Summary of advice for furloughing staff

Updated 11 June 2020

Summary of the Coronavirus Job Retention Scheme (CJRS) commonly known as the furlough scheme

The furlough scheme is designed to help people put on leave due to the coronavirus outbreak, and to prevent employers having to make mass redundancies.

HMRC will reimburse 80% of the furloughed workers' wages cost up to a cap of £2,500 per month per employee (further detail on how to calculate the wage cost for the claim are listed below). This will be back-dated to 1st March 2020.

Parents returning to work after extended leave are eligible for furlough

The government has confirmed that parents on statutory maternity and paternity leave who return to work in the coming months after a long period of absence will be permitted to be furloughed even after the 10 June deadline (see below).

This will only apply where they work for an employer who has previously furloughed employees.

10th June Deadline to Furlough Employees for the First Time

The scheme will close to new entrants from 30 June. From this point employers will only be able to furlough employees they have furloughed for a full three-week period prior to 30 June. This means that the final date by which an employer can furlough an employee for the first time will be the 10 June, in order for the current three-week furlough period to be completed by 30 June. Employers will have until 31st July to make any claims in respect of the period to 30 June.

From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed. Also from 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. New flexibility From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them - and will be responsible for paying their wages while in work. Employers will contribute to cost of the scheme from August From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of salaries. In the following months, businesses will be asked to contribute, but individuals will continue to receive that 80% of salary covering the time they are unable to work:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything

  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions

  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500

  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500

Access to the scheme and eligibility

To access the scheme employers will need to:

  • Designate the relevant employees as "furloughed workers" and notify them of this change. This is instead of laying them off or making them redundant. The employer must keep a copy of the written communication informing employees they are furloughed for 5 years

  • The furloughed workers must not undertake any work at all for the employer

  • Submit information about the employees that have been furloughed to HMRC via a new online portal that is being set up - further details to follow

Summary of further information concerning furloughed employees

  • Employer and employee must both agree to the furlough

  • Employee must have been on the payroll on 19 March 2020

  • All types of employment contracts are covered including zero hours and temporary ones

  • Employees on sick leave or self-isolating may be furloughed at the end of those periods

  • The grant will apply from the day the employee was furloughed which can be backdated to 1 March 2020

  • Employees made redundant after 28 February can be re-employed and placed on furlough instead

  • Employees on maternity /adoption/paternity/shared parental leave - normal rules still apply

  • Pregnant employees due to commence maternity leave will continue to do so as usual

Making a claim

The online service for applications to HMRC is now open CLICK HERE to claim.

The system is reported to be able to handle 450,000 claims per hour and employers should receive the grant money within 6 working days of submission.

Please note HMRC has stated it will retain the right to retrospectively audit all aspects of claims.

HMRC has put in place an online portal for employees and the public to report suspected fraud in the Coronavirus Job Retention Scheme.

HMRC has stated that employers will need to have enrolled for PAYE online which can take up to 10 days. CLICK HERE for more information.

To make the online application employers will need:

  • their employer PAYE reference number

  • the number of employees being furloughed

  • National Insurance Numbers for the employees furloughed

  • Names of the employees furloughed

  • Payroll/works number for the employees on furlough

  • their Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number

  • the claim period (start and end date)

  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)

  • bank account number and sort code

  • contact name

  • phone number

If you have fewer than 100 furloughed staff

You will be asked to enter details of each employee you are claiming for directly into the system - this will include their name, National Insurance number, claim period and claim amount, and payroll/employee number (optional).

If you have 100 or more furloughed staff

You will be asked to upload a file with the information rather than input it directly into the system. HMRC will accept the following file types: .xls .xlsx .csv .ods

The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional).

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

If the employer uses an agent who is authorised to act for them for PAYE purposes, the agent will be able to make a claim on the employers behalf. If they use a file only agent (who files the RTI return but doesn’t act for them on any other matters) the agent won’t be authorised to make a claim and the employer will need to do so. The file only agent can assist in obtaining the information to claim (which is listed above).

You should make your claim using the amounts in your payroll - either shortly before or during running payroll.

Calculating Monthly Earnings

Full or part time employees on a salary

Claim for the 80% of the employee’s salary, as of 19 March 2020, before tax.

Employees whose pay varies

If the employee has been employed for 12 months or more, you can claim the highest of either the:

  • same month’s earning from the previous year

  • average monthly earnings for the 2019-2020 tax year

If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.

If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.

Past Overtime, Fees, Commission, Bonuses and non-cash payments

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.

Employer National Insurance and Pension Contributions

You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.

You cannot claim for:

  • additional National Insurance or pension contributions you make because you chose to top up your employee’s salary

  • any pension contributions you make that are above the mandatory employer contribution

Benefits in Kind and Salary Sacrifice Schemes

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

Common questions from employers about the furlough scheme

While Employees are Furloughed

Once on furlough employees are not able to work for their employer, but can undertake training or volunteer subject to public health guidance, as long as they're not:

  • making money for their employer

  • providing services to their employer

If employees are required to, for example, complete training courses whilst they are furloughed, then they must be paid at least the National Living Wage /National Minimum Wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

Any activities undertaken while on furlough must be in line with the latest Public Health guidance during the COVID-19 outbreak.

The employee can still be made redundant while on furlough or afterwards.

Minimum furlough periods

Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

Can I furlough an employee who is shielding?

You can claim for furloughed employees who are shielding in line with public health guidance(or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.

Can furloughed staff take holiday while on furlough?

Furloughed employees continue to accrue leave as per their employment contract. The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday whilst on furlough. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

Employers will be obliged to pay additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.

If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

HMRC is keeping the policy on holiday pay during furlough under review.

Can my workers' holiday entitlement be carried over to next year?

Workers who have not taken all of their statutory annual leave entitlement due to COVID-19 will now be able to carry it over into the next 2 leave years.

New regulations were introduced on 27 March to allow up to 4 weeks of unused leave to be carried into the next 2 leave years, easing the requirements on business to ensure that workers take statutory amount of annual leave in any one year. The changes will also ensure all employers affected by COVID-19 have the flexibility to allow workers to carry over leave at a time when granting annual leave could leave them short-staffed in some of Britain’s key industries, such as food and healthcare.

The Working Time (Coronavirus) (Amendment) Regulations 2020 amends the Working Time Regulations 1998 to create a further exemption relating specifically to COVID-19. Where it is not reasonably practicable for a worker to take some, or all, of the holiday to which they are entitled due to the coronavirus, they have a right to carry the 4 weeks under regulation 13 into the next 2 leave years. This will not apply to the 1.6 weeks under regulation 13A leave, but this can be carried forward one year by agreement between workers and employers.

Can I furlough my apprentice and how does this affect their training?

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.

You must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

Guidance is available for changes in apprenticeship learning arrangements because of COVID-19.

Are casual workers covered by the Job Retention Scheme?

The Government has listed eligible individuals who are not employees

The government has announced that as well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:

  • office holders (including company directors)

  • salaried members of Limited Liability Partnerships (LLPs)

  • agency workers (including those employed by umbrella companies)

  • limb (b) workers. It is possible that casual workers (i.e. not working under a contract of employment nor self-employed) may be covered - see below:

Office Holders

Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

Agency Workers (including those employed by umbrella companies)

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Limb (b) Workers

Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme. A limb b worker is defined in the Employment Rights Act 1996 as a worker who works under any other contract (other than an employment contract): "..whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;"

A Limb b worker is, therefore and individual who:

  • works under a contract personally to do work; and

  • the work is done for another party to the contract that is not a customer or client of a profession or business undertaking carried on by the individual


A person is occasionally offered work as a private nurse for various clients of a private nursing company. They have a worker contract that sets out terms of pay etc. and they are free to decline the work offered if they choose. When they do accept they must personally undertake the work and are paid by the company for the nursing service they provide to the company's patients.

Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.

Read more information on the Self-Employed Income Support Scheme, including eligibility criteria and how to claim.

Read the other Managing Staff Matters summaries via the links below:

If you have any other questions please do get in touch with our team on 01722 325833 or email

3 views0 comments

Recent Posts

See All


T: 01722 325833


3rd Floor Cross Keys House

22 Queen Street

Salisbury SP1 1EY

 For Insights, news and advice
Join our mailing list here

Privacy Policy

© 2020 HJS Human Resources Limited