This Q&A was written on 23 March 2020 and last updated on 18 June 2020. It will be updated from time to time as more information becomes available. Please note that this document does not constitute the giving of legal advice – this is intended to be a guide to the issues employers will need to consider and is not a substitute for taking specific legal advice as situations are likely to be fact specific.

We recommend that this Q&A is read in conjunction with the official guidance which can be found here:

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-guidance-for-employees#furloughed-workers

https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme

https://www.businesssupport.gov.uk/coronavirus-job-retention-scheme/

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf

1. What is the scheme?

On 20 March 2020, the Government announced the introduction of a Coronavirus Job Retention Scheme. Additional guidance on the scheme is being published and updated from time to time on the gov.uk website by HMRC (“Guidance”). On 15 April 2020, the Treasury issued a Direction to HMRC under powers conferred by the Coronavirus Act 2020, containing authority and instructions for making payments under the Coronavirus Job Retention Scheme (“First Treasury Direction”). On 22 May 2020 the Treasury issued a new Direction (“Second Treasury Direction”) which applies to claims made on or after 22 May and up to 30 June. A third Treasury Direction is expected in relation to the scheme from 1 July onwards in the coming weeks.

For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

The First Treasury Direction remains applicable to claims submitted before 22 May which are not compliant with the Second Treasury Direction. There are some inconsistencies between the Treasury Directions and the Guidance (see below). HMRC have indicated on an informal basis that they will interpret the First Treasury Direction in light of the Guidance but it remains to be seen whether this is lawful, given that HMRC is given its powers to administer the scheme via the Treasury Directions themselves.

Under the current scheme, all UK employers can claim a grant from HMRC to cover 80% of the usual monthly wage costs of employees who are not working but are retained on the payroll, up to a cap of £2,500 per month per employee, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on those wages. The scheme applies to all employees and workers on PAYE and will therefore include those employed on part-time, fixed-term and zero-hour contracts. The scheme is to be backdated to 1 March 2020.

The portal for claiming grants opened on 20 April 2020.

On 12th May 2020, the Chancellor announced an extension to the Coronavirus Job Retention Scheme (CJRS), for all sectors and regions, until the end of October 2020.

On 29 May 2020 the Government announced changes to the CJRS. From 1 July 2020 employees will be able to work part-time. Employers will pay employees for the days they have worked and claim the CJRS grant for non-working days, subject to the applicable caps. For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

The Coronavirus Job Retention Scheme Fact Sheet (published on 29 May 2020) indicated that the following will apply:

• The CJRS closed to new entrants from 30 June 2020. The last date to furlough an employee was 10 June 2020 as the employee must have gained the minimum three weeks furlough by 30 June 2020.
• There is an exception to the deadline for parents on statutory maternity and paternity leave, adoption leave, shared parental leave and parental bereavement leave who return to work in the coming months. They will be eligible for the furlough scheme even after the 10 June cut-off date. However, this will only apply where they work for an employer who has previously furloughed employees.
• We believe that employees who have previously been furloughed prior to this date, but are not currently on furlough, can be re-furloughed, although we await further guidance. If this is correct, employers who are rotating staff on furlough would be able to re-furlough any employee after 10 June who had been furloughed before. However, we understand that there will also be a requirement that the number of employees an employer can claim for in any claim period will not be permitted to exceed the maximum number that they have claimed for in any previous claim.
• Employers must agree flexible furloughing arrangements with employees in writing. For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

An employee must be furloughed for a minimum of 21 calendar days in order for the employer to claim the grant. The Guidance states that claims should be started from the date that the employee finishes work and starts furlough, not the date that the decision to furlough is made, or the date on which the employer writes to the employee to confirm their furloughed status.

From 1 July 2020, the minimum furlough period of 21 calendar days will no longer apply. Flexible furlough agreements can last any length of time. The exception to this rule is where a previously furloughed employee starts a new furlough period before 1 July 2020, in which case the employee would be expected to remain furloughed for a minimum period of 21 calendar days, even if they remain furloughed beyond 1 July.

Although minimum furlough periods will no longer apply, a practical point to bear in mind is that there is a one week minimum period that can be claimed through the CJRS online portal.

Payments received from HMRC MUST be used to pay the employee, no fees can be charged from the money that is granted. Payments to the employee are still subject to deductions including income tax, national insurance contributions and pension contributions (if applicable) in the usual way.

Payments will be made from HMRC via BACS to the employer’s nominated bank account.

Draft Regulations (which are not yet in force) provide that Company officers deliberately making false claims can be held jointly and severally liable by HMRC. The Regulations would also enable HMRC to levy penalties for deliberate non-compliance with the terms of the scheme.

2. What does furlough mean?

“Furlough” is not a concept previously recognised by UK law. Generally, it means to take a leave of absence from work.

Employees can be furloughed for up to the full duration of the scheme (see below) but if furloughed, the furlough must last for a minimum of three weeks.

3. Which employers are eligible to use the scheme?

The scheme is open to all UK employers that had a PAYE payroll scheme registered on HMRC’s real time information system for PAYE on or before 19 March 2020, have enrolled for PAYE online and have a UK bank account.

If an employer has more than one qualifying PAYE scheme the employer must make a separate claim in relation to each scheme and the amount of any payment will be calculated separately in relation to each scheme.

The scheme therefore applies to businesses, charities and public authorities, although the Government expects that it will not be used by many public sector organisations, as the majority of employees will be continuing to provide essential public services.

Where employers receive public funding for staff costs, and that funding is continuing, the Government expects employers to use that funding to continue to pay employees as usual. Where funding is not continuing, it may be appropriate to furlough employees.

To be eligible, employers must write to employees confirming that they have been furloughed (see further below for how this can be done) and keep a record of this letter for five years.

The criteria has changed slightly since in line with the new flexible furlough rules. For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

4. Which employees are eligible for the scheme?

Furloughed employees must have been on your PAYE payroll and notified to HMRC on an RTI submission on or before 19 March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. The scheme, therefore, does not apply to any employees who joined after this date.

If you had employees that were employed on 28 February 2020 but not on 19 March 2020, these employees can potentially be re-employed and furloughed. See questions 12 and 13 below.

The scheme can cover:

• Full-time employees
• Part-time employees
• Employees on fixed-term contracts
• Employees on flexible or zero-hour contracts
• Agency workers
• Apprentices
• Company Directors
• Salaried Members of LLPs

The updated guidance issued on 4 April 2020 stated that foreign nationals are eligible to be furloughed. The revised guidance dated 9 April also now confirms that those with certain work visas will not be regarded as breaching their visa conditions if they receive funds under the furlough scheme with the addition of the words “Grants under the scheme are not counted as ‘access to public funds’, and you can furlough employees on all categories of visa”.

A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28th February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.

Employees who have more than one job can be furloughed by either employer or multiple employers, the grant can be claimed (up to the cap) by each employer. If an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer/s should not re-employ them, put them on furlough and claim for their wages through the scheme.

One additional eligibility criterion has now been added from 1 July 2020. Only employees who have previously been furloughed for at least three consecutive weeks between 1 March 2020 and 30 June 2020 can be furloughed. There is, again, one exception to this which relates to employees returning from Statutory Parental Leave after 10 June 2020.

5. What are the requirements of furloughing an employee?

The First Direction states that an employee has been furloughed if:

a)   The employee has been instructed by the employer to cease all work in relation to their employment;

b)   The period the employee has not worked is 21 calendar days or more (this does apply under the flexible furlough scheme); and

c)   The reason for the Employer instructing the employee to cease work was due to circumstances of the coronavirus.

d)   The employer and employee must have agreed in writing that the employee will cease work. The agreement can be made via email.

Points a, c and d were new requirements that were not  included in the earlier guidance issued by HMRC. HMRC subsequently amended its guidance to state that written confirmation of furlough would be sufficient for the purposes of claiming under the scheme and, provided that the written confirmation was in compliance with employment law, this would be valid. However, technically, the Direction takes precedence over the HMRC guidance and, therefore, there was uncertainty about these requirements for evidencing employee consent prior to the Second Treasury Direction being issued. Under the Second Direction, the employer must obtain the employee’s consent but this can be recorded in writing by the employer.

In respect of claims post 1 July, employers will need to agree any part-time working arrangements with employees and confirm these in writing. For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

Please see the following questions for explanations of the key requirements set out above.

6. What does the employer need to do to comply with the requirement to “instruct the employee to cease work” due to the coronavirus?

In order to claim the furlough grant the employer must have instructed the employee to cease all work in relation to their employment (in respect of claims prior to 1 July).

If any ESPHR customers downloaded and used the ‘Furlough Letter Template – SL88’ from the Customer Zone at, or after, 4pm on Friday 3rd April 2020 the template contains sufficient wording that would amount to an instruction to cease work for the employer. We recommend you check your version of the letter to ensure that the following wording was not deleted before sending the letter to employees:

“During Furlough you may not carry out any work for us and you agree that we are under no obligation to provide any work to you. You should not attend your usual workplace or carry out any work on our behalf including provision of any services to or generation of any revenue for us…..”

If the above wording was included then no further action is necessary.

Any customers who used the earlier versions of the template, or who removed the wording outlined above, or drafted their own letter which does not have wording that would amount to an instruction to cease work, should send new, updated furlough letters to their employees and ask them to sign and return the agreement to be furloughed. You can explain in the letter that Treasury and HMRC guidance has recently changed and this is the reason for the updated letter.

This is important to ensure that your entitlement to receive a furlough grant is protected as far as possible.

In relation to the Flexible Furlough Scheme, we have produced a Flexible Furlough Letter Template for customers to access and download on our Customer Zone.

7. What does the employer need to do to comply with the requirement that the reason for the employer instructing the employee to cease work was due to circumstances of the coronavirus?

The good news from the Direction is that the new wording appears to clarify that furlough does not need to only be used as an alternative to redundancy.

This new wording allows employers to furlough those employees with confidence who may not be redundant (for example because there will be an immediate spike in demand once lockdown measures are lifted) but have significantly reduced workloads during lockdown.

The new wording does, however, create potential issues relating to those employees who have been placed on furlough who were on long term sickness or shielding due to being extremely vulnerable or high risk as these situations are not included in the Direction, despite having been referenced in the earlier guidance. Please see later questions for further guidance on these issues.

8. What does the employer need to do to comply with the requirement that “the employer and employee must have agreed in writing that the employee will cease work”?

The requirement in the Direction that there must be a written agreement between the employer and employee is a new requirement. Previous versions of HMRC guidance only required the employee to be notified that they were furloughed. See question 5 above.

The latest HMRC guidance suggests that HMRC will not be overly prescriptive about the requirements set out in the Direction but there is still a risk that there will be situations where employers have furloughed but not had the agreement in writing to cease working and be furloughed. Currently, there is debate on whether an employer can comply retrospectively where the requirements for an agreement were not fully met when the employer originally furloughed.

If you do not have a compliant agreement we recommend that you obtain retrospective agreement in writing as soon as possible. If the claim is subsequently challenged by HMRC, we anticipate that it is likely to be considered reasonable to have complied with the guidance in force at the relevant times.

The new requirement also means that obtaining signed agreements from employees is important. Even where an employer has sent compliant letters (we believe our template letter after 4pm on 3 April 2020 would be compliant), it is vital to audit the replies and contact any employees who have not accepted in writing to evidence that consent was obtained.

The requirement for an agreement between the employer and employee also called into question the validity of relying on lay off clauses for consent to furlough. The changes to the HMRC guidance should address this, but it is still safest to ensure that you have a compliant agreement in place. Please see later question on lay off for further information if you have relied on lay off clauses to furlough employees.

9. Can employees continue to work for their employer during furlough?

Until 1 July – no. Employees are not permitted to undertake ANY work (whether from home or otherwise) for or on behalf of the employer, or any associated or linked organisation, during furlough. This includes providing services or generating revenue for the employer or any associated or linked organisation. Any tasks undertaken by an employee for the benefit of the business are likely to be considered work. As such, any tasks performed by an employee, however minor and ad-hoc, may mean that the employee is not suitable for furlough leave and the employer may be unable to claim the reimbursement in respect of them. We recommend that employees are specifically instructed that they should not perform any work and it is also recommended that systems access is suspended so that they are not checking or responding to work related emails, or doing anything that could be regarded as work.

The HMRC guidance updated on 30 April 2020 expressly states that employees who are union or non-union representatives can undertake duties and activities for the purpose of individual or collective representation of other employees or worker during furlough. However, in doing so, they must not provide services to or generate revenue for or on behalf of the employer or any linked or associated organisations.

Furloughed employees can take part in volunteer work provided such volunteer work is not for the employee’s employer. If furlough is used and then the employee performs some work for their employer (even if this is labelled as voluntary), there is a risk that this would be regarded as fraudulent use of the scheme and subject to the government’s retrospective audits.

Furloughed employees can take part in training that is directly relevant to the employee’s employment, as long as such training is not used by the employer to generate revenue for the business. If the employer requires the employee to complete training during furlough then this will not bring their furlough leave to an end, but they must be paid the national minimum wage in respect of the time spent training. If you intend to require your employees to complete any training (including online) during furlough then we recommend that this is agreed with the employee and reflected in the correspondence confirming furlough leave. The current guidance says that employees should be encouraged to undertake training during furlough.

The current HMRC guidance confirms that employees can accept and undertake paid employment elsewhere with a second employer whilst they are furloughed from a first employer. However, the second employer must not be a company associated or linked with the first employer. If an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer/s should not re-employ them, put them on furlough and claim for their wages through the scheme.

From 1 July 2020 employees will be able to return to work part-time whilst furloughed. For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

10. Can we use furlough for employees who are working reduced hours on reduced pay?

At the moment – no. Employees who are working for their employer at all, even if on reduced hours, are not eligible for the scheme. If you have already placed employees onto reduced hours you can then put them on furlough and claim the reimbursement through the scheme in respect of them once they are not working at all. See question 14 regarding the calculation of wages in such cases. 

For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

11. Does the employee have to be at risk of redundancy to be covered by the scheme?

No. The Direction states that employees can be furloughed if the reason for the furlough is “by reason of circumstances arising as a result of coronavirus”. In addition, HMRC guidance does not specifically state that all furloughed employees must have been at risk of redundancy before they can be furloughed under the scheme.

The guidance states that the scheme is designed to help employers whose “operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy”. The guidance recognises that different businesses will face different impacts from coronavirus.

It is important to note that the government will retain the right to retrospectively audit all aspects of the scheme with scope to claw back fraudulent or erroneous claims. We would, therefore, recommend that employers keep a record of their business reasons for furloughing staff to support their case in any later audit. Specifically, it would be helpful to retain a paper trail demonstrating that the decision to furlough was taken as a result of the Coronavirus pandemic, and its effects on the business, and that furloughing took place to avoid alternatives such as reductions in pay, lay-off or redundancy or other methods of drastically reducing payroll costs.

12. What about employees that we have already made redundant?

If you have already given an employee notice of redundancy due to circumstances related to the coronavirus crisis (and they are within their notice period), you could propose to that employee that they agree to be placed on furlough instead. The scheme is backdated to 1 March 2020 and therefore, in theory, if you have given notice of redundancy dismissal after 28 February 2020 you can put them onto furlough leave instead and claim the reimbursement through the scheme.

Employees who were dismissed for redundancy since 28 February 2020 can be re-engaged and put on furlough.

The current guidance does not distinguish between employees who were made redundant for reasons relating to coronavirus and those who were made redundant for other, unrelated reasons. It may be, therefore, that all such employees can be re-employed and furloughed. However this is, of course, subject to the criteria set out in question 5 (namely, the reason for the Employer instructing the employee to cease work was due to circumstances of the coronavirus). If an employer subsequently re-hires and furloughs an employee that was made redundant for another reason, technically, the instruction to cease work is not directly due to the circumstances of the coronavirus (it may be indirectly due to the employee’s inability to secure alternative employment elsewhere). Employers may therefore find that this is not possible or would be regarded as potentially fraudulent on audit. The First and Second Directions do seem to indicate that those redundancies which were unconnected to the coronavirus pandemic would not be entitled to be furloughed. Please take advice from your legal advisor if you have furloughed or are considering re-hiring and furloughing in these circumstances.

13. Can employees who left employment, for reasons other than redundancy, since 28 February 2020 or 19 March 2020 insist on being re-engaged and furloughed?

The current HMRC guidance states that employees “who stopped working for you on or after 28 February 2020” may be re-employed, furloughed and claimed for under the scheme, even if they were not re-hired until after 19 March 2020. The guidance also states that employees “who stopped working for you after 19 March 2020” can also be re-employed, furloughed and claimed for under the scheme. This seems to imply that any employees who left employment after that date (whether through dismissal or resignation) can be re-hired and furloughed, but do not have to be. However, see question 12 above on this point and the terms of the Direction.

Employees who started and ended the same contract between 28 February and 19 March 2020 will not be eligible for the scheme.

Employers will, therefore, have to decide on a case-by-case basis whether it is appropriate or desirable to re-hire an employee and furlough them. Following the Directions, we now understand that those dismissed for reasons unconnected to the virus may not be eligible for furlough (see question 12 above). Making a claim for the furlough grant could be considered to be fraudulent and, therefore, we recommend that you take legal advice on whether to re-hire and furlough an employee who was e.g. dismissed for gross misconduct and, therefore, for a reason entirely unrelated to coronavirus.

Employers will, in any event, need to consider the following in relation to any requests for former employees to be re-hired:

• If the employee was previously dismissed for redundancy connected to coronavirus and has already received a statutory redundancy payment, this will have brought their continuous service for redundancy pay purposes to an end, but there may be the risks of claims for unfair dismissal if the employer does not agree to re-hire and furlough them under the scheme;
• If the employee was dismissed for any other reason, the employer should consider not re-employing them due to the risk they may not be able to receive the furlough grant for that employee;
• If the employee resigned for a reason unconnected to coronavirus but either their new employer has deferred their start date or sent them home without pay due to coronavirus and cannot furlough them under the rules of the scheme, it may be possible to re-hire these employees;
• If there is no break in continuity of service, and the employee has two or more years’ service, the employer will need to follow a fair process and have a fair reason for dismissal at the end of the furlough period in order to avoid claims for unfair dismissal;
• Whether it might be reasonable to ask any returning employee to sign a settlement agreement to waive any claims arising out of the termination of their employment at the end of the furlough period;
• The risk of any discrimination claims if employees are treated differently due to protected characteristics (such as refusing an employee re-employment due to high levels of absence which are related to a disability).

We recommend that employers take legal advice regarding handling any requests for re-employment.

14. How do we calculate an employee’s wages?

For full and part-time employees, you should base your claim on the employee’s actual salary, before tax, as at 19 March 2020.

The Direction states that the amount of salary for the employee must disregard anything which is not “regular salary or wages”. That includes disregarding any performance related bonus or discretionary payments (including tips), any conditional payments (e.g. where a threshold must be met) and any non-financial benefits. Non-cash benefits should not be included in the reference salary.

It is not clear whether car allowances would be considered to be “regular salary or wages”. We consider that it is likely that a car allowance would be considered to be a benefit and therefore should not be included in the reference salary.

If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.

Many employers use salary sacrifice schemes to provide other benefits to employees. Where employees participate in salary sacrifice schemes, the salary used for the furlough calculation should be the post-sacrifice salary. The employee will retain the right to receive the benefit throughout the duration of the furlough. The guidance was updated on 9 April 2020 to state that all the grant received to cover an employee’s subsidised furlough pay must be paid to the employee 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. Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. The guidance states that 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.

You will need to calculate 80% of the wage for the period of the furlough and then apply the cap of £2,500 per month for anyone’s wages exceeding this amount.

The Treasury Direction explicitly extends the employer’s record-keeping obligations whereby it is now a requirement that employers keep a record of how calculations in relation to each furloughed employee have been reached, as well as keeping written records of each employee furloughed.

15. How will normal salary be calculated for those with variable pay, such as zero-hours workers?

For employees who have been employed for a full 12 months prior to the claim, you can claim for 80% of the higher of:

• The same month’s earnings from the previous year; and
• The average monthly earnings from the 2019/2020 tax year;

subject to the cap of £2,500 per month.

If the employee has been employed for less than 12 months, you can claim for 80% of an average of their monthly earnings since they started work with you, subject to the cap.

If the employee has been employed for less than a month, you should pro-rata their earnings and calculate 80% of this amount, again, subject to the cap.

16. How does maternity (and other family) leave and sickness absence affect furlough payments?

HMRC has updated its statutory payments manual to provide that employees do not qualify for SSP if they are on furlough.

The guidance confirms that the furlough pay for those employees who return after statutory leave or sickness absence should be calculated in accordance with their normal salary, not the pay they received while on statutory leave/sickness absence. However, the furlough pay of employees on variable pay should be calculated based on the same month’s earnings from the previous year, or the average monthly earnings for the 2019-20 tax year (see further above “How will normal salary be calculated for those with variable pay, such as zero hours workers?”). Employers should be prepared to look at individual circumstances on a case-by-case basis to ensure that the employee is not disadvantaged because they took statutory leave entitlement.

The HMRC guidance updated on 30 April 2020 confirms that employers may need to calculate the average weekly earnings of employees differently for the purposes of statutory family pay (such as statutory maternity pay and statutory adoption pay) if the employee was furloughed and then started their family-related leave on or after 25 April 2020.

17. Can an employer elect to top up the wage to 100%?

Yes – an employer can offer to top up the wage but there is no obligation on them to do so. Clearly, topping up the wage is likely to assist with obtaining consent to furloughing the employee. Whether you intend to furlough on 80% or to top up out of your own budget should be made clear to the employees when seeking their consent for furlough.

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

18. How do we calculate the Employer National Insurance and Employer Pension Contributions we can claim?

Once you have calculated the amount that you can claim, you can use this to calculate the employer national insurance contributions and automatic enrolment pension contributions (up to the minimum mandatory contribution of 3% of income above the lower limit of qualifying earnings) you can claim. Grants for pension contributions can be claimed up to this cap, provided the employer will pay the whole amount claimed to a pension scheme for the employee as an employer contribution.

Employer national insurance contributions and automatic enrolment pension contributions applicable to any top up of salary (or any pension contributions above the minimum mandatory contribution) will not be funded through the scheme and employers will remain liable for these amounts.

You cannot claim for any pension contributions you make that are above the mandatory employer contribution.

19. Can you force an employee to take furlough leave?

The Direction requires there to be a written agreement between the Employer and the Employee to furlough. This has called into question the validity of furloughing using lay off clauses.

Previously, if the contract of employment contained a clause allowing you to lay off the employee (lay-off means to send the employee home with no work or pay, save for Statutory Guarantee Payments, where applicable), then you may not have needed separate consent in order to furlough an employee as, in this scenario, the Government would simply be stepping in to provide up to 80% of pay when the employer already has the right to lay off employees without pay.

The new requirement appears to suggest that this is not sufficient. There is a risk that employers may not have complied with the newly stated requirements to qualify for the grant. Currently, there is debate on whether an employer can comply retrospectively where the requirement for an agreement were not fully met when the employer originally furloughed. This may harm the ability to make claims for the whole of the period that employees have been on furlough.

If you have relied on a lay off clause to furlough employees without obtaining consent, we recommend that you obtain retrospective agreement in writing (there is a furlough letter template in our Customer Zone). If the claim is subsequently challenged by HMRC, we anticipate that it is likely to be considered reasonable to have complied with the guidance in force at the relevant times. If an employee refuses to consent to be furloughed they can be placed at risk of redundancy, subject to the normal redundancy rules and protections.

20. Can an employee ask to be furloughed?

Yes, they can request this, but the employer does not have to agree to it. If the employee is requesting to be furloughed as an alternative to redundancy then the employer must properly consider this proposal or there could be a risk of the dismissal being unfair.

21. Will we have to collectively consult if we intend to put 20 or more employees onto furlough?

The guidance confirms that if sufficient numbers of employees are involved then it may be necessary for the employer to collectively consult to reach agreement to furlough. The government has not elected to create an exception to the obligation to collectively consult in relation to the use of furlough through the scheme.

If you are simply requesting the consent of the employees to furlough them, without intending to dismiss any employees who refuse to consent voluntarily to the change, then it is arguable that the collective consultation obligations would not be triggered.

However, if you are asking employees to consent to being furloughed otherwise you will impose furlough or put them at risk of redundancy (as is likely to be the case in most situations), then this would be likely to trigger the obligations to engage in collective consultation with elected employee representatives, if there are 20 or more employees affected at any one establishment.

If collective consultation obligations are triggered this requires employers to engage with appropriate employee representatives (including to elect such if none are in place) and consult for a minimum 30/45 day period, depending on total numbers of employees affected.

A failure to comply with the collective consultation obligations can result in awards of up to 90 days’ gross pay per employee. In some cases, it may be possible for an employer to rely on the special circumstances defence where they can show that it was not reasonably practicable for them to comply with the obligations and the circumstances were “special”. Given the unprecedented situation, this defence may be possible if you can show that the effect of the Coronavirus pandemic meant that it was not practicable to comply due to practical difficulties and/or the inability to remain solvent while a long collective consultation was undertaken. However, where full compliance is not possible, employers would be expected to take all steps towards compliance as are reasonably practicable in the circumstances. In all but the most extreme cases, there would be an expectation that some form of consultation would be possible at least. We recommend that you seek legal advice in any such cases.

22. Do we need to consult with a Trade Union about the proposal to place employees on furlough?

This will depend on the collective bargaining terms that have been agreed with any trade union. If you are obliged to consult with a trade union about any terms and conditions relating to pay, then you would need to consult the trade union about the proposals and agree the change with the union in the usual way.

23. How do I get consent from employees to put them on furlough?

We envisage that most employees will be likely to voluntarily consent to a proposal to vary their contractual terms and conditions to place them on furlough. Employers will need to write to employees confirming that they have been furloughed to be eligible for the scheme (see question 5 above) and therefore we recommend that employers should ask employees to countersign a letter confirming their agreement to being furloughed. In the current situation with many employees based at home, it may be possible to have employees electronically sign documents or to simply reply to an email confirming their agreement.

We have produced a Furlough Agreement Letter Template for customers to access and download on our Customer Zone.

24. Can we extend the period of furlough that employees have agreed to?

Yes, subject to the employee’s agreement. The Guidance confirms that employees can be furloughed more than once (while the scheme remains in existence) provided that they have completed at least three weeks of furlough prior to 30 June and that one period of furlough can follow straight after an existing furlough period, subject always to the rule that any period of furlough must be for a minimum three week period (one week after 1 July). Each period of furlough can be extended by any amount of time whilst the employee is on furlough. However, this is at all times subject to normal principles of employment law – some employers may have agreed to an open-ended furlough period and specified that it doesn’t come to an end until the employer decides to end it or the scheme ceases.

Other employers may have obtained consent from employees to furlough them for an initial period (three weeks or perhaps longer) and then realise that there’s still no work for them to perform at the end of the furlough period and would need to extend furlough. The mechanism to extend furlough for a further period would require the employees’ consent in the same way as before, and therefore you should follow the same process as you did in relation to the initial furlough period (see Q&A above “How do I get consent from employees to put them on furlough?”). You may decide to bring some or all employees back to work for a period and then furlough again, alternatively you may furlough back-to-back with the previous furlough period.

Due to the requirement to obtain written consent to furlough, we would recommend that once you become aware that you do need to furlough an employee for a further period you should commence the process to seek their agreement as soon as possible, which may well be while their initial furlough is still ongoing.

Employers should bear in mind the changes to the scheme from 1 July onwards when setting fixed durations for furlough.

25. What happens if I still need to furlough staff after 30 June?

Existing agreements with employees may need to be revised to allow the possibility of furlough continuing into July and beyond – now that it has been announced that the CJRS will remain in place until October 2020.

From 1 July 2020, employees who are on furlough will be able to return to work for their employers on a part-time basis. For further details about the application of the scheme from 1 July, please refer to our Flexible Furlough Scheme Q&A.

From 1 August, employers will be required to meet part of their furloughed workers’ minimum salary which is equal to 80% of their reference pay or up to £2,500 per month (see question 1 above).

Employers will need to enter into new furlough agreements, or confirm a variation of them in writing, to facilitate an employee working during furlough after 1 July.

26. Does the 80% include employer pension contributions and employer’s NICs?

No – the employer can claim for these sums in addition to the 80% of salary (subject to the cap) until 31 July. From 1 August onwards, the employer must pay the employer’s NICs and employer pension contributions.

27. Do we still need to seek consent to furlough if we are proposing to top up the pay to 100%?

Yes, as this would still represent a change to the employee’s terms and conditions of employment.

28. Is it a breach of trust and confidence if the employer does not ‘top up’ the extra 20%?

In cases where there is no contractual right to lay off, if an employer did not seek the consent of an employee to put them on furlough and simply imposed the change, it is likely that this would constitute a breach of trust and confidence, theoretically entitling the employee to resign and claim constructive unfair dismissal. However, in the current climate, it is more likely that an employee would remain in employment and bring a claim for unlawful deductions from wages for the “missing” 20%.

It is not a requirement to offer furlough at any higher rate than the 80% pay and most employees would be expected to agree to the voluntary furlough at this rate to avoid redundancy, however, topping up would clearly mean it is less likely that any employee would object. If you are not going to top up the salary you therefore need to obtain the employee’s consent to accept a reduced salary during the furlough (see above).

29. At what rate would benefits (such as holiday entitlement) accrue during furlough?

All other employment rights remain the same during furlough and therefore all contractual benefits, such as annual leave entitlement, would continue to accrue in full during any furlough, unless expressly agreed otherwise with affected employees. This is because a furlough is akin to a sabbatical, during which all terms and conditions of employment remain.

It would be open to employers who are seeking the consent of employees to place them on furlough and therefore to accept a reduced rate of pay to also seek consent to vary benefits for the duration of the furlough. For example, employers could ask employees to forgo a car allowance, or to only accrue statutory holiday entitlement during the furlough and to forgo any additional contractual entitlement. Employers would need to weigh up the benefits of minimising these additional costs during this time versus making consent harder to obtain.

It is worth noting that the government has passed emergency legislation to relax the restriction on carrying over the four weeks’ leave to which workers are entitled under the WTD, where it was not reasonably practicable to take it in the leave year “as a result of the effects of the coronavirus (including on the worker, the employer or the wider economy or society)”.

30. Can apprentices be furloughed?

The guidance confirms that apprentices can be furloughed and can continue to train whilst furloughed. Apprentices must continue to be paid at least the Apprenticeship Minimum Wage or National Minimum Wage as appropriate for all the time they spend training. Additional guidance relating to apprentices can be found at:

https://www.gov.uk/government/publications/coronavirus-covid-19-apprenticeship-programme-response/coronavirus-covid-19-guidance-for-apprentices-employers-training-providers-end-point-assessment-organisations-and-external-quality-assurance-pro.

31. How do I select which employees should be furloughed?

It is possible for employers to ask for volunteers for furlough, although do be aware of the risk of getting more volunteers than you require and then having to select some and not others. Consider only asking for volunteers from certain parts of the business where the work is not available i.e. those who would be at greater risk of being made redundant than others. All other employment rights and protections still apply and therefore employers will need to ensure that they do not inadvertently trigger claims for discrimination, or less favourable treatment of part-time or fixed-term workers, when selecting employees for furlough. We recommend that employers rely on business justifications for identifying roles for furlough, and/or consider adopting objective selection criteria (similar to how you would select an employee from a pool for redundancy) as necessary.

In some cases, employers may find that they would want to select employees for furlough based on what would, in normal circumstances, be discriminatory criteria, for example to furlough vulnerable groups for the purposes of assisting with shielding. Legal advice should be obtained before making any decisions that could be discriminatory, however, this could be potentially justified as a proportionate means of achieving the legitimate aim of protecting the health and safety of vulnerable employees, as identified in government guidance.

From 1 July, the scheme will be closed to new entrants who had not already completed a period of furlough prior to 30 June.

32. We have been forced to close our business by the Government recommendations but we would not be proposing to make the staff redundant as we will need them when we are able to reopen. Can we still use the scheme?

We are not aware of any restrictions that would prevent such businesses from accessing the scheme and the most recent guidance appears to acknowledge that different businesses will be affected in different ways. See Q&A above “Does the employee have to be at risk of redundancy to be covered by the scheme?”.

33. Can an employer rotate furlough leave amongst staff, and can employees dip in and out of it?

Yes. For some employers who do not need to furlough all staff, it may be desirable to rotate employees on furlough so that all employees (or all of a particular type/role) are rotated and accordingly all face a period of time for which they are receiving only 80% of pay. The scheme is clear that furlough prior to 1 July must be for a minimum of at least three weeks and therefore this may not be viable for some employers who are hoping to rotate employees. From 1 July, there will be a minimum claim period of one week and employers will not be able to claim for more employees than the maximum number that they have claimed for in a previous claim period. Employers will therefore need to bear this in mind when planning rotating furlough.

The guidance has now been updated to confirm that employees can be furloughed multiple times, but each separate instance must be for a minimum period of three consecutive weeks. One period of furlough can follow straight after an existing furlough period while the scheme is open. We therefore anticipate that employees can be rotated on and off furlough while the scheme is open.

34. Will it be unfair if an employer makes someone redundant rather than placing them on furlough leave?

This will depend on the circumstances of the case. If the redundancy is solely proposed because of the current situation regarding the Coronavirus, then it is likely to be unfair to not at least thoroughly consider the possibility of furlough rather than making an employee redundant, since such action would potentially be deemed unreasonable in the circumstances. Employees can claim unfair dismissal if they have two or more years’ service.

However, if a redundancy consultation process was ongoing prior to the onset of the Coronavirus crisis, and/or the situation is not affected by the Coronavirus, it is very likely that it will still be possible to fairly dismiss an employee for redundancy notwithstanding the availability of the scheme.

If redundancies are proposed due to what the employer considers will be a permanent reduction in work, even once the immediate crisis has abated, it is possible that a Tribunal would consider that a redundancy was fair (provided that a fair process was followed) and that furlough was not a viable alternative to redundancy in any event. However, the Government has strongly encouraged any business considering redundancies to fully consider the support available before making decisions.

With effect from 1 August, employers will need to contribute to the costs of the scheme and therefore some employers may well need to consider redundancies or other measures if they cannot meet the contribution requirements under the terms of the scheme.

We strongly recommend that you seek specialist employment law advice before effecting any proposed redundancies.

35. How do you deal with employees who object to their colleagues getting 80% of pay on furlough leave when they still have to work?

It will be important to manage carefully any communications with employees about access to the scheme and how employees have been selected to go onto furlough. We recommend that employers consider selection for furlough based on a clear business rationale as to the types of work that have reduced and/or whether it is feasible to perform such work from home. Employers could consider incentives for those who are having to continue working, such as additional holiday entitlement or bonuses.

Rotating employees on and off furlough, where possible and subject to the minimum three week period and continued availability of the scheme, may go towards employees seeing the situation as more fair to all.

36. Can employees who are absent from work due to (a) sickness, or who are (b) shielding, be furloughed?

(a) The position is not straightforward.

The First Treasury Direction states that where an employee is eligible for SSP, the employer cannot claim under the scheme until the SSP entitlement has ended. This appears to apply whether or not the employee was actually claiming the SSP. Under the First Direction, if an employee was on unpaid sickness absence prior to 28 February 2020, they cannot be furloughed until they are fit to return to work.

The Second Treasury Direction (applicable to claims after 22 May) appears to suggest that an employer can furlough employees who are entitled to SSP provided that they are not receiving the SSP and can, therefore, decide whether to pay the employees SSP or furlough them. In respect of employees on unpaid sickness absence, the Second Treasury Direction states that no claim can be made where the employee was on unpaid leave between 1 March and 30 June. Where unpaid leave began on or after 1 March, an employer can agree to end the unpaid leave and put the employee on furlough provided the conditions in question 5 above are met. If the unpaid leave began before 1 March, the employee cannot be furloughed until the employee is fit to return to work.

The HMRC guidance states that the CJRS is not intended for short-term absences from work due to sickness (i.e. should not be used as a method of topping up small amounts of SSP during short term absences), and that short-term illness/self-isolation should not be a consideration in deciding to furlough an employee. The guidance states that if an employer wants to furlough an employee, for business reasons connected to the coronavirus pandemic, then they can do so provided they comply with all of the requirements, such as instructing the employee to cease work and obtaining an agreement in writing regardless of whether the employee is off sick. There is no requirement in the Guidance that an employee must be fit for work before they can be furloughed. Where the employee off sick is furloughed, they should no longer receive sick pay and, instead, would be classified as furloughed (and paid accordingly, subject to what has been agreed).

The Guidance suggests that this is also applicable for those on long-term sickness absence, if there are business reasons for furloughing the employee in the same way as other employees. This therefore implies that it would not be possible to only furlough those on long-term sickness absence if the employer is not also furloughing other employees who usually perform similar work.

There is therefore a discrepancy between the Guidance and the First Treasury Direction. Employers who relied on the guidance and furloughed employees who were eligible for SSP prior to the First Treasury Direction being issued may face claims being clawed back on audit. It may be possible to judicially review any such decisions but specialist legal advice should be sought.

(b) The HMRC guidance and the Treasury Directions are inconsistent regarding shielding employees. Indeed, the publication of the Second Treasury Direction and an explanatory memorandum (published 22 May) has complicated the situation further.

The HMRC guidance states that those shielding in accordance with public health guidance, and those on long-term sick leave, can be placed on furlough, but that it is a matter for the employer to decide whether to furlough in those situations. The Statutory Sick Pay (General) (Coronavirus Amendment) (No. 3) Regulations 2020 provide that a person is deemed to be incapable of work if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield. The Regulations came into force on 16 April and therefore mean that from that date, shielding employees will be entitled to SSP, if they cannot work from home.

The First Treasury Direction stated that where SSP is payable when the furlough period commences, a claim cannot be made under the CJRS until the SSP entitlement has ended. As above, technically, the Direction takes precedence over the HMRC guidance and therefore, the position in the Direction should be followed. This means that employees who are in receipt of SSP cannot be furloughed until the SSP entitlement has ceased. On the face of it, this would mean that shielding employees could not be furloughed if they had not already been furloughed prior to 16 April 2020 when entitlement to SSP commenced.

The Second Treasury Direction suggests that the employer and employee can agree that an employee entitled to SSP is taken off SSP and can be furloughed instead. This is in direct contrast with the First Treasury Direction.

The Coronavirus Amendment No. 3 Regulations only came into force on 16 April 2020 and do not have retrospective effect. This means that the position with regard to claims could be different depending upon the period to which the claim relates.

Furlough period before 16 April 2020:

Prior to 16 April 2020 employees who were shielding were not entitled to SSP and therefore could be furloughed. In accordance with paragraph 6.3 of the First Treasury direction, where SSP is payable in respect of an employee at the time they were instructed to cease all work, then furlough cannot begin until entitlement to SSP ends. If there was no entitlement to SSP at the time the direction was given to cease work then this section of paragraph 6.3 does not seem to apply and the employer may be able to claim from the CJRS.

Paragraph 6.3 of the First Treasury direction also provides that any subsequent entitlement to SSP by virtue of the employee becoming unfit for work again during furlough can be disregarded. However, the use of “again” suggests that this confirmation relates only to those who were on SSP prior to furlough and have become sick again.

The First Treasury direction is silent on those who have a new entitlement to SSP during furlough. However, the guidance states that an employer has a discretion as to whether or not to keep such employees on furlough or move them off furlough and onto SSP.

This wording has been removed from the Second Treasury Direction, which applies to claims submitted on or after 22 May 2020, or claims made before that date that would have complied with that direction.

Arguably, there is nothing in the First Treasury Direction to prevent employers from claiming in respect of shielding employees for periods prior to 16 April 2020, on the basis that they were not entitled to SSP at the time they were furloughed.

Furlough period on or after 16 April 2020:

Employers are unlikely to be able to claim from the CJRS in respect of a claim to which the First Treasury direction applies. This is because the Coronavirus Amendment No. 3 Regulations are clear that SSP eligibility arises from shielding where that shielding renders them incapable of work, and the First Treasury direction is clear that HMRC does not have the power to reimburse where the employee is eligible for SSP at the point that they are instructed to cease work.

It is only in respect of claims made under the Second Treasury direction (i.e. after 22 May) that the employer and employee are free to agree that the employee’s receipt of SSP will end so that the employee can be furloughed.

The risk, therefore, is that employers will not be able to recover the furlough pay of a shielding employee eligible for SSP where a claim to the CJRS is made between 16 April (when the Coronavirus Amendment No. 3 Regulations came into force) and 22 May 2020 (when the Second Treasury Direction was published).

Furloughing shielding employees is a complex issue and further advice should be taken from your legal advisor.

37. Can employees on unpaid leave be furloughed?

This may apply to those on unpaid leave due to childcare or other caring responsibilities (such as staying at home with a shielding family member).

The First Treasury Direction stated that if an employee went on unpaid leave on or before 28 February, you cannot furlough them until the date on which it was agreed they would return from unpaid leave. Where the end date was to be determined by a completion of a particular purpose, or a specific event occurring, the employee cannot be furloughed until that this occurs. If the employee was placed on unpaid leave after 28 February, the employer and employee could agree to end the unpaid leave and furlough the employee.

Under the Second Treasury Direction, an employee cannot be furloughed if they are on unpaid leave between 1 March and 30 June. If the unpaid leave began after 1 March, the employer and employee can agree to end the unpaid leave and furlough the employee (subject to the conditions in question 5). If the unpaid leave began before 1 March, the employee cannot be furloughed until the date on which the unpaid leave is due to end. See further below in relation to employees returning from statutory family leave.

38. Can directors be furloughed?

Company directors can be furloughed if they are employed executive directors and are subject to PAYE. Non-executive directors are unlikely to be covered by the scheme. This is, of course, subject to obtaining the individual directors’ consent.

The calculation of wages for directors should be based on their normal salary only and should not include dividends or other payments made to the director.

Where a company considers that directors should be furloughed, this should be formally adopted as a decision of the company (acting through its board of directors), noted in the company records and communicated in writing to the director.

Where directors need to carry out a duty or other obligation under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the company, the Direction confirms that they may do. This restricts the scope of the type of work significantly from the HMRC guidance originally published and Directors should be very careful to only undertake the limited work outlined above. They should not do any work of a kind that would generate commercial revenue or provide services to or on behalf of their company.

39. Can employees with caring responsibilities be furloughed?

If the employee was on unpaid leave on or before 28 February 2020, or on or before 1 March 2020, please see question 37 above.

The HMRC guidance confirms that those who are unable to work because they have caring responsibilities resulting from coronavirus can be furloughed. However, this has not been clearly replicated in the Directions. The guidance gives the example of employees who need to look after children. The guidance for employees elaborates on this further and states that those who are unable to work (including from home) due to caring responsibilities arising from coronavirus, such as caring for children who are at home as a result of school and childcare facilities closing, or those who are caring for a vulnerable adult in the household, may be furloughed.

The Direction requires that employees must have been instructed to cease work by their employer. There will be some situations where the employer has perhaps instructed an employee to stop work.

However, particularly in cases of childcare issues, the employee may well have themselves informed the employer they will not be attending work and there is, therefore, a risk that those employees may not be eligible for the furlough grant. If you are concerned that your employees may not have received an formal instruction to cease all work (except training) and the unpaid leave did not start before 1 March 2020, then we recommend you send employees an instruction now (please see our furlough letter template which includes all of the requirements). However, we cannot guarantee that such claims would be permitted under the scheme.

There does not appear to be any condition requiring such employees to otherwise be at risk of redundancy.

At all times, the decision to furlough employees is at the employer’s discretion. If an employer considers that the employee can continue to work from home (accepting that the employee’s productivity may be significantly impacted by having children to look after) then there is no obligation to furlough an employee in such circumstances.

40. Can we put someone who is working out a notice period on furlough?

Subject to the normal requirement to obtain the employee’s consent for furlough, there does not appear to be any reason why an employee under notice could not be furloughed, provided that they do not undertake any work during furlough (prior to 1 July). However, obtaining consent in the circumstances may be more difficult than with other employees.

Employers would also need to consider that the employee may be eligible to receive full pay during their notice period regardless of the agreement to furlough, under the provisions in the Employment Rights Act 1996. We recommend that legal advice is sought before applying furlough to an employee on notice.

The ability to furlough may also depend on the reason for termination. An employee whose reason for termination is resignation/conduct/capability may not be able to be furloughed under the scheme while working their notice period, as to do so may not be consistent with the aims of the scheme. Employers should be aware that claims for reimbursement, in respect of employees that are furloughed during their notice periods, may not succeed.

41. Can agency workers be furloughed?

Employment businesses with agency workers paid through PAYE can access the scheme. The current guidance states that furlough should be agreed between the agency, as the deemed employer, and the agency worker, although it would be advised to discuss the need to furlough with the end-user too.

End-users do not employ agency workers and therefore they would not be able to furlough agency workers. If the end-user terminates the assignment of the agency worker then the employment business may want to place the agency worker on furlough. Agency workers should perform no work for, through or on behalf of the agency that has furloughed them whilst they are furloughed, including for any of the agency’s clients.

42. What happens if an employee is sick during furlough? Do they continue to receive their salary or SSP?

The HMRC guidance states that an employee who is furloughed, and subsequently becomes ill, must be paid at least SSP and the guidance suggests that it is a matter for the employer to decide whether to move the employee onto SSP or keep them on furlough (maintaining ability to reclaim through CJRS). There, therefore, seems to be no reason why an employer would decide to move a furloughed employee onto SSP where they become sick during the period of furlough, doing so would prevent the employer being able to reclaim through the CJRS. Potentially, there could be claims for disability, age and/or pregnancy discrimination if an employee is self-isolating based on medical guidance because of a disability, their age or pregnancy (and is therefore receiving only SSP), but employees performing the same role who have remained in work are furloughed.

43. What happens to annual leave that has been booked during a period of furlough? What about bank holidays that fall during furlough periods?

The HMRC guidance states that annual leave (which includes bank holidays where these form part of annual leave entitlement) can be taken during the furlough period and this does not break furlough or prevent the subsidy being claimed for that period.

However, annual leave must be paid at the normal rate of pay. As a result, where employees take annual leave during furlough, the employer must top up pay (at least for the statutory minimum holiday entitlement, further advice on this point can be obtained from your legal advisor) but is likely to be able to cover the majority of the holiday pay costs from the CJRS subsidy payments. Many employers would, therefore, see this as preferable to employees accruing large amounts of annual leave to be taken after furlough ends and/or having to meet the full costs of pay in lieu of accrued holiday on termination of employment (for example where redundancies may follow periods of furlough).

Rather ominously the guidance adds “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.” Therefore, there is scope for this element of the guidance to change.

The Government published further guidance on 13 May 2020 to confirm that employers can require employees to take annual leave during the furlough period and that the notice periods for doing so remain the same as for employees not on furlough. It is certainly possible for employers to use the double notice rule (you can serve notice on the employee to take annual leave and that notice must be double the length of the amount of annual leave you are requiring them to take) to require employees to take annual leave (an existing right under WTR), however, the government guidance suggests that employers should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the employee from resting and enjoying leisure time, which the guidance states as being ‘the fundamental purpose of holiday’. Employees may therefore attempt to argue that it is not reasonably practicable for them to take holiday during a period when restrictions/lockdown is in place, however the guidance on 13 May 2020 notes further on that workers will be able to take annual leave during a period of furlough ‘in most cases at least’.

There may also be employee relations and morale issues if you seek to force employees to use up their holiday during periods when they cannot fully enjoy it due to lockdown restrictions. Certainly an instruction to employees to use their full holiday entitlement for the whole year during periods of furlough, which leaves them no ability to take holiday later in the year, would present a level of risk. We recommend that legal advice is obtained if you are considering compelling employees to use up annual leave entitlement during periods of furlough.

44. What happens if I can’t continue to pay employees until I receive the money from the Government?

Any failure to pay an employee their usual wage (or any agreed reduced rate) on the correct date would constitute an unlawful deduction from wages and the employee could bring a claim for the arrears and/or resign and claim constructive unfair dismissal.

The Government is offering temporary Coronavirus Business Interruption Loans through the British Business Bank, which should be available to small and medium-sized businesses. Employers are likely to be expected to take advantage of this and/or other measures put in place by the Government to assist businesses prior to receiving a grant, rather than considering making redundancies in the interim. It is likely that any such redundancies could be considered to be unfair.

Alternatively, employers could try to agree with employees that they will be furloughing them and that they will be paid when the funds are received from HMRC (i.e. an agreed variation to pay date). This would not amount to a valid waiver of a claim for unlawful deductions from wages but employees may understand the employer’s position and not bring claims.

It is not clear from the Direction whether deferring employees’ pay in this way could affect eligibility to claim under the Scheme and, therefore, there could still be risk with agreeing with employees that pay will be deferred until payments are received from HMRC.

45. Can furloughed employees claim a statutory redundancy payment?

Employees who are furloughed are not dismissed or made redundant.

Employees who have been laid off or placed on short-time working are eligible to apply for a statutory redundancy payment if they meet certain conditions (for example if they have two or more years’ service and have been laid off without pay for four or more consecutive weeks or six or more non-consecutive weeks in any thirteen week period). We await further information on whether furloughed employees would be able to resign and claim a statutory redundancy payment in similar circumstances, but we suspect that this is unlikely, because the provisions around short-time working only apply if the employee is receiving less than 50% of their usual week’s pay.

46. Can furloughed employees claim a statutory guarantee payment?

Statutory guarantee payments are payments potentially available to those employees who have been laid off or subject to short-time working. They can apply where an employee receives less than 50% of their normal weekly pay in a week. Employees can claim up to five days’ payment in a three-month period from their employer. The Statutory Guarantee Payment is currently £29 per day. We understand that furloughed employees are unlikely to be able to claim a statutory guarantee payment because they will be receiving the alternative more generous payments under the Job Retention Scheme, but we await clarity on this point.

In any event, contractual remuneration (which will include furlough pay) can be set off against an employer’s liability to pay a statutory guarantee payment, and equally any statutory guarantee payments made to the employee will go towards discharging an employer’s liability to pay contractual remuneration in respect of the same period. Therefore, even if an employee could argue that they are entitled to receive statutory guarantee payments during furlough, it will not make any financial difference.

47. Can we furlough a pregnant employee or an employee on maternity or other family related leave? What are employees on maternity, paternity, adoption, shared parental and statutory parental bereavement leave entitled to?

It is possible to furlough an employee who is pregnant or any of the family leave outlined above, unless the employee is in receipt of maternity allowance rather than SMP, in which case she cannot be furloughed until she has given eight weeks’ notice of an earlier return from maternity leave and that notice has expired.

Otherwise, it is possible to continue with furlough while an employee is also simultaneously on maternity (or other types of family leave) leave, but the employer can only reclaim any enhancement contractual payments and not the minimum payment of statutory maternity pay etc. Employees who are already on maternity leave, or due to go on maternity leave, can do so in the usual way, they remain entitled to maternity leave and pay (provided they would have qualified as usual). The government has confirmed that furlough cannot affect the compulsory maternity period (two weeks in most cases, four weeks if they work in a factory or workshop) following the birth.

They can be on furlough until the date that they would commence the family leave. At that point, a woman on maternity leave would be entitled to their statutory maternity pay (90% of their average weekly earnings in the first six weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate, provided they meet the eligibility criteria) and maternity leave in the usual way. Depending on the contract, they may be eligible for enhanced company maternity pay. As above, the guidance (30 April) confirms that average weekly earnings may need to be calculated differently where an employee has been furloughed and then started their family-related leave on or after 25 April 2020.

Although the Government has imposed a deadline of 10 June for new entrants to the furlough scheme, it has agreed to an exception to the deadline for parents on statutory maternity and paternity leave and other family leave. However, it is important to note that this will only apply where they work for an employer who has previously furloughed employees (please see question 1).

It is possible to make an employee redundant while she is on maternity leave (although the termination would not bring the SMP entitlement to an end, if eligible she remains so for the whole SMP period).

If you offer enhanced (earnings related) contractual pay to women on maternity leave, this is included as wage costs that you can claim through the scheme.

The same principles apply to contractual adoption, paternity, statutory bereavement leave or shared parental pay.

48. Do employers still have to meet the National Living Wage/National Minimum Wage if the employee is furloughed?

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working. Furloughed workers are not working and therefore must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required to, for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

49. What happens if a fixed-term contract is due to expire during furlough?

The guidance confirms that those on fixed-term contracts can be furloughed, and that contracts can be renewed or extended during the furlough period without breaching the terms of the scheme, provided this is done before the contract expires and provided that the contract did not start and end between 28 February and 19 March. An employer cannot claim under the scheme once the contract has expired.

If an employer is considering terminating a fixed-term contract during or after a period of furlough, we recommend that legal advice is sought to evaluate the potential risks of claims for unfair dismissal and/or for the less favourable treatment of fixed-term employees.

50. Can an employee who is furloughed by one employer take a new job with another employer while furloughed?

Yes, if it is permitted by the contract of employment. The updated guidance states that employees are allowed to work for another employer whilst they are on furlough. The guidance for employees states that employees will need to be able to return to work for the employer that has placed them on furlough if that employer decides to end the furlough, and the employee must also be able to undertake any training required by the original employer during the furlough. In accordance with the guidance on employees not undertaking work for the furloughing employer during furlough, it appears that a furloughed employee cannot undertake work for a company linked to or associated with the furloughing employer (see above). Any activities undertaken during furlough must be in line with the latest PHE guidance.

An employee with more than one job (where they validly held both jobs prior to being furloughed) may be furloughed by one employer while remaining at work for the other employer. If they are furloughed by multiple employers, they can receive their furlough payments from each employer and the 80% of normal wage up to £2,500 monthly cap applies to each job.

If an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer/s should not re-employ them, put them on furlough and claim for their wages through the scheme.

51. How do we make a claim?

Once you have obtained the consent of employees to place them on furlough and confirmed this in writing, you will need to provide the following information to HMRC:

• Your ePAYE reference number;
• The number of employees being furloughed;
• The names, national insurance numbers and payroll/work numbers of the employees being furloughed;
• The employer’s Self-Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference or company registration number;
• The claim period (start and end date);
• The amount claimed (per the minimum length of furloughing of three weeks);
• The employer’s bank account number and sort code;
• Your contact name; and
• Your phone number.

The employer will need to calculate the amount they are claiming.

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.

HMRC cannot provide employees with details of claims you make on their behalf. HMRC asks employers to keep their employees informed, answering any questions that they might have, and to ask them not to contact HMRC.

HMRC retains the right to retrospectively audit all claims and fraudulent claims could result in criminal proceedings being considered. The portal opened on 20 April 2020 at 5:30am. The first payments are to be made to employers on 30 April 2020. HMRC will aim for payments to be made within 4-6 working days of submission of the data.