The Government published details of its Job Retention Scheme in March, which was subsequently updated on 4 April 2020. B P Collins provides key Q&As on the scheme. Please note that many points are still awaiting further clarification.

1.What is the Coronavirus Job Retention Scheme (CJRS)?

All UK employers – that had created and started a PAYE payroll scheme on 19 March 2020; have enrolled for PAYE online and have a UK bank account –  regardless of size or sector, can claim a grant from HMRC to cover 80% of the wages costs of furloughed workers, up to a cap of £2,500 per calendar month for each furloughed worker. 

The CJRS is designed to “help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy”. It does not appear that there is a specific requirement for furlough to be offered as an alternative to redundancy or lay-off, but the employer’s operations do need to be “severely affected” by COVID-19 in order to make use of the CJRS. The Government has committed to have the CJRS up and running by 20 April 2020.  It will be open for at least three months starting from 1 March 2020.

2. Which employees can I furlough and claim for?

All employees and workers on the employer’s PAYE payroll. This includes those on zero-hours, flexible or agency contracts, apprentices and employees who started unpaid leave or who were made redundant or left employment for any reason since 19 March 2020, if they are rehired by their previous employer. Employees and workers cannot work for  either the organisation that employs them or a linked or associated entity whilst on furlough.

3. What about company directors?

Office holders (such as salaried company directors), salaried members of LLPs and salaried individuals who are directors of their own personal service company are eligible to be furloughed and receive support through the CJRS.

Directors’ duties under the Companies Act 2006 must be considered by the board when considering whether to furlough a director and any decision to furlough a director should be formally adopted as a decision of the company and noted and communicated to the director formally.

Furloughed directors are entitled to continue to carry out such duties as are reasonably necessary to fulfil the statutory obligations they owe to their company. However, they should not do work to generate commercial revenue or provide services to or on behalf of their compa

4. Which employees cannot be furloughed or claimed for?

Employees hired after 19 March 2020 and those on unpaid leave (if they were placed on unpaid leave before 19 March).

5. What if my employee is on Statutory Sick Pay (SSP)?

Employees on sick leave or self-isolating should get SSP (or contractual sick pay) but can be furloughed after this. Employees who are shielding in line with public health guidance can be placed on furlough in some circumstances.

6. What if my employee has more than one job?

They can be furloughed for each job. The cap applies to each employer individually.

The employee can work for another employer during furlough subject to the terms of their contract. They cannot do work for a business linked or associated with the employer they are furloughed by.

7. What steps must I take to put employees on furlough leave?

  1. Decide which employees to designate as furloughed.  Equality and discrimination laws will apply in the usual way.
  2. Notify those employees of the intended change.
  3. Consider whether you need to consult with employee representatives or trade unions.
  4. Agree the change with the furloughed employees.
  5. Confirm the employees’ new status in writing and keep a record of this communication for five years.
  6. Submit information to HMRC about the employees that have been furloughed and their earnings through the new online portal.
  7. Ensure that the employees do not carry out any further work for you while they are furloughed.
  8. Once the Scheme ends you will need to decide whether employees can return to their normal duties.  If not, it may be necessary to consider redundancy. 

8. Can I rotate furlough between employees?

Yes, but employees must be furloughed for at least three weeks at a time.The same employee can be furloughed multiple times.

9. Do I need to collectively consult if I intend on furloughing 20 or more employees?

Possibly, although it will depend upon your circumstances. If you are not considering dismissing any employees at this stage, then the obligation may not yet arise.

10. Do I have to top up the remaining 20%?

It’s up to you, however bear in mind that withholding 20% of your employee’s salary will amount to breach of contract and unlawful deduction of wages unless the employee gives their consent.  Employees can be paid less than the National Living Wage (NLW) /National Minimum Wage (NMW) under this Scheme unless they are undertaking any training during their furlough in which case, they must be paid the NLW/NMW.

11. What does the £2,500 cover?

Employers can claim for the usual monthly wage costs plus the associated Employer National Insurance contributions and the minimum automatic enrolment employer pension contributions on that wage.  Past overtime, fees, contractual bonuses and compulsory commission payments should be included provided they are regular payments; but discretionary payments should not be.

If you are not sure about how to calculate exactly what HMRC will reimburse you for, it may make sense to reserve the right to amend what you agree with the employees pending further guidance.

12. Can employees request to be furloughed?

Yes, but you don’t have to agree. It is your decision which employees to place on furlough leave or make redundant.

13. How should I deal with annual leave?

It is highly likely that statutory holiday entitlement will continue to accrue during furlough leave.The Government has passed emergency legislation relaxing the restriction on carrying over the four weeks’ statutory annual leave to the following two leave years, where it was not reasonably practicable to take it in the leave year “as a result of the effects of the COVID-19 (on the employee, the employer, the wider economy or society).”

However, the interaction between annual leave and furlough leave is not currently clear and there are several potential issues with allowing or requiring workers to take annual leave during furlough.  We await further guidance from the Government to clarify this point.  A tweet from HMRC Customer Support (which is by no means formal guidance) states that it is possible to take annual leave when on furlough and that such holiday must be paid at full pay.  This may be indicative of the guidance that is to come.

For further information or advice please contact our employment team on 01753 889995 or email

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