Furlough: Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme was set up to reimburse a proportion of 'furloughed' employees' wages i.e. employees on a leave of absence who are kept on your payroll. It is to remain in place until the end of October 2020.

Since the start of July furloughed employees have been able to return to work part-time ('flexible furlough') - you can still claim under the scheme for normal hours not worked. A taper requiring employers to contribute to furloughed salaries applies from August. The final date by which you could furlough an employee for the first time was 10 June (other than employees returning from statutory family leave and military reservists returning after a period of mobilisation).

The following FAQs are based on current Government guidance and 'Treasury Directions'. Treasury Directions take precedence over Government guidance. Please contact us for advice before furloughing employees or before acting on the information below as government guidance is being regularly updated.

There is a separate Workbox page with FAQs on Ending Furlough and Lockdown, which also has details on the Government's new Job Support Scheme.

Which employers can apply for reimbursement under the scheme?

All UK employers (including businesses, charities, recruitment agencies (where agency workers are paid through PAYE) and public authorities) are eligible, provided they have:

a PAYE scheme registered on HMRC's real time information system at the time of making the claim, and that scheme was registered on or before 19 March 2020;
enrolled for PAYE online; and
a UK bank account.

Administrators can access the scheme on behalf of a company in administration.

You can only apply for reimbursement under the scheme in respect of the period from 1 July to 31 October if you have made a qualifying claim under the scheme on or before 31 July in respect of an employee who has been furloughed for a minimum of three weeks starting on or before 10 June.

Does it apply to the public sector?

Although the scheme is available to public sector organisations, the Government expects that it will not be used by many as they will continue to provide essential public services or contribute to the response to the coronavirus outbreak.

Where employers (public sector or non-public sector) receive public funding for staff costs, and that funding is continuing, the Government expects them to use that money to continue to pay staff in the usual fashion – and not furlough them.

Separate guidance has been issued on how payments to suppliers of contingent workers impacted by COVID-19 should be dealt with where the party receiving the contingent worker's services is a Central Government Department, an Executive Agency of a Central Government Department or a Non-Departmental Public Body.

How do we apply for a grant under the scheme?

HMRC has set up an online system, which you can access here. Information on the steps you need to take before making a claim can be found in the various sets of HMRC guidance:

Check if you can claim - Claims for wages through the Coronavirus Job Retention Scheme
Check which employees you can put on furlough
Steps to take before calculating your claim
Calculate how much you can claim
Claim for your employees's wages - Claim for wages through the Coronavirus Job Retention Scheme
Report a payment in PAYE Real Time Information

You will need to calculate the amount you are claiming. HMRC will be able to retrospectively audit claims, and may ask you for additional information at any time

You should reduce wages within payroll before they are paid – the adjustment will not be made by HMRC.

You can only make one claim in respect of a 'claim period' – and claim periods cannot overlap. Your claim will need to include all of the employees you want to furlough for that claim period. See more on claim periods below - the rules differ depending on whether the claim is in respect of a period before or after 30 June.

You can make your claim in anticipation of an imminent payroll run, at the point you run your payroll, or after you have run your payroll.

If you are eligible you will receive the grant from HMRC by BACS to a UK bank account. You must then pay the employee all the grant received for their gross pay.

Claims can be backdated to 1 March where employees have already been furloughed (see below).

How should we decide on the length of a claim period?

Your claim will need to include all of the employees you want to furlough for that claim period.

You can only make one claim in respect of a 'claim period' – and claim periods cannot overlap.

For claim periods that end on or before 30 June you can decide on the length of your claim period. Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least seven calendar days. You can only claim for a period of fewer than seven days if:

the claim period includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it; or
an employee is returning from family leave or a period of mobilisation and you reasonably consider that it would be simpler to claim for a shorter period (provided you then make another claim for the period starting immediately after it).

Claims for any periods starting before 1 July must end on or before 30 June and had to be submitted by 31 July. This is the case even where an employee furloughed in June continued to be furloughed full time in July. Separate claims needed to be submitted to cover the days in June and the days in July that you want to claim for. This may mean that your claim periods will differ from the pay periods you use.

Claims for periods after 30 June can be made from 1 July. There is as yet no final date by which claims for periods between 1 July and 31 October must be submitted.

From 1 July claim periods will no longer be able to overlap months (to reflect the fact that the scheme rules are going to be changing each month - see below). If your pay period includes days in more than one month, you'll need to submit separate claims covering the days that fall into each month. See examples here and here.

To calculate how many furloughed hours you can claim for in respect of each employee, you have to work out (i) the employee's usual working hours in the claim period; and (ii) the number of these hours that the employee has worked and has not worked. There is a different calculation, however, for employees who come off furlough in the middle of a claim period: How do we calculate furlough pay for employees who come off furlough partway through a claim period?

What is the maximum number of employees a claim can cover?

There is no limit on the number of employees covered by claim periods up until 30 June.

From 1 July the number of employees claimed for in any claim period cannot exceed the maximum number claimed for under any previous claim under the scheme ending on 30 June (referred to in the Treasury Direction as the 'high-watermark number'). This could be relevant if there have been periods of rotating furlough. So, for example, if you have submitted three claims between 1 March and 30 June and the total number of furloughed employees was 30, 20 and 50 employees, then the maximum number of employees you can furlough in a single claim from July would be 50.

There are, however, a number of exceptions:

Statutory family leave returners: 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 statutory family leave after 10 June 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 on or before 30 June, plus any employees that you are furloughing for the first time due to them returning from leave.

Military reservists: If you are furloughing employees that are military reservists for the first time on their return to work after a period of mobilisation from 10 June, you should add this number to your previous maximum when calculating the maximum number of employees you can claim for.

TUPE transfer after 10 June: If there has been a TUPE transfer after 10 June, and you are the new employer, the maximum number of employees that you can claim for will be the total of both:

the maximum number of employees you claimed for in any one claim ending on or before 30 June; and
the number of employees that are being transferred to you who have had a claim submitted for them in relation to a furlough period of at least three consecutive weeks taking place any time between 1 March and 30 June 2020.

Consolidated payroll: If you have consolidated payroll and there are new employees on it (see Which workers are covered by the scheme?), the maximum number of employees that you can claim for under the consolidated scheme is the total of the maximum numbers of employees under a single claim in each scheme that was consolidated.

Do we need to document the furlough arrangement in writing?

Yes - see below.

When flexible furloughing is introduced in July (see below), you must agree any new flexible furlough arrangement with the employee; and confirm that agreement in writing.

You should also retain all records and calculations in respect of your claims.

What period can we claim the grant in respect of?

You can claim reimbursement of salary for the period since 1st March 2020, if employees have been furloughed since that date. The start date for a claim should be the date an employee moves onto furlough, not when you make the decision to furlough. The scheme is to close on 31 October 2020.

Claims for any periods starting before 1 July must end on or before 30 June and must be submitted by 31 July.

Claims for periods after 30 June can be made from 1 July. There is as yet no final date by which claims for periods falling between 1 July and 31 October must be made.

If an employee continues to be furloughed after 30 June, separate claims will need to be submitted to cover the days in June and the days from 1 July that you want to claim for.

How quickly can we claim the grant?

The online system opened on 20 April 2020 (but pay can be backdated to 1 March 2020 if the conditions of the scheme are satisfied).

The government has advised that payments will be made to employers within 6 working days. You are advised not to contact HMRC unless it has been more than 10 working days since a claim was made and no payment has been received in that time.

What records do we need to keep of our claims?

You should keep claim 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.

What should we do if we make an error or miscalculate the amount we have claimed for?

You should notify HMRC of any errors or miscalculations.

Any overclaimed amounts must be paid back to HMRC, in line with current Government guidance. You can do this on your next claim form or contact HMRC if you are not making another claim. For more details on making repayments, click here. You should keep a record of the adjustment for 6 years.

It's important to double check the amounts you have received to ensure you haven't overlooked any potential errors or compliance issues. This is because the Finance Act 2020 enables HMRC to recover overclaimed amounts through the tax system and in some cases also impose penalties (see below).

If your error or miscalculation has led to an underpayment, then you should contact HMRC directly to amend your claim.

If you make a claim in error, then you are able to delete it, provided that you do so within 72 hours of the claim being made.

What happens if we have made a claim, but haven’t complied with the conditions of the Scheme?

HMRC can recover payments (by way of an income tax charge) if you have accessed the Scheme, but failed to comply with its conditions.

HMRC can also impose financial penalties if there has been deliberate non-compliance. There is a 90-day amnesty period to allow you to notify HMRC of any non-compliance issues you are aware of and avoid the potential penalties.

In certain situations, a company officer of an insolvent company may also be jointly and severally liable for the income tax charge.

Which workers are covered by the scheme?

The scheme applies to individuals who are subject to PAYE on any type of contract including full-time, part-time, agency, flexible and zero-hour contracts. See the government guidance: Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme.

Must have started work with you on or before 19 March 2020

You can only claim for furloughed employees if they were:

employed with you on 19 March 2020; and
on your PAYE payroll on or before 19 March 2020; and
notified to HMRC by you on a 'real time information' (RTI) submission on or before 19 March 2020.

Was the employee employed with you as of this date?	Date RTI submission notifying payment was made to HMRC	Eligible for Job Retention Scheme?
28 February 2020	On or before 28 February 2020	Yes
28 February 2020	On or before 19 March 2020	Yes
28 February 2020	On or after 20 March 2020	No
19 March 2020	On or before 19 March 2020	Yes
19 March 2020	On or after 20 March 2020	No
On or after 20 March 2020	On or after 20 March 2020	No

Scheme closed to new entrants from July: 10 June cut-off

From 30 June the scheme is closed to anyone who has not already been furloughed for a full consecutive three-week period. This means that the final date by which you can furlough an employee for the first time was 10 June. However, there is an exception to this cut-off for employees returning to work after family leave or after a period of mobilisation as a military reservist, provided you have previously furloughed other employees. See What is the 10 June cut-off?

The number of employees you can claim for in any claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June (unless you have employees returning from statutory family leave or reservists after a period of mobilisation): What is the maximum number of employees a claim can cover?

Employees who TUPE transferred after 28 February

You can claim under the scheme in respect of employees who transferred to you after 28 February 2020 (this date had changed to 19 March 2020, but has now gone back to original date of 28 February 2020) if either the TUPE or PAYE business succession rules apply to the change in ownership, or if there was a transfer from the liquidator of a company in compulsory liquidation where TUPE would have applied had the company not been in liquidation. Contact us to discuss whether these apply in your circumstances. In order to claim under the scheme for these employees, you need to have previously submitted a claim for the employees for a furlough period of at least three consecutive weeks by 30 June.

You can also claim in respect of employees who TUPE transferred after 10 June as long as:

the TUPE or PAYE business succession rules apply to the change in ownership; and
the employees being claimed for have previously had a claim submitted for them by their prior employer in relation to a furlough period of at least three consecutive weeks taking place any time between 1 March and 30 June 2020.

For information on the limit on how many employees can be claimed for in any one claim in a TUPE situation from 1 July see What is the maximum number of employees a claim can cover?

Payroll consolidation

If you are part of a group of companies with multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28 February (this date had previously been 19 March 2020), the new scheme will be eligible to furlough those employees. In order to claim the new employer needs to have previously submitted a claim for them in relation to a furlough period of at least three consecutive weeks before 30 June.

Where the transfer into the new consolidated PAYE scheme took place after 10 June 2020, the new scheme will be eligible to continue to furlough and claim for employees that have previously had a claim submitted for them in relation to a furlough period of at least three consecutive weeks before 30 June.

For information on the limit on how many employees can be claimed for in any one claim from 1 July see What is the maximum number of employees a claim can cover?

Employees who stopped working for you after 28 February 2020, or after 19 March 2020

Employees who were on your PAYE payroll as at 28 February 2020 and notified to HMRC on an RTI submission on or before 28 February, and were made redundant or stopped working for you on or after 28 February 2020, can qualify for the scheme if you re-employ them and put them on furlough (even if you didn't re-employ them until after 19 March). You can claim for their wages from the date you put them on furlough.

You can also re-employ individuals, put them on furlough and claim for their wages through the scheme, if you made them redundant or they stopped working for you on or after 19 March 2020. This applies if they were employed with you on 19 March 2020, on your PAYE payroll on or before 19 March 2020, and notified to HMRC on an RTI submission on or before 19 March 2020.

However, if an employee has moved to a new employer, and is being furloughed by them, you should not re-employ them and put them on furlough.

You are not obliged to re-employ employees in this way and you may want to take advice on whether to do so, particularly if you have already paid redundancy payments to these employees and if you wish that to be repaid. Re-hiring such employees may lead to additional liabilities in some cases (for example, if by re-employing them they would gain two years' service). If you do decide to re-employ such employees, act consistently so as to minimise the risk of discrimination claims.

From 1 July you can only claim for an employee under the scheme if they have been furloughed for at least three consecutive weeks before 30 June - see What is the 10 June cut-off?

The rules are different for individuals on fixed-term contracts – see below.

Fixed-term contracts

If an employee's fixed-term contract has not already expired, you can extend or renew it. You can claim for them through the scheme if an RTI payment submission was notified to HMRC on or before 19 March 2020.

You can re-employ employees on fixed-term contracts which have expired, place them on furlough by 10 June (What is the 10 June cut-off?) and claim through the scheme 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.

However, if an employee has moved to a new employer, and is being furloughed by them, you should not re-employ them and put them on furlough.

Employees (whether fixed-term or not) who started and ended the same contract between 28 February 2020 and 19 March 2020 do not qualify for the scheme.

From 1 July you can only claim for an employee under the scheme if they have been furloughed for at least three consecutive weeks before 30 June - see What is the 10 June cut-off?

Specific guidance on different categories of workers

The Government guidance has specific sections on how the scheme applies to:

Foreign nationals. Foreign nationals are eligible to be furloughed. Grants under the scheme are not counted as 'access to public funds', and you can furlough employees on all categories of visa.
Agency workers (including those employed by umbrella companies). Furloughed agency workers should perform no work through or on behalf of the agency, including for the agency's clients. If a worker is employed by an umbrella company that operates PAYE, it is for the umbrella company and the worker to agree whether to furlough the worker or not.
Workers (who are not 'employees'). Workers paid through PAYE can be furloughed through the scheme (even if for employment law purposes they are 'workers' rather than 'employees'). Individuals paying tax on their trading profits through self-assessment may be eligible for the Self-Employed Income Support Scheme.
Apprentices. See below FAQs.
Office holders - for example, trade union officers and club secretaries.
Company directors - see below.
Salaried members of Limited Liability Partnerships. The terms of the LLP agreement may need varied to reflect the fact that the member will perform no work and how this will impact their remuneration. The appropriate reference salary is the member's profit allocation excluding any amounts determined by the member's performance, or the performance of the LLP.
Contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35). Public sector bodies will follow the Crown Commercial Services guidance in most cases. 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, it may be appropriate to claim under the Coronavirus Job Retention Scheme. Contractors who are deemed employees according to the off-payroll working rules might be eligible. The Government guidance provides more detail on the mechanics and conditions of a claim in these circumstances.

What is the 10 June cut-off?

On 30 June the scheme closed to anyone who had not already been furloughed for a full consecutive three-week period. This means that the final date by which you could furlough an employee for the first time was 10 June.

However, there is an exception to this cut-off for employees returning to work after family leave. You can furlough an employee returning from statutory family leave after 10 June even if you are furloughing them for the first time 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 and 30 June;
The employee you wish to furlough for the first time started maternity, shared parental, adoption, paternity or parental bereavement leave before 10 June and has returned from that leave after 10 June; and
The employee was on your PAYE payroll, and notified to HMRC on an RTI submission, on or before 19 March 2020.

You can also furlough an employee who is a military reservist returning to work after a period of mobilisation after 10 June, even if you are furloughing them for the first time as long as:

You have already claimed for another employee for a furlough period of at least three consecutive weeks, between 1 March and 30 June;
The employee was away on a period of mobilisation that started before 10 June and returned from that mobilisation after 10 June; and
The employee was on your PAYE payroll and you submitted an RTI submission for them on or before 19 March 2020.

Note that there is no exception to the 10 June cut-off for employees returning to work after a period of sick leave.

In what circumstances can someone be furloughed?

The original Treasury Directions (for claims in respect of the period to 30 June) state that an employee can be furloughed 'by reason of circumstances arising as a result of coronavirus or coronavirus disease'. The subsequent Treasury Direction (for claims in respect of the period 1 July to 31 October) states that an employee can be furloughed 'by reason of circumstances arising as a result of coronavirus or coronavirus disease or measures taken to prevent or limit its further transmission'. For advice on whether this covers your own situation, please contact us.

The Direction states that claims must not be 'abusive' or otherwise contrary to the purpose of the scheme.

The guidance states that HMRC will check claims made through the scheme; and that payments may be withheld or need to be repaid in full if the claim is based on dishonest or inaccurate information or found to be fraudulent.

Company directors

Company directors can be furloughed, including salaried individuals who are directors of their own personal service company.

Any decision to furlough a company director must be formally adopted as a decision of the company, noted in the company records, and communicated in writing.

As with other workers, furloughed directors should not do any work for, or on behalf of, the organisation during full-time furlough - as discussed below. However, there are some exceptions, and furloughed directors can still:

Carry out statutory duties relating to the filing of company accounts or provision of other information relating to the administration of the company;
Make claims under the Job Retention Scheme in respect of employees of their company;
Pay salary / wages to employees of their company; and
Fulfil duties as the trustee or manager of an occupational pension scheme (unless your business involves providing services as a trustee or manager of the scheme) – but contact us for advice on the detail of this exception.

Company directors who are paid annually are eligible to claim under the scheme, as long as they meet the other conditions discussed above, including being notified to HMRC by you on a 'real time information' (RTI) submission on or before 19 March 2020 in relation to a payment of earnings in the 2019/2020 tax year.

Employees on unpaid leave

If an employee started unpaid leave before 1 March 2020, you cannot furlough them until the end of the period that had been agreed for their unpaid leave. The final date by which you could have put them on furlough for the first time was 10 June.

However, if an employee started unpaid leave before 1 March 2020, and then, after the date on which they started unpaid leave, but before 20 March 2020, you agreed a revised end date for their period of unpaid leave, you can put them on furlough immediately after that revised end date.

If an employee started unpaid leave on or after 1 March 2020, you can stop their period of unpaid leave, and put them on furlough instead, provided you did this by 10 June for a minimum of three consecutive weeks.

You cannot claim via the scheme in respect of any period of unpaid sabbatical or other unpaid leave.

For employees on fixed pay who are furloughed after a period of unpaid leave, when calculating 80% of their wages, use the amount they would have been paid if they had been on paid leave (calculated in the same way you would calculate holiday pay under the Working Time Regulations).

Employees who are self-isolating or on sick leave - can we put them on furlough?

The government guidance states that short-term illness / self-isolation should not be a consideration in deciding whether to furlough an employee. You cannot reclaim statutory sick pay via the Job Retention Scheme.

However, the guidance also states that if you want to furlough employees for business reasons, and they are currently off sick, you can place these employees on furlough. This includes employees on long-term sick leave. To put these employees on furlough, you must agree a date with them for their 'period of incapacity for work' to end – please contact us to discuss whether this is appropriate in a particular case, and how to approach these discussions. Their sick pay (including statutory sick pay) will then stop, and their period of furlough can start immediately after that. They can continue to be furloughed from 1 July as long as you have previously submitted a claim for them in relation to a furlough period of at least three consecutive weeks before 30 June (What is the 10 June cut-off?).

For employees on fixed pay who are furloughed on their return from sick leave, you should calculate claims against their salary, before tax (calculated in the same way you would calculate holiday pay under the Working Time Regulations), not the pay they received whilst on sick leave. For those on variable pay, you should use the highest of either (i) 80% of the same month's wages from the previous year up to a maximum of £2,500 per month (reduced proportionately to reflect any hours worked on flexible furlough from 1 July); or (ii) 80% of average monthly wages for the 2019-2020 tax year up to a maximum of £2,500 per month (reduced proportionately to reflect any hours worked on flexible furlough from 1 July).

Furloughed employees who become sick

If an employee who is already on furlough becomes sick, you can decide whether to move them onto sick pay, or keep them on furlough (at their furloughed rate):

If you keep them on furlough, you can continue to claim for their furloughed pay via the Job Retention Scheme. However, their rate of pay on furlough must be at least at the level of statutory sick pay. They can continue to be furloughed from 1 July as long as you have previously submitted a claim for them in relation to a furlough period of at least three consecutive weeks before 30 June (What is the 10 June cut-off?).
If you move them onto statutory sick pay, you can no longer claim for their furloughed salary through the Job Retention Scheme – you would need to pay statutory sick pay. However, you may qualify for a rebate for up to 2 weeks' statutory sick pay via the SSP rebate scheme.

You 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. You cannot claim under the SSP rebate scheme for any period of time in respect of which an employee is on furlough.

Employees who are shielding (as opposed to social distancing)

If an employee is unable to work because they are shielding in line with public health guidance (or need to stay at home with someone who is shielding), the government guidance advises that you can opt to furlough them. They can continue to be furloughed from 1 July as long as you have previously submitted a claim for them in relation to a furlough period of at least three consecutive weeks before 30 June (What is the 10 June cut-off?). However, it may be possible for these individuals to work from home – if so, you should facilitate this.

The guidance previously stated that you could only furlough these individuals if you would otherwise need to make them redundant, but this condition has now been removed from the guidance.

Although this was not originally the case, amended Regulations now allow for these individuals to receive statutory sick pay, however, the notes to these Regulations explain that statutory sick pay is only intended to be used as a safety net if an employer decides not to furlough these individuals, and they cannot work for home, and they are not covered by another of the employer's policies (such as a 'special leave' policy, which might provide for pay in these circumstances).

Note that 'shielding' only covers those with the most serious health conditions as per the Government guidance here.

Vulnerable employees who are not 'shielding' (i.e. pregnant, 70+, underlying health conditions)

The government guidance does not deal with vulnerable employees who are not within the group (described above) who are required to 'shield' - so it does not provide guidance on pregnant women, employees aged 70 or over, or who have underlying health conditions which increase their risk of coronavirus (but don't result in them being in the 'shielded' group). We discuss the options as regards these employees in our Coronavirus: FAQs for Employers.

Employees with caring responsibilities

Employees who are unable to work because they have caring responsibilities can be furloughed. So, employees who have to look after children can be furloughed. They can continue to be furloughed from 1 July as long as you have previously submitted a claim for them in relation to a furlough period of at least three consecutive weeks before 30 June (What is the 10 June cut-off?).

For advice on additional requirements that may apply, and how to deal with multiple requests for furlough from employees with caring responsibilities where there is work for them to do: contact us.

Family-friendly leave and furlough

Employees can be on furlough and family leave at the same time.

Statutory maternity, paternity, adoption and shared parental and parental bereavement payments apply as normal – so if an employee on family leave is furloughed and is entitled to statutory pay, they will retain that entitlement. You cannot claim for these statutory payments via the Job Retention Scheme.

If an employee has been on furlough, and then starts family leave on or after 25 April 2020, when confirming their eligibility for statutory pay, and calculating their statutory pay rate, you should use the rate of pay they would have received if they had not been on furlough.

If you offer enhanced pay during family leave, you can claim via the Job Retention Scheme for 80% of the enhanced element (subject to the cap).

Employees who are furloughed after they return from family-related statutory leave

You should calculate claims for employees on fixed pay who are furloughed after their return from family-related statutory leave (including maternity, paternity, shared parental, adoption, parental bereavement and unpaid parental leave) against their salary, before tax (calculated in the same way you would calculate holiday pay under the Working Time Regulations), not the pay they received whilst on family leave.

For those on variable pay, you should use the highest of either (i) 80% of the same month's wages from the previous year up to a maximum of £2,500 per month; or (ii) 80% of average monthly wages for the 2019-2020 tax year up to a maximum of £2,500 per month (with the cap reduced proportionately to take account of any hours worked if on flexible furlough).

The general rule is that the last day on which an employee can be furloughed for the first time is 10 June. There is however an exception for employees returning after family-related statutory leave (provided you have previously put other employees on furlough) – meaning that they can start furlough at the end of their leave period even if this falls after 10 June. See What is the 10 June cut-off? The limit on how many employees can be claimed for in any one claim is different if there are family leave returners: What is the maximum number of employees a claim can cover?

Can an employee opt to return early from maternity leave and be put on furlough?

An employee may wish to return early from maternity leave, if you will agree to them being put on furlough, so that they can receive 80% of normal wages, rather than what they are receiving as maternity pay (which, in the later stages of maternity leave, is likely to be lower than 80% of normal wages, or even nothing). Normally, employees must give at least 8 weeks' notice to return early from maternity leave, but you are usually able to accept less notice than this if you wish.

The government guidance currently says that someone ending their maternity leave early will not be eligible for furlough pay until the end of the 8-week notice period – it is not clear whether you can claim for the furlough grant earlier, if you agree to accept less than 8 weeks' notice.

If someone cuts their maternity leave short in this way, they will not be able to return to maternity leave after the furlough scheme ends. However, depending on the circumstances, it may be possible for them to take a further period of leave as shared parental leave – however, they would need to comply with the usual notice provisions for this – see Shared Parental Leave: Mothers.

Employees who receive maternity allowance

The guidance says that if your employee receives maternity allowance (as opposed to statutory maternity pay) during maternity leave, they should not get furlough pay at the same time. It says that, if such an employee agrees to be put on furlough, you should advise them to contact Jobcentre Plus to stop their maternity allowance payments. However, contact us if you want to discuss this.

Additional issues if you are furloughing employees sponsored under Tier 2 of the immigration system

Sponsored workers must be paid a specific salary under the immigration rules. If that salary reduces, there are likely to be reporting obligations to UK Visas and Immigration. UKVI has produced updated guidance on what salary reductions are permitted as a result of furlough. We suggest you take advice on a case by case basis: contact us.

What if an employee is working reduced hours?

For claim periods up to 30 June if an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for the scheme.

For claim periods starting after 1 July, you can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim for the hours not worked. This only applies where you have previously submitted a claim for the employee in relation to a furlough period of at least three consecutive weeks before 30 June.

What if an employee has more than one employer?

If an employee has more than one employer, they can be furloughed for each job. The cap applies to each employer individually. Employees can be furloughed from one job, and receive a furloughed payment, but continue working for another employer.

Can an employee start working for another employer while on furlough?

You can, but don't have to, allow a furloughed employee to go and start a temporary period of work for another employer during their period of furlough with you. However, this cannot be with any organisation that is linked or associated with you.

Check if your current contracts of employment restrict outside employment with competitors or otherwise. You may wish to require employees to seek consent before taking up new jobs during furlough.

How much will be reimbursed and what does it cover?

Until the end of July, for full-time furloughed employees you can claim the lower of (1) 80% of an employee's 'reference salary'; or (2) £2,500 per month (or the appropriate pro-rata amount if the claim is not in respect of a whole calendar month), plus the associated employer national insurance contributions and employer pension contributions that are paid on the subsidised furlough pay (up to the level of the minimum auto-enrolment employer contribution).

During August, for full-time furloughed employees you can claim the lower of (1) 80% of an employee's 'reference salary'; or (2) £2,500 per month (or the appropriate pro-rata amount if the claim is not in respect of a whole calendar month). You will pay employer national insurance contributions and employer pension contributions on furlough pay.

During September, for full-time furloughed employees you can claim the lower of (1) 70% of an employee's 'reference salary'; or (2) £2,187.50 per month (or the appropriate pro-rata amount if the claim is not in respect of a whole calendar month). You will pay employer national insurance contributions and employer pension contributions on furlough pay; and top up employees’ wages (by 10%) to ensure they receive 80% of their wages up to a cap of £2,500 for time they are furloughed and not working.

During October, for full-time furloughed employees you can claim the lower of (1) 60% of an employee's 'reference salary'; or (2) £1,875 per month (or the appropriate pro-rata abount if the claim is not in respect of a whole calendar month). You will pay employer national insurance contributions and employer pension contributions on furlough pay; and top up employees’ wages (by 20%) to ensure they receive 80% of their wages up to a cap of £2,500 for time they are furloughed and not working.

Since 1 July it has been possible for employees to work part-time under flexible furlough arrangements. For employees working under flexible furlough arrangements you can claim for the hours that they do not work each month. You will, however, have to pay the employee's salary, and the employer NICs and pension contributions due on that pay, for any hours worked. See Flexible furloughing and How do we work out usual hours and furloughed hours for flexibly furloughed employees?

A fixed-rate employee's 'reference salary' is the amount payable to the employee in the latest salary period ending on or before 19 March 2020 but disregarding anything which is not regular wages or salary. However, if you placed employees on furlough before 15 April 2020, and based furlough payments on their salary as at 28 February 2020 (which was the date set out in the original guidance), your first claim under the scheme can be based on those payments. For employees with variable pay see below at How do we calculate wage costs for employees with variable pay?

You can claim for any 'regular payments you are obliged to make'. This includes wages, non-discretionary overtime (e.g. payments you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked), non-discretionary fees, non-discretionary commission payments, piece rate payments and non-discretionary payments related to the timing of shifts or additional responsibilities; but excludes discretionary bonuses, tips (including those distributed through troncs) and discretionary commission payments. If you are unclear about what can be included, or whether a certain payment is 'discretionary': contact us.

In calculating the reference salary, you should not include benefits in kind, or anything provided in lieu of a cash payment. You should not include benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee's taxable pay i.e. for those with fixed hours the 80% figure will be based on the actual (post-sacrifice) salary paid to the furloughed employee. You must pay the employee all of the grant you receive to cover their furlough pay in the form of money – no part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme. If you provide benefits to furloughed employees, including through a salary sacrifice scheme, these should be in addition to the wages that must be paid under the Coronavirus Job Retention Scheme. Our Pensions team has written a blog: Furlough and salary sacrifice: what employers need to know.

Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a 'life event' – coronavirus will count as a life event that could warrant changes to salary sacrifice arrangements if the employment contract is updated accordingly – see this blog and contact us to discuss.

Income tax and NICs will be payable on the sums received under the scheme.

The reimbursement of employer pension contributions (which ceased from 1 August) is based on the reduced 80% furlough salary.

Any voluntary auto-enrolment contributions above the minimum mandatory employer contribution of 3% of income (if above the lower limit of qualifying earnings) will not be funded through the scheme. The maximum level of grant for employer pension contributions on subsidised furlough pay is set in line with the minimum automatic enrolment employer contribution of 3% on qualifying earnings. You can claim for pension contributions up to this cap, provided you pay the whole amount claimed to a pension scheme for the employee as an employer contribution. More information on pensions and furlough is also available on our Pensions team blog.

You must pay furloughed staff no less than 80% of their reference pay up to the monthly cap of £2,500. You cannot reduce wages below this amount (even if the individual was to agree to it). For example, you cannot charge any administration fee.

To calculate how many furloughed hours you can claim for in respect of each employee, you have to work out (i) the employee's usual working hours in the claim period; and (ii) the number of these hours that the employee has worked and has not worked. There is a different calculation, however, for employees who come off furlough in the middle of a claim period: How do we calculate furlough pay for employees who come off furlough partway through a claim period?

If an employee was on unpaid leave for any part of the latest salary period ending on or before 19 March 2020, you should determine their 'reference salary' as if they were on 'paid leave' (calculated in the same way as you would calculate holiday pay under the Working Time Regulations) – contact us if you want to discuss this.

If you reduced an employee's pay to less than 80% of their 'reference salary', you can claim for the full 80% (or the relevant maximum claim amount in September / October), if you make a top-up payment to the employee (to the full 80%) either before making a claim or within a reasonable period after receiving the reimbursement via the scheme – contact us to discuss the detail of this.

Company directors who are paid annually are eligible to claim under the scheme, as long as they meet the other conditions discussed above, including being notified to HMRC by you on a 'real time information' (RTI) submission on or before 19 March 2020 in relation to a payment of earnings in the 2019/2020 tax year.

Detailed guidance on calculating payments, with examples, and a link to a calculator, is in the government guidance:

How much will be reimbursed in August, September and October?

The taper requiring you to contribute to furloughed salaries was brought in from August 2020. However, furloughed employees themselves won't see any changes in terms of how much they are paid or when (unless they go back to work part-time under a flexible furlough arrangement – in which case they will paid their normal salary due under the contract of employment for the hours worked).

In terms of what is included as furlough pay for hours not worked, see How much will be reimbursed and what does it cover? The rules on what should be included are unchanged for the period from 1 July 2020.

Table of maximum contributions per month if employee furloughed 100% of time	July	August	September	October
Government contribution: employer NICs and pension contributions	Yes	No	No	No
Government contribution: wages	80% up to £2.500	80% up to £2.500	70% up to £2,187.50	60% up to £1,875
Employer contribution: employer NICs and pension contributions	No	Yes	Yes	Yes
Employer contribution: wages	-	-	10% up to £312.50	20% up to £625
Employee receives	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month	80% up to £2,500 per month

If an employee is flexibly furloughed you will be required to pay the employee's salary, and the employer NICs and pension contributions due on that pay, for any hours worked. The percentage of the 'reference salary' and the cap on the amount that will be reimbursed by the government for furloughed hours are reduced proportionately to take account of any hours spent working. So, for example, during September the government will pay 70% of an employee's 'reference salary' up to a cap of £2,187.50 per month (with the 70% or cap reduced proportionately by any hours worked). Employers will top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500 for time they are furloughed and not working (with the 80% or cap reduced proportionately by any hours worked). Employers will be required to pay the employee's salary, and the employer NICs and pension contributions due on that pay, for any hours worked.

Information on calculating payments and national insurance, with examples, and a link to a calculator, is in the government guidance: here and here. This includes information on making claims as the tapered grant is introduced from August onwards.

Do we have to top up pay to 100%?

You can choose to fund the additional 20% of wage costs, but you don't have to.

If you decide to provide top-up salary in addition to the Government grant, any employer NICs and pension contributions on that additional salary will not be funded through the scheme.

How do we calculate wage costs for employees with variable pay?

You can claim the higher of 80% (or the lower percentage applying in September and October: How much will be reimbursed in August, September and October?) of the following (subject to the cap and adjusted if necessary for flexibly furloughed employees to take account of hours worked):

the average monthly (or daily or other appropriate pro-rata) earnings from the 2019-20 tax year (or, if they have been employed less than a year, the period since they started work) up to the point furlough began; or
the actual amount paid to the employee in the corresponding calendar period in the previous year.

If they have been employed for less than one month, work out a pro-rata for their earnings so far, and claim for 80% (subject to the cap).

But bear in mind (as noted above) that you should not include payments that are not 'regular', such as discretionary bonus, tips, discretionary commission payments and non-cash payments.

Detailed guidance on calculating payments, with examples, and a link to a calculator, is in the government guidance:

What if an employee falls below the National Minimum Wage (NMW) because we only pay 80% of their salary?

Employees are only entitled to the NMW for hours they are actually working. Therefore, furloughed employees – who are not working – are entitled to the lower of 80% of their salary or the cap even if this means that, based on their normal working hours, this falls below the applicable NMW.

If an employee carries out training whilst furloughed they must receive at least the National Minimum Wage for doing so - see below.

Who will pay for the cost of benefits during furlough?

Employees will remain employed while furloughed and their contract of employment will remain in place. Therefore, you should provide benefits, including pension contributions, in the normal way, unless you have obtained an employee's consent to vary their entitlement to the benefits.

Benefits provided via salary sacrifice, including additional employer pension contributions, must continue during furlough (unless you have obtained the employee's agreement to vary this).

Depending on the rules of the pension scheme, pension contributions may be based on the reduced salary, but you should take advice, as this may vary according to the terms of any contract of employment / the pension scheme. We would also recommend taking advice if you have salary sacrifice arrangements in place, or are considering reducing pension contributions during furlough: contact us. More information on pensions and furlough is also available on our Pensions team blog.

How is an employee paid if they are on flexible furlough?

Since 1 July you have been able to bring furloughed employees back to work part-time and still claim under the scheme for any usual hours not worked. There are no restrictions on the working pattern – so you have discretion to decide on the most appropriate working hours and shift patterns, which might vary week to week.

However, a claim can be made under the scheme for the shortfall between the hours actually worked compared with the hours normally worked. To work out how much you can claim, start with the lesser of 80% of reference salary and the maximum wage amount (£2,500 per month) (or the relevant cap for September/October); multiply by the employee's furloughed hours; and divide by the employee's usual hours.

See:

How much will be reimbursed and what does it cover?
How do we work out usual hours and furloughed hours for flexibly furloughed employees?
Examples of how to calculate employees' wages, National Insurance contributions and pension contributions
For details of the tapered reimbursement applying from August go to How much will be reimbursed in August, September and October?

How do we work out usual hours and furloughed hours for flexibly furloughed employees?

Guidance was published on 12 June setting out how to work out an employee's usual hours and furloughed hours, with links to worked examples. The Treasury Direction issued on 25 June also sets out in detail the means of claiming under the scheme for employees working part-time on flexible furlough.

If your employee is fully furloughed (i.e. don't do any work for you during the claim period), you do not need to work out their usual and furloughed hours.
If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period. There are different calculations for working out usual hours, depending on whether the employee works fixed or variable hours.

To work out how much you can claim, start with the lower of 80% (or the relevant cap for September/October) of the employee's reference salary (reduced proportionately for the length of the claim period) and the maximum wage amount (£2,500 (or the relevant cap for September/October) or the appropriate pro rata amount if the claim is not in respect of a whole calendar month); multiply by the number of the employee's furloughed hours; and then divide by the employee's usual hours.

The calculations are complicated and require you to take account of calendar days (i.e. including non-working days).

See Examples of how to calculate employees' wages, National Insurance contributions and pension contributions.

Usual hours: employees with fixed hours

Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020 (meaning that an employee who agreed to reduced hours/pay after 19 March appears to be entitled to flexible furlough based on their pre-19 March pay and hours).
Divide by the number of calendar days in the repeating working pattern, including non-working days.
Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
Round up to the next whole number if the outcome isn’t a whole number.

If an employee with fixed hours was on annual leave, sick leave or on family related statutory leave at any time during the last pay period ending on or before 19 March 2020, the usual hours should be calculated as if the employee had not taken that leave. See example 2.3 in the guidance.

Usual hours: employees with variable hours

Where the pay varies by the amount of time worked, the ‘usual hours’ will be calculated based on the higher of either:

The average number of hours worked in the tax year 2019 to 2020; or
The corresponding calendar period in the tax year 2019 to 2020.

Include any hours of leave for which the employee was paid their full contracted rate (such as annual leave) prior to being furloughed. Hours worked as ‘overtime’ should be included only if the pay for those hours was not discretionary.

Exclude any days on which the employee was entitled to statutory sick pay or statutory family leave, or on 'reduced rate paid leave' (leave granted immediately following the forms of family friendly leave identified above, but on different terms to that statutory leave). For an example of a calculation involving an employee on statutory adoption leave during the relevant period see example 2.5 in the guidance.

Usual hours based on the average number of hours worked in the tax year 2019 to 2020:

Start with the number of hours worked (including paid leave) in the tax year 2019 to 2020 before the employee was furloughed.
Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020, up until the day before they were furloughed (excluding any days in respect of which the employee received statutory pay while on sick leave or family related leave).
Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
Round up to the next whole number if the outcome isn’t a whole number.

See example 2.4 in the guidance.

Usual hours based on the corresponding calendar period in the tax year 2019 to 2020:

Identify the pay periods in the 2019 to 2020 tax year that correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
If the pay period (or partial pay period) you are claiming for starts and ends on the same calendar days as the identified pay period in the 2019 to 2020 tax year - use the number of hours they worked in that pay period.
If the pay period (or partial pay period) you are claiming for does not start and end on the same calendar days as the identified pay periods in the 2019 to 2020 tax year – you’ll need to add together a proportion of the hours worked in each of the pay periods you’ve identified.

This is relatively straightforward if the 2019/20 pay period corresponds exactly with the pay period claimed for under the scheme. It becomes more complicated though where the claim period covers more than one corresponding pay period. See example 2.7 in the guidance.

The guidance contains examples of these calculations in practice, or contact us for more information.

Calculating the number of furloughed hours

You will have agreed how many hours your flexibly furloughed employee is going to work in the claim period. They will be furloughed for the rest of their usual hours.To calculate the number of furloughed hours, start with your employee’s usual hours; and subtract the number of hours they actually worked in the claim period – even if this is different to what you agreed.

For an example of how to calculate an employee's number of furloughed hours in respect of a weekly claim, see example 2.8 in the guidance.

If you claim in advance and your employee works for more hours than you agreed, then you’ll have to pay some of the grant back to HMRC.

If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

How do we calculate furlough pay for employees who come off furlough partway through a claim period?

To calculate how many furloughed hours you can claim for in respect of each employee, you have to work out (i) the employee's usual working hours in the claim period; and (ii) the number of these hours that the employee has worked and has not worked. On 11 September the guidance on the Scheme was amended to state that when claiming in respect of an employee who comes off furlough or flexible furlough partway through a claim period, you should:

Only calculate the employee’s usual hours up to the last day of furlough, instead of to the end of the claim period;
Not include any working hours after the last day of furlough.

This applies even if the claim period includes days after the employee’s last day of furlough (e.g. if you are claiming for multiple employees and some of them stay on furlough).

The amended calculation should be used from 14 September 2020 but you do not need to amend claims submitted prior to then.

How do we furlough employees?

The government guidance and rules regarding placing employees on furlough have been amended a number of times. The Treasury Directions state that to put an employee on furlough:

In respect of the period until 30 June 2020 you must have agreed with the employee that the employee will 'cease all work in relation to their employment'. In respect of the period from 1 July until 31 October 2020 you must have agreed with the employee that the employee will 'do no work in relation to their employment' or 'will not work the full amount of the employee's usual hours in relation to their employment'. This agreement can be reached via a collective agreement between you and a trade union.
In respect of the period until 30 June 2020 the agreement must specify the main terms and conditions upon which the employee will cease all work in relation to their employment. In respect of the period from 1 July until 31 October 2020 the agreement must specify the main terms and conditions upon which the employee will do no work in relation to their employment, or will not work the full amount of their usual hours in relation to their employment.
Agreements in respect of periods from 1 July must be made before the period to which the claim under the scheme relates, but may be subsequently varied to reflect any agreed changes.
The agreement must be incorporated (expressly or impliedly) in the employee's contract.
The agreement must be made in writing, or confirmed in writing by the employer (which can include via email).
You must retain the agreement, or confirmation, until at least 30 June 2025.

If you are putting employees on furlough now, you should comply with the above. If you have already furloughed employees, and have not met all of the conditions above, contact us to discuss whether you should now take any additional steps.

Employees are likely to agree to furlough if the alternative could be redundancy, unpaid leave or lay-off.

If an employee is continuing to work under a full-time furlough agreement there is no need to enter into a new furlough agreement for the period after 1 July. A new agreement will be required, however, if the employee is moving from full-time furlough to part-time flexible furlough.

On the basis of the above rules, you should ensure that furlough agreements are recorded in writing, and include:

The main terms and conditions of the furlough - this is likely to include: the agreed period of furlough (you may want to opt for a specific period of time and include a mechanism for the period to be extended or shortened); for employees working part-time on flexible furlough how many hours they will work each week or how and when they will be notified of their varied working pattern; how much will be paid; what happens to any benefits; and if there is any change to the usual contractual position for that worker as regards whether they can work for others.
Clear agreement between you and the employee that the employee will stop doing any work for you (full-time furlough) or not work the full amount of their usual hours (part-time flexible furlough).
That the reason for the cessation of their work, or them not working their usual hours, is 'due to circumstances arising as a result of coronavirus'.
That the worker's contract is being amended as per the furlough agreement.

We would also recommend that the agreement is subject to any terms and conditions of the Job Retention Scheme, given that the Government guidance is regularly changing.

You must keep furlough agreements entered into under the scheme until at least 30 June 2025. This will allow HMRC to carry out retrospective checks for fraudulent claims or claims which do not comply with the scheme requirements.

Template letters

Our template notification of furlough letter is available here. Use this if placing an employee on full-time furlough.
Contact us if you would like assistance with drafting a letter putting employees on rotating furlough.
Our template notification of flexible furlough letter (possible from 1 July onwards) is available here.
Retain furlough agreements until at least 30 June 2025.
If you want to end a period of furlough and the original notification of furlough did not specify when furlough would end, have a look at our template notification of end of furlough letter. This notification should clarify which terms and conditions of employment will apply; highlight the health and safety issues arising from returning to work; and make it clear that you are reserving the right to put the employee back on furlough at some point.
Please contact us before using these templates, as there will be different factors to consider before deciding on the best approach for your business.

How should we select which employees to furlough?

In some circumstances, you will be furloughing a whole group of employees undertaking the same role. However, if you have to decide which employees to furlough from a pool of employees, you might want to ask for volunteers initially (some employees may prefer to stay at home on 80% pay rather than attend work). Others will have to go on furlough because they are shielding, or would prefer to do so because they are clinically vulnerable or won't be able to manage their caring responsibilities.

If it is not possible to agree who will be furloughed, then you may decide to select on the basis of fair and objective criteria - but seek advice on this as the approach may vary depending on the circumstances. The usual protection against discrimination will apply. Record all your discussions, rationale and decisions in writing.

The same considerations apply when deciding who to put on, or move to, part-time flexible furlough.

The final date by which an employee can be furloughed for the first time is 10 June 2020 (details of some exceptions are here). When deciding how many employees to put on furlough bear in mind that from 1 July the number of employees claimed for in any claim period cannot exceed the maximum number claimed for under any previous claim under the scheme.

Do we need to collectively consult if we are furloughing 20+ employees?

We suggest you take advice about whether collective redundancy consultation obligations could apply as that may depend on factors such as the alternative strategy you have in mind if employees do not agree to the furlough arrangement: contact us.

What is the minimum period of furlough? Can employees be furloughed on a rotating basis?

Until 30 June

Any employees placed on furlough must be furloughed for a minimum period of three consecutive weeks.

Each period of furlough can be extended 'by any amount of time' whilst the employee is on furlough. Therefore, so long as someone has been on furlough for a minimum of three consecutive weeks, you can extend their furlough by, for example, one or two weeks, or indeed a certain number of days - you don't have to extend it by another three full weeks. However:

the end date of the scheme will be the last day you can claim for; and
if you 'break' furlough (i.e. bring an employee back to work, even for a short time), their next period of furlough must be for a minimum of three consecutive weeks.

Employees can be furloughed on a rotating basis. This means that if agreed with the employees, you can designate employees as being on furlough on a three-week cycle, or a longer cycle, or perhaps three weeks on furlough followed by eg. one week off furlough, if you want to spread the burden of actual work. The government guidance doesn't provide for a minimum period that an employee must be 'off furlough' before going back on to another period of furlough.

A furlough period can end after 30 June but any claim under the old version of the scheme must only relate to the period from 1 March to 30 June. How should we decide on the length of a claim period?

From 1 July

From 1 July, furlough can last any amount of time. However, unless otherwise specified (see above at How should we decide on the length of a claim period?), the period you claim for must be for a minimum of seven calendar days. An employee does not necessarily have to be on furlough for every day of the seven day claim period.

If an employee has completed a furlough period of at least three weeks, comes back to work but then goes back on furlough after 10 June but before 1 July; it seems that the minimum three-week furlough period still applies and that you can't convert any part of that three-week period to flexible furlough even if it will take place in July.

Employees can be flexibly furloughed on a rotating basis. From 1 July, if agreed with the employees you can rotate employees between work and furlough on any length of cycle e.g. a weekly basis.

Rotating furlough will be treated as a flexible furloughing arrangement from 1 July. This means that you will need to start calculating usual hours, worked hours and furloughed hours. It will however be possible to avoid the flexible furloughing calculations if the rotation pattern matches your claim period. So, for example, if you rotate monthly paid employees on the basis of calendar months, the employees on furlough will not have done any work in that claim period (a month). This allows you to use a simplified calculation method that does not involve a comparison of usual hours and worked hours. Contact us to discuss your options.

Can furloughed employees do any work for us, even on a temporary basis? What about training?

Under the terms of the scheme in place until 30 June during furlough employees cannot do any work for, or on behalf, of your organisation or any linked or associated organisation. This includes providing services or generating revenue. The guidance is clear that you should 'consider allocating any critical business tasks to staff who are not furloughed'. Employees who have agreed to work reduced hours, or for reduced pay, including those on short-time working, are not eligible for furlough under the scheme until 1 July.

Under the terms of the amended scheme applying from 1 July until 31 October, you can bring furloughed employees back to work part-time and still claim under the scheme for any normal hours not worked (flexible furloughing). During their furloughed hours employees cannot do any work for, or on behalf, of your organisation or any linked or associated organisation.

Furloughed employees can undertake study or training if:

its purpose is to improve the employee's effectiveness in the employer's business, or the performance of the employer's business; and
it does not directly provide a service to the employer, contribute to the business activities of the employer or anything generating income or profit for the employer; and
it does not directly contribute to any significant degree in the production of goods or supply of services for sale to others.

An 'employer' will include those connected with the employer.

If a furloughed employee undertakes such training, they must receive at least the appropriate National Minimum Wage for doing so. The furlough payment will be taken into account in determining whether the NMW requirements have been met.

Furloughed employees can also fulfil duties as the trustee or manager of an occupational pension scheme (unless your business includes providing services as a trustee or manager of the scheme) – but contact us for advice on the detail of this exception.

Can furloughed employees carry out duties as employee representatives?

Furloughed employees who are union or non-union representatives are able to carry out duties and activities for the purpose of individual or collective representation of employees or other workers, provided that in doing so, they do not provide services or generate revenue for, or on behalf, of your organisation or any linked or associated organisation. This means that they will be able to, for example, accompany a colleague during a disciplinary or grievance meeting, or undertake duties as a representative during collective redundancy consultation. Contact us if you want to discuss whether particular activities by a representative will be permitted during furlough.

Can we carry out disciplinaries / grievances with furloughed employees?

HMRC guidance and a Treasury Direction say that, during furlough, employees cannot do any work for, or on behalf, of your organisation or any linked or associated organisation. This includes providing services or generating revenue.

ACAS guidance currently says that someone on furlough can take part in a disciplinary or grievance investigation or meeting, including if they:

are under investigation in a disciplinary
raised a grievance
are chairing a disciplinary or grievance hearing
are taking notes at a hearing or during an investigation interview
are being interviewed as part of an investigation
are being a witness at a hearing
are an employee's companion for a hearing.

However, our view is that, at least in some respects, this is inconsistent with the HMRC guidance and Treasury Direction. Some of the above activities could amount to 'work', in particular chairing a hearing or taking notes for an employer. As such, if furloughed employees carry out these activities, it could put your furlough grant at risk.

We would advise that you contact us for advice before involving furloughed employees in disciplinary or grievance proceedings. Bear in mind that you can rotate employees on and off furlough as described above.

Can furloughed employees do volunteer work?

Yes, so long as doing so doesn't provide services or generate revenue for, or on behalf of your organisation or a linked or associated organisation. You can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance (i.e. there is no requirement on the employee to self-isolate).

From 1 July: closure to new entrants

The scheme closed to new entrants from 30 June 2020. From July onwards, you can only furlough employees that have already been furloughed for a full consecutive three-week period prior to 30 June. This means you can only claim under the scheme in respect of employees who were furloughed for the first time on or before 10 June 2020. You will still, however, be able to put a previously furloughed employee who is now working back on furlough after 1 July (provided they were earlier furloughed for the minimum three-week period).

There is an exemption to the 10 June cut-off for employees returning to work after family leave (maternity, paternity, adoption, shared parental and parental bereavement leave), provided you have previously furloughed other employees. Military reservists returning to work following a period of mobilisation after 10 June can also be furloughed for the first time. What is the 10 June cut-off?

You will have until 31st July to make any claims in respect of the period to 30 June. The first claims under the revised scheme can be made from 1 July. Claim periods will no longer be able to overlap months; and the number of employees claimed for in any claim period cannot exceed the maximum number claimed for under any previous claim under the scheme (this could be relevant if there have been periods of rotating furlough).How should we decide on the length of a claim period? What is the maximum number of employees a claim can cover?

From 1 July: flexible furloughing

Since 1 July you have been able to bring furloughed employees back to work part-time and still claim under the scheme for any normal hours not worked. There are no restrictions on the working pattern – so you have discretion to decide on the most appropriate working hours and shift patterns, which might vary week to week. To be eligible for the grant, you must agree any new flexible furloughing arrangements with employees; and document that agreement in writing. How do we furlough employees? Contact us if you would like help with this.

If employees come back to work on reduced hours, you will have to pay them as normal in terms of their employment contract for the hours they work (and pay tax and NICs due on that amount). The government will not make any contribution for the hours worked. However, a claim can be made under the scheme for the hours furloughed employees are not working – meaning furloughed employees will still be entitled to 80% salary subject to the £2,500 monthly cap (or the reduced percentage and cap applying in September and October) for their non-working hours, adjusted to take account of the hours worked.

There will be no minimum period of furlough although the minimum claim period for furloughed hours will be 7 days. You will need to report both hours worked and the usual hours an employee would be expected to work in a claim period.

You will only be able to bring furloughed employees back to work where either homeworking is an option; or the workplace is permitted to open in line with relevant government guidance. This is discussed in our legal update on the Brodies COVID-19 Hub.

For more details see:

From 1 August: introduction of tapered HMRC grant

A taper requiring you to contribute to furloughed salaries was brought in from August 2020. However, furloughed employees themselves won't see any changes in terms of how much they are paid or when (unless they go back to work part-time – see above - in which case they will paid their normal salary due under the contract of employment for the hours worked).

See above at How much will be reimbursed and what will it cover? and How much will be reimbursed in August, September and October?

FAQs on furlough and redundancy

Should we place employees on furlough, or move straight to redundancies?

Consider whether it is better to furlough employees now, with the possibility that you will still have to make them redundant later, or move straight to redundancies now. Some employees will accrue the two years' continuous service required to claim unfair dismissal and/or statutory redundancy pay by being kept in furlough for now – so that may be a point to consider. Other relevant considerations may be whether you expect the shortage in work to be temporary in nature. The scheme provides breathing space for employers who need time to consider their options, where there is a prospect that the shortage of work is temporary.

Bear in mind that:

If you are proposing to dismiss 100+ employees at one establishment within 90 days, you must notify the Department for Business, Energy and Industrial Strategy (BEIS), and begin collective consultation, at least 45 days before the first dismissal takes effect.
For 20 – 99 employees, you must notify BEIS, and begin collective consultation, at least 30 days before the first dismissal takes effect.

You can find out more at Redundancy: Consultation.

Are employees entitled to redundancy pay when they are placed on furlough?

No. Employees are not entitled to statutory redundancy pay just because they have been put on furlough, as they will remain employed by you. But if you then proceed to make these employees redundant, they may be entitled to statutory redundancy pay - see What statutory redundancy pay are furloughed employees entitled to?

This is different from those on a period of lay-off or short-time working. Employees with two years' service can resign and claim statutory redundancy pay after being on lay-off or short-time working for four consecutive weeks, or six weeks in a rolling period of 13 weeks. Lay-off occurs when an employee is not provided with any work and so receives no pay for a week. An employee is put on short-time working if their hours are reduced and, as a result, their remuneration for the week is less than half a week’s pay.

Other redundancy / furlough FAQs

We discuss the following FAQs on our page: Ending Furlough and Lockdown: FAQs for Employers.

Can we make furloughed employees redundant?
Does the furlough option mean that redundancies are potentially unfair just now?
Can we carry out redundancy consultations with employees during furlough?
Will the 'special circumstances' exception to collective consultation apply?
How can we elect representatives for collective redundancy consultation?
Are representatives involved in collective consultation 'working' while on furlough?
What statutory redundancy pay are furloughed employees entitled to?
Can notice pay and redundancy pay be claimed under the Scheme?

What about holidays?

The Government has published specific guidance on "holiday entitlement and pay during coronavirus" and holidays are also covered under the current Government guidance on the Scheme:

Annual leave will continue to accrue throughout furlough (although a furlough letter could contain an agreement that any contractual holidays in excess of the statutory 5.6 weeks will not accrue – our template letters contain this option).

Employees can take holiday whilst on furlough (without breaking the period of furlough).

The guidance states that employees should not be placed on furlough simply because they are on holiday for that period.

If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours. Although see below in relation to the holiday pay that the furloughed employee would be entitled to.

Employers might want to encourage employees to take some of their annual leave entitlement while on furlough, or following them being furloughed, so as to avoid them returning to work with significant amounts accrued. Also see: Can workers carry over holidays they haven't been able to take due to the Coronavirus outbreak?

The guidance suggests that employers can require employees to take annual leave while furloughed provided that they give the required period of notice (double the length of the holiday which they are requiring the worker to take, unless the contract says otherwise, See: Can we insist that staff take holidays?). However the guidance also notes that employers should: "consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday." This issue about whether employees can be required to take holidays during furlough has not been resolved by the courts, so despite what the guidance says, it is possible that employees may challenge whether this approach complies with European laws in relation to holidays in due course. If you want to require employees to take holidays during a period of furlough, contact us to discuss the issues further.

If furloughed employees take annual leave, they must be paid holiday pay calculated in accordance with the Working Time Regulations i.e. their normal rate of pay, or where the rate of pay varies, the average pay received in the previous 52 working weeks. For more information on calculating holiday pay go to the Workbox section on Holiday Pay. Employers paying furloughed employees the lower of 80% of their 'reference salary' or £2,500 per month, in accordance with the scheme, will therefore have to pay furloughed employees taking annual leave additional amounts over and above the HMRC grant to top up to 100% of normal holiday pay. These additional top up payments will not be reimbursed by HMRC – something which employers need to factor in when assessing wage costs during furlough.

Employers can restrict when leave is taken if there is a business need (both during furlough and after a return to work). For information on restricting holiday requests see: Can we refuse holiday requests?

If a furloughed employee usually works on a bank holiday this can be included in the application for reimbursement of wage costs under the Scheme. If an employee usually gets a day off on a bank holiday, then they should either still be allowed to take that day as annual leave and have their pay topped up to their usual holiday pay rate, or alternatively, you may agree that that day's holiday can be deferred until a later date. In either case the employee should still receive their full holiday entitlement.

Employees who have been furloughed, despite being able to take holiday during furlough leave, may be entitled to carry some untaken holiday forward. (See: Can workers carry over holidays they haven't been able to take due to the coronavirus outbreak?) In particular the guidance notes that it may not be 'reasonably practicable' for furloughed employees to take their leave where you are unable to top up their salary to their normal rate of pay during annual leave.

Furloughed employees might want to request to change any pre-booked time off. See If a worker wants to cancel or change their holiday dates, do we need to agree?

Contact us to discuss furlough and holidays: it is a tricky issue. You can also listen to our recent podcast on employee holidays, which covers recent legislative changes as a result of COVID-19, as well as managing the holiday entitlements of furloughed workers.

Can apprentices continue to train whilst furloughed?

Apprentices can continue to train whilst furloughed, provided that in carrying out the training they do not provide services to or generate revenue for or on behalf of your organisation or a linked or associated organisation. Apprentices must be paid at least the apprenticeship minimum wage, national living wage or national minimum wage as appropriate for the time spent training.

What if apprenticeship training and assessments can't be provided / completed during the Coronavirus outbreak?

Employers and training providers are being encouraged to carry out training and assessments remotely where possible, but this will not be possible in all cases especially where manual work is required.

For further details on measures which have been put in place for apprenticeships in England, see the Coronavirus guidance for employers, apprentices and training providers.

For information in relation to apprenticeships in Scotland, visit the Skills Development Scotland website.

Is apprenticeship levy still being collected?

There are currently no plans to pause the collection of the apprenticeship levy because of the disruption caused by the COVID-19 outbreak.

What obligations do insolvent businesses owe to furloughed employees?

This question has already been considered by the courts: find out more in our legal update, or contact us.

What other financial assistance is the Government making available?

Businesses in need of short term cash flow support may be eligible for a Coronavirus Business Interruption Loan. Other assistance is also available, for example VAT payments were deferred for three months until 30 June 2020. More information on the financial support measures is available here.

If you need specific advice on financial support measures, please get in touch. If necessary we can put you in touch with our Restructuring & Advisory Team.

Where can we find more information?

Government / HMRC guidance

Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme
Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme
Steps to take before calculating your claim using the Coronavirus Job Retention Scheme (decide the length of your claim period, find out what to include when calculating wages and work out your employees’ usual and furloughed hours before you calculate how much you can claim)
Calculate how much you can claim using the Coronavirus Job Retention Scheme
Claim for wages through the Coronavirus Job Retention Scheme
Examples of how to calculate employees' wages, National Insurance contributions and pension contributions
Report a payment in PAYE Real Time Information
Coronavirus Job Retention Scheme: step by step guide for employers
Coronavirus Job Retention Scheme factsheet: flexible furloughing; closure to new entrants from July; and employer costs

Treasury Directions

Claims in respect of the period 1 March to 30 June 2020 require to be made in accordance with the original Treasury Directions. Claims in respect of the period 1 July to 31 October 2020 must be made in terms of the later Treasury Direction issued on 25 June. This Direction sets out in detail the means of claiming under the scheme for employees working part-time on flexible furlough. These are technical documents setting out the legal framework for the scheme, and you can contact us to discuss any queries.