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Coronavirus Job Retention Scheme – Updated Guidance 4th April 2020

The Coronavirus Job Retention Scheme (“the Scheme”) is a new temporary government scheme which was announced on 20th March 2020 as part of the government’s response to the COVID-19 pandemic.

Following announcement of the Scheme, the government published guidance on 26th March 2020 (our commentary on which can be found here). The guidance raised a number of issues and questions.

The guidance for employers was substantially updated on 4th April 2020, ( and the equivalent guidance for employees was also updated on 4th April 2020 ( While this guidance provides clarity on a number of issues, further clarification is still required. It must also be noted that this is just guidance. It is not legislation.

The Scheme applies to employees who have been “furloughed” and is a means by which employers can apply for a government grant to cover a portion of the employee’s salary while they have been furloughed. The Scheme allows the employer to agree with employees that they will be put on temporary leave of absence (furlough). It does not directly change the employment relationship between employer and employee.

Who can claim?

There has been a lack of precise detail in relation to the circumstances in which an employer can furlough employees and apply for a grant under the Scheme. The current guidance provides that the Scheme “is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect UK economy”. When the Scheme was originally announced its purpose was stated to be to protect the jobs of employees who, would otherwise have been made redundant. However, the updated guidance provides “all employers all eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.” Whether or not HMRC will carry out an analysis of an employer’s circumstances surrounding furlough leave is unknown. However, the government’s Business support: FAQs do say that the government will retain the right to retrospectively audit all aspects of the scheme with scope to claw back fraudulent or erroneous claims.

The updated guidance does make clear that employers who i) have had a PAYE scheme in operation on or before 28th February 2020; ii) enrolled for PAYE online and iii) have a UK bank account can apply for a grant whether they are a business, charity, recruitment agency or public authority.

Who’s eligible?

The scheme covers the following individuals, whether they are employees or workers, provided that they were on a UK employer’s PAYE payroll on or before 28 February 2020:

  • Full-time employees.
  • Part-time employees.
  • Employees on agency contracts.
  • Employees on flexible or zero-hour contracts.
  • Apprentices (provided that they are paid at least the applicable apprenticeship national minimum wage rate for all the time they spend training).

It is also now clear that non-UK nationals can be furloughed by a UK employer.

Employees who were made redundant, or left employment for any reason, since 28 February 2020 can qualify if they are re-engaged by their former employer.

The updated employers’ guidance clarifies that some individuals who may not be employees under employment law will be eligible for the Scheme. In particular, it provides that the grant can be claimed for the following groups, if they are paid via PAYE:

  • Office holders (including company directors). For more information in relation to company directors click here.
  • Salaried members of limited liability partnerships (LLP).
  • Agency workers (including those employed by umbrella companies).
  • ”Limb (b) workers”.

Employees must have been on furlough for a minimum of three consecutive weeks for the employer to be eligible for a grant. Employees can be taken off furlough and placed back on furlough multiple times however, each period of furlough must be a minimum of three consecutive weeks.

 Placing Employees on Furlough Leave

The updated employer’s guidance provides that employers should discuss and agree furlough with employees and to be eligible for the grant furlough leave must be confirmed to the employee in writing and a copy of this record should be kept for five years.

During furlough leave

Employees cannot carry out any work for or on behalf of the employer that placed them on furlough leave however, the updated guidance confirms that employees can work for another employer while on furlough leave provided their contract of employment with their current employer permits it.

Employees can also carry out unpaid voluntary work provided that it does not involve the generation of any revenue for their employer and that it meets any criteria set out in the Scheme. Similarly, employees can also undertake training provided that it is not used by their employer to generate revenue and if the employer requires the employee to undertake training they must be paid the national minimum wage in respect of the training.

What can be claimed back?

Employers can claim up to the lower of 80% of usual monthly wage costs or £2,500 per employee, plus the associated employer national insurance contributions and minimum auto-enrolment employer pension contributions. The original guidance provided that fees, commission and bonuses should not be included in the calculation. However, the updated guidance provides that the employer can claim for “any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.”

For employees who are on a salary and whose pay does not vary, the 80% calculation is based on the employee’s gross salary as at 28th February 2020.

How is the 80% calculated for those with irregular earnings?

The updated employer’s guidance now provides that:-

If the employee has been employed (or engaged by an employment business) for a full 12 months prior to the claim, the employer can claim for the higher of either:

  • The same month’s earning from the previous year.
  • Average monthly earnings from the 2019-20 tax year.

If the employee has been employed for less than a year, the employer can claim for an average of their monthly earnings since they started work.

If the employee started employment in February 2020, their earnings so far should be pro-rated.

Past overtime, fees and compulsory commission payments can be included provided that they are “regular payments” but discretionary payments and non-cash payments should be excluded. Detailed guidance on what is meant by “regular” has not been provided. Furthermore, it is unclear what the intention or significance of the word “past” is in connection with overtime

The sums paid to the employees during furlough are subject to income tax and national insurance in the usual way.

A claim can be made from the date that the employee finished work and commenced furlough, not when the decision was made or the date written confirmation was issued. 


As noted above, the updated guidance provides some clarity however, there are a number of areas that still require clarification for example, the relationship between furlough leave and i) annual leave and ii) sick leave.

Finally, employers should be aware that the Scheme does not waive their requirement to comply with UK employment law.

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