Coronavirus job retention scheme: Further clarification provided

Many employers have already taken steps to furlough staff so they can access the government’s coronavirus job retention scheme (CJRS). However, guidance on how the scheme will operate in practice has been lacking in certain key areas until now.


The CJRS is a temporary scheme to help businesses that cannot maintain their current workforce because their operations have been severely affected by coronavirus. In order to access the scheme, employers need to decide which of their employees are furloughed, notify and agree with those employees that they are furloughed and submit information to HMRC about who has been furloughed and their earnings through a new online portal. Employers will then be able to apply to HMRC for a grant to cover 80% of the furloughed employees usual monthly wage costs up to a total of £2,500 a month plus the associated employer national insurance contributions and minimum automatic enrolment employer pension contributions on that wage. The furloughed employee remains employed by the employer during the furlough period and cannot carry out work for the employer during this period. The scheme will remain in place initially for three months starting from 1 March 2020 and employers are able to use the scheme at any time during this period.

When can the scheme be accessed?

Originally when the scheme was first introduced, there was a suggestion that an employer needed to be contemplating lay off or redundancies before being able to access the grant under the scheme. That is no longer the case, and the guidance is clear the scheme can be accessed by any business where it cannot maintain the current workforce because its operations have been severely affected by the pandemic. It is recognised that different businesses will be impacted in different ways and all will be able to access the scheme which is designed to help businesses retain their employees and protect the UK economy. The only requirements are that the employer:

  • created and started a PAYE payroll scheme on or before 28 February 2020;
  • enrolled for PAYE online (this can take up to 10 days);
  • has a UK bank account.

Which employees can be furloughed?

Employers can claim for furloughed employees that were on their PAYE payroll on or before 28 February 2020. The updated guidance has clarified the position regarding different types of individual who can be furloughed, provided they are paid via PAYE, including:

  • apprentices (who can continue to train whilst furloughed provided they receive at least the national living wage/national minimum wage for any training they carry out);
  • nannies and others employed by individuals as long as they are paid via PAYE;
  • office holders including company directors and salaried members of limited liability partnerships – in such cases the furlough arrangements need to be formally adopted as a decision of the company or LLP. Once furloughed, statutory directors can carry out duties to fulfil their statutory obligations but no other work;
  • agency workers (including those employed by umbrella companies);
  • fixed term employees provided the fixed term contract has not ended; and
  • workers required to give their personal service to the employer.

Public and private sector organisations that receive public funding for staff costs where that funding is continuing are expected to use that money to continue to pay staff and no to furlough them. The same also applies to organisations receiving public funding specifically to provide services necessary to respond to the current pandemic.

The guidance is also clear that employees who were made redundant or stopped working for an employer on or after 28 February 2020 can be re-employed and then put on furlough leave, regardless of why the employee left the business. However, employers are not obliged to rehire staff and need to think carefully before doing so, not least because those employees will retain continuity of service and their employment rights once re-hired and become an additional cost for the employer to fund until it is able to reclaim the grant via the scheme.

What about employees who are on sick leave and/or shielding?

If an employee is on sick leave or self-isolating then they can get statutory sick pay (SSP) (and potentially contractual sick pay depending on the terms of the employer’s policy – many employers are agreeing with staff that contractual sick pay will not apply where absence is related to the current pandemic). The guidance is clear that an employee cannot be furloughed while they are getting SSP but once they stop receiving SSP they can be placed on furlough leave.

The updated guidance has amended the advice in relation to employees who are shielding. Previously, the guidance said such employees could be placed on furlough leave, but now adds this is only possible if they are unable to work from home and the employer would otherwise have to make them redundant. This seems to place an unnecessary hurdle for employers to overcome when considering whether to furlough those employees who are shielding and it is hard to believe this is what the government intended. It is interesting to note that the guidance for employees on the scheme suggests individuals who are shielding and unable to work from home speak to their employer about whether the employer plans to place staff on furlough without mentioning any need for redundancy to be considered. Our immediate reaction is therefore that the wording in the employer guidance may have been added in error. However, employers should be mindful of the guidance and consider whether redundancy is a potential outcome when deciding whether to furlough those who are currently shielding.

What about employees with caring responsibilities?

The updated guidance clarifies that such employees who cannot work because of their caring responsibilities can be furloughed. This could include, for example, an employee who cannot effectively work from home because of their childcare commitments.

What activities can an employee do while on furlough leave?

The guidance is clear that a furloughed employee can undertake training and take part in volunteer work for their employer, provided doing so does not provide services to or generate revenue for or on behalf of the employer. Where training is completed, the employer must ensure that the individuals are paid at least their appropriate minimum wage for the time spent training, and where this is more than can be recovered under the scheme the employer will have to make up the shortfall. The employer can also agree to find new work or volunteering opportunities for furloughed staff and anyone on furlough leave can take up work for a new employer provided this is not in breach of their employment contract with their existing employer.

What about maternity and other family leave?

Any employees who are on maternity, adoption, paternity or shared parental leave continue to have their normal rights. The guidance is clear that any contractual enhanced pay for such leave can be claimed through the scheme. What is still unclear, however, is whether an employee can be on both family leave and furlough leave at the same time. The ability to claim the enhanced element of pay through the scheme would suggest this is possible but further clarification on this point would be welcome.

What about annual leave?

The updated guidance has failed to address the relationship between holiday and furlough leave. However, ACAS has recently updated its guidance to state that If an employee is furloughed they can still request and take their holiday in the usual way, including taking bank holidays, without breaking the period of furlough. It is, however, not clear what pay an employee should get for any period of annual leave and whether payments for holiday can be recovered under the scheme. ACAS states employees and workers must get their usual pay for bank holidays and some employers are taking this to mean full pay should be given. It is hoped that further clarification on this point will be issued by the government before employers have to run the April payroll.

How to furlough employees

It has always been the case the employers have to agree with employees that they will go onto furlough leave and that employers must confirm in writing to their employees that they have been furloughed. The guidance now makes clear that such letters need to be retained for five years.

What will the scheme cover?

Claims should be started from the date the employee finishes work and begins furlough leave. An employer can claim for any regular payments they are obliged to pay their employees, up to the stated cap. The guidance now clarifies that this includes wages, past overtime, fees and compulsory commission payments but does not include discretionary bonus and commission and non-cash payments or benefits (such as a company car). Benefits provided through salary sacrifice schemes (including pension contributions) should also not be included. Such benefits will need to be continued in addition to any wages paid under the scheme. Employees wishing to change salary sacrifice arrangements will be able to treat the current pandemic as a life event in order to do so.


It is clear that the government is regularly reviewing and updating its guidance on the scheme and employers need to ensure they keep a close eye on developments if they are to maintain access to the scheme. This is also likely to involve updating employees placed on furlough leave on a regular basis in relation to any change of approach in the guidance issued.

This article is up to date as at 6 April 2020.


This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2024.



Read the latest articles and commentary from Shoosmiths or you can explore our full insights library.