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The guidance on the Coronavirus Job Retention Scheme (“the Scheme”) is now on its third revision. The most recent revision was published on 9 April 2020. Our commentary on the original guidance published on 26 March 2020 and the update published on 4 April 2020, can be found below. 

Update 9 April 2020

What has been updated?

There are three significant changes and a number of clarifications.

Sick leave

  • If an employee is on sick leave or self-isolating as a result of Coronavirus, they are entitled to receive Statutory Sick Pay (“SSP”) (subject to other eligibility conditions applying) or company sick pay where applicable. The Coronavirus Job Retention Scheme is not intended for short-term absences from work due to sickness. The period of furlough must be a minimum of 3 weeks.
  • When deciding whether or not to furlough an employee, short term illness and self-isolation should not be a consideration. However, if an employer wants to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these circumstances, the employee should no longer receive sick pay and would be classified as a furloughed employee.
  • Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. However, it is the employers’ decision whether to furlough these employees.
  • An employer can claim back from both the Coronavirus Job Retention Scheme and the SSP rebate scheme for the same employee but not for the same period of time.
  • Furloughed employees retain their statutory rights, including their right to Statutory Sick Pay (“SSP”). Therefore, furloughed employees who become ill must be paid at least SSP however, it is the employers’ decision whether to keep the employees on furlough or to move them onto SSP. It is also noted that employers are required to fund SSP themselves although some employers may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the Scheme.

 TUPE Transfers

The second significant change is that “a new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28th February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership”. This is a logical clarification given that the purpose of the Transfer of Undertakings (Protection of Employment) Regulations “2006 safeguard employees' rights on the transfer of a business.

Work Visas

Those with certain work visas will not be regarded as breaching their visa conditions if they receive funds under the furlough scheme:  "Grants under the scheme are not counted as ‘access to public funds’, and you can furlough employees on all categories of visa."

The other points of clarification are that:-

  • The prohibition on working for your employer while on furlough includes carrying out work for any organisation that is linked or associated with the employer.
  • An employer can only reclaim national insurance and pension contributions on furlough salary i.e. 80% of regular salary capped at £2,500 per month.
  • Organisations that consolidated their payroll after 28th February 2020 are permitted to place their employees on furlough.
  • The entire grant received in relation to salary must be paid to the employees. Employers are prohibited from using the grant to fund benefits and/or administrative charges etc.

Annual Leave

The main outstanding point in relation to furlough is the relationship between furlough and annual leave, it is anticipated that the guidance may be updated further in this regard.

Update 4 April 2020

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.

Application of Employment Laws

Finally, as we noted previously, when operating the Scheme, employers should always be aware that the Scheme does not otherwise affect an employer’s obligation to comply with UK employment laws. They are not suspended or disapplied by the Scheme.

Coronavirus Job Retention Scheme - 'Furlough leave' - 23 March

On Friday 20th March, the Chancellor set out a package of temporary measures to support people and businesses through the period of disruption caused by COVID-19.

These measures include a new 'Coronavirus Job Retention Scheme'.  Under the scheme all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been 'laid off' during this crisis.

Only limited information has been provided to date. However, the following has been set out in guidance to business


All UK employers will be eligible i.e. limited companies, LLPs, partnerships, sole traders and charities.

How to access the scheme

An employer will need to:

  • designate affected employees as ‘furloughed workers', and notify your employees of this change.

The guidance also notes that changing the 'status' of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.

  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.

HMRC advise they will set out further details on the information required.

What HMRC will support

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

HMRC advise they are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.

The guidance to employees notes as follows:

'Furloughed workers'

  • If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.
  • To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
  • You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.
  • If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
  • The Government intends for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.

As more details will follow in the days to come, this advice note will be updated. 

If you have any queries or would like advice regarding the Job Retention Scheme, get in touch with our Employment team  

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