalty (see below). 

The legislation provides employers with a grace period to review and check the validity of their furlough claims and, if an error is found, notify HMRC to avoid having to pay a penalty.  The grace period ends on the latest of:

  • 20 October 2020 (now passed);
  • 90 days after the employer received the furlough grant it was not entitled to; and
  • 90 days after the circumstances changed so that the employer was no longer entitled to keep the furlough grant received (for example, when the employee claimed for started carrying out work for it whilst furloughed).

If an employer knows it has received furlough grant amounts it was not entitled to and fails to “own up” within the grace period, this will be treated as a “deliberate and concealed” failure to notify and the starting point when considering the penalty that should be imposed will be 100% of the tax. This means that repaying any furlough grant could cost double (i.e. the amount of the grant, plus the same amount by way of penalty).

If employers do come forward within the 90 day window, they will still have to repay the furlough grant they were not entitled to, but would escape the penalty.

If an employer “owns up” after the grace period, the penalty it pays can be reduced, but to no lower than 30% of the tax (if the employer comes forward without any prompting) or 50% of the tax (if the employer comes forward after prompting by HMRC). 

Criminal prosecution is likely to be considered (for defrauding the public purse) if an organisation fails to comply with a direction from HMRC to repay the furlough grant.  HMRC carried out its first arrest for “furlough fraud” in July (our partners, Richard Fox and Nicola Finnerty commented on this and the Finance Act 2020 in their article which was published in Business Matters on 22 July 2020).   

Further commentary on employers’ possible exposure in the event that furloughed employees are required to work can be found in our partner, Richard Fox’s article, published in SME Magazine in April 2020.

It is recommended that you seek specialist advice if you have concerns regarding how you have implemented the furlough arrangements and what the new legislation may mean for you


 As a director, could I be personally liable for any furlough penalty?

Yes.  The relevant legislation includes powers to impose the penalty on company directors personally where HMRC is of the view that the company is at risk of becoming insolvent and unable to pay the tax (i.e. repay the incorrectly claimed grant amounts).

Please see the article by Nick Ralph and Özlem Mehmet on the potential personal liability of directors of insolvent companies that are found to have received incorrect furlough grants.


Will the fact that we have claimed the CJRS grant be disclosed to the public?


HMRC will publish employer names, an indication of the value of the furlough grant claim they have made (within a banded range – see below) and, in the case of companies and LLPs, the company registration number of those who claim under the scheme for the month of December 2020 onwards.

The banded ranges of furlough grant claims for these purposes are:

  • £1 to £10,000;
  • £10,001 to £25,000;
  • £25,001 to £50,000;
  • £50,001 to £100,000;
  • £100,001 to £250,000;
  • £250,001 to £500,000;
  • £500,001 to £1,000,000;
  • £1,000,001 to £2,500,000;
  • £2,500,001 to £5,000,000;
  • £5,000,001 to £10,000,000;
  • £10,000,001 to £25,000,000;
  • £25,000,001 to £50,000,000;
  • £50,000,001 to £100,000,000; and
  • £100,000,001 and above.

HMRC may agree not to publish such details if you are able to show (with evidence) that publishing them would result in a serious risk of violence or intimidation to certain individuals (for example, directors in the case of companies), or any individual living with them.Evidence that could be provided in support of such application could include a police incident number (if you have been threatened or attacked), or documentary evidence of a threat or attack, such as photos or recordings.

Further details on how to submit a request to HMRC not to publish this information is expected shortly

From February 2021, HMRC will be including details of claims made by an employer (in periods starting on or after 1 December 2020) in respect of an employee within employees’ Personal Tax Account.


What is happening in relation to the Coronavirus Job Retention Bonus now that the scheme has been extended?

This was a one-off payment of £1,000 that was going to be made to employers in February 2021 in respect of each employee they allowed to return from furlough and retained until 31 January 2021 (and did not serve them with notice before then).

Given the extension to the CJRS, this bonus has expressly been withdrawn under the latest Treasury Direction.

However, the Government indicated in its policy paper extending the CJRS that “a retention incentive will be deployed at the appropriate time”, so something similar may be put in place when the CJRS closes at the end of April 2021.


What is happening with the Job Support Scheme?

The launch of this has been postponed given the extension of the CJRS.


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