Skip to main content
« Back to Blog

Updated Guidance on Furlough

[Guidance is changing quickly and this was correct at time of posting]

[There is a further update to this post, click here]

On 9 April 2020 the Government updated its guidance on the Coronavirus Job Retention Scheme (CJRS) (the third edition of such guidance – with previous versions published on 26 March and 4 April 2020).

With this new guidance we have some additions and some clarification. In other areas we still have some gaps.

First, what is new and clarified.

  • The most significant addition to the guidance is the expansion of the rules on the relationship between sick leave and furlough.
    • As previously, an employee on sick leave or self-isolating in line with guidance will be entitled to Statutory Sick Pay (SSP).
    • It is expressly stated that the CJRS is not intended for short-term sickness absence.
    • Short-term illness and self-isolation should not be a factor when considering who to furlough. However, so long as the decision to furlough is for business reasons, someone who is currently off sick can be furloughed, and sick pay would then cease.
    • Employers can furlough someone who is shielding, in accordance with relevant guidance. This is something we knew before but the wording has improved.
    • Employers can furlough someone on long-term sick leave, with sick pay ceasing as a result.
    • A furloughed employee who becomes ill must, at least, be paid SSP but an employer has the option as to whether the employee stays on furlough or they are regarded as on sick leave. If the latter, the right to claim under the CJRS falls away.
    • Essentially, the designation between sick leave and furlough is about money and time. Where it is possible to claim a rebate on SSP you cannot do that for the same period where a claim is made under the CJRS, and vice versa. A period of furlough must be in place for at least three weeks. Sick leave is for as long or as short as the individual is sick.

  • Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer contribution) will be based on the subsidised furlough pay.
  • The part of the grant applicable to an individual employee must be paid to the employee and cannot be used to fund benefits.
  • Not only will employees on furlough be barred from undertaking work for their own organisation, they will not be permitted to do any work for any linked or associated organisation.
  • The limitations on volunteer work are also extended to linked or associated organisations.
  • Any grants made under the scheme will not be regarded as “access to public funds”, allowing employees on all categories of visa to be furloughed.
  • Where there has been a business transfer after 28 February 2020 the new employer is able to make a claim under the scheme if either TUPE or PAYE business succession rules apply to the change.
  • Where businesses have transferred employees under payroll consolidation schemes after 28 February 2020, they are eligible to furlough employees under the scheme.
  • When it comes to making a claim, an employer will have to supply the following about the relevant employees: National Insurance Numbers, their names and their pay roll number. This expands upon the otherwise basic information that was mentioned previously.

Second, the elements that have not changed.

  • The scheme is, currently, in place only for a period of three months starting from 1 March 2020 and the minimum period for furlough is three weeks.
  • An employer must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.
  • A claim can only be made for furloughed employees that were on the PAYE payroll on or before 28 February 2020.
  • If employees were made redundant, or they stopped working for an employer on or after 28 February 2020, they can be re-employed and put on furlough.
  • Employees on unpaid leave are only eligible if they started the unpaid leave after 28 February 2020.
  • Training, as opposed to work, is possible.
  • Employees can be furloughed multiple times allowing them to dip in and out of furlough subject to the minimum period of three consecutive weeks.
  • If contractually allowed, employees are permitted to work for another employer whilst they are on furlough. The process to be followed by the new employer is sign-posted by the guidance.
  • Those on maternity leave etc can be placed on furlough but any claims on the CJRS can only be for enhanced contractual pay. Normal rules apply for statutory entitlements.
  • Individuals who are employers can furlough employees so long as they are paid through PAYE.
  • Employees who have caring responsibilities arising from the coronavirus can be furloughed.
  • Employees on a fixed-term contract can be furloughed.
  • Office holders (including company directors), agency workers and those classified as workers, rather than employees, can be furloughed to the extent that they are paid via PAYE.
  • An employer does not have to top up the amount received by the grant under the CJRS.
  • The grants will be prorated if an employee is only furloughed for part of a pay period.
  • Employers should discuss matters with their staff and make changes to the employment contract by agreement.
  • Eligibility for the grant is subject to employers confirming in writing to employees about being furloughed and a record of this communication must be kept for five years.
  • Claims should be started from the date that the employee finishes work and starts the period of furlough. The date a decision is made to furlough should not be used and neither should the date that the employer confirms the furlough in writing to the employee. The emphasis is on the date the actual period of no work actually started.

Away from the guidance there have been reports about the progress with the HMRC portal via which claims will be made.

On 8 April 2020, some senior representatives of HMRC appeared in front of a parliamentary select committee and gave some details about the workings of the portal for making claims under the CJRS.

It was reported that the portal will be open on 20 April 2020, with testing already ongoing, and the expectation is that payments will be made within four to six working days.

Employers will be allowed to make one claim per pay period. Thus, different timings for those paying weekly or monthly.

Claims should be able to look 14 days ahead. The initial claim will also look back quite a bit, bearing in mind the CJRS is retrospective to 1 March 2020.

The issue with looking ahead is that it is possible that circumstances for an individual may change (eg they could be called back from furlough). How this can be covered is not clear.

Mention was also made of a hotline for employees to report abuse of the scheme.

If HMRC find evidence of a breach of the rules, there will be no payment. At what level such investigations will be is unclear. Whether there will be an appeal mechanism is also not clear.

A suspicion of fraud could lead to criminal proceedings.

Finally, the impact a period of furlough has on annual leave remains unclear.

This issue is subject to differing legal opinions and a briefing paper submitted to the House of Commons Library on 8 April 2020 made mention of the uncertainty.

The briefing paper acknowledges that the relationship between furlough and annual leave is among the most complicated issues involving the CJRS, where no specific Government guidance exists and ACAS has changed its guidance a number of times.

ACAS says that workers can continue to request to take annual leave, though some point out that it is unclear whether taking holiday breaks a period of furlough. There is also a debate as to whether an employer can impose holiday during furlough.

There have been indications from HMRC that annual leave would not break a period furlough and such leave should be paid at full salary. However, HMRC have not confirmed what they mean by “full salary” during furlough, bearing in mind that those on furlough may have salary reduced to 80%.

That holiday accrues during furlough is not something that is in dispute.


The information in blog post  is intended for reference purposes only and does not constitute legal advice. It is recommended that specific legal advice is sought before taking any action in connection with the subject matter of this post.