be capable of processing 450,000 claims per hour. The system will be self-assessment and will
operate 24/7, but there will be 3,500 support staff available to help companies make their claim.
Payments will be made by BACS within 4-6 days. Companies will select a claim start date and this
may be backdated to cover the period from 1 March 2020 providing you have evidence to support
this date. Enforcement and audit will be post hoc through PAYE returns – there will be an employee
hotline to report employers breaching furlough and requiring work to be undertaken. Criminal
sanctions for companies knowingly committing fraud will be put in place.
We anticipate that further guidance may still be forthcoming and this note will be updated as a
result. New items are in bold. The information is correct as at 11 April.
• The scheme is designed to help employers who cannot maintain their current workforce
because operations have been severely affected by coronavirus.
• It allows companies to retain their current staff but also to re-recruit staff whom they had
previously laid off or made redundant or who have recently left the company
• You can use the scheme at any point during the initial 3-month period (note it may be
longer) – this means you can make a decision about furloughing some people now and add
others to furlough as circumstances change. Minimum furlough period is 3 weeks
• PAYE will continue to be recorded and paid through furlough – as will Apprenticeship Levy
payments – but you may request a deferment of tax payments due to COVID19
• Open to all UK employers of whatever size – including charities and public sector - provided
the company and payroll were in existence on 28 February 2020
• Companies must also have a UK bank account and have enrolled for PAYE online (note this
may take up to 10 days). If you do not have a e-PAYE account, you should register now
• Employees hired after 28 February cannot be furloughed and claimed for and employees
should have been on the payroll by that date.
• Furloughed workers can be on any type of employment contract include full, part time,
agency and flexible or zero hours contracts
• You can either make use of a pre-existing furlough clause in your contract or can write to
your employees now to set out the proposals for how you intend to use the furlough
provisions and to seek their agreement. You are allowed to make other changes to contract
terms and conditions as part of a furlough arrangement
• Where a company is operating under administration, the administrator will be able to access
the scheme, but only if there is a reasonable likelihood of rehiring the workers
• A new employer is eligible to claim under CJRS in respect of employees of a previous
business transferred after 28 February if either the TUPE or PAYE business succession rules
apply to the change of ownership
• The scheme will also apply where a group of companies have multiple PAYE schemes and
there is a transfer of employees to a new consolidated PAYE scheme after 28 February
Who is covered?
• If you made employees redundant or they stopped working for you on or after 28 Feb, you
can reemploy and furlough them and claim for their wages through the scheme
• The scheme is only for employees who are not working – if the employee is working on
reduced hours or reduced pay, they are not eligible and will need to be employed normally
• Employees with more than one job can be furloughed for each job or continuing working on
other jobs and the cap applies to each employer
• Note, to be eligible an employee may not undertake any work for the either the
organisation itself or a linked or associated undertaking. If there are critical business tasks
which need to be undertaken, then these must be passed to another employee.
• A furloughed employee can take part in volunteer work provided it does not provide
services to or generate revenue for your organisation or associated organisation. Your
organisation can agree to find new work or volunteering opportunities while on furlough
• Employees on fixed term contracts can be furloughed and their contracts extended or
renewed during furlough without breaking the rules of the scheme
• The scheme can also include company directors or senior members of staff providing they
are also not working. As a director, you may continue to fulfil statutory duties without
breaching the no-work provisions. Providing they are paid by PAYE, the scheme also applies
to office holders, LLP members, agency workers and limb workers
• Employees on unpaid leave cannot be furloughed unless leave started after 28 February
Sickness & Maternity/Parental Leave
• Statutory rights continue to apply during furlough and the normal rules apply for
maternity and other forms of parental leave and pay. You may claim through the scheme
for enhanced (earnings related) contractual pay for employees who qualify
• If employers want to furlough employees for legitimate business reasons and they are
currently off sick, they are eligible to do so, as with other employees. In these cases, the
employee would no longer receive sick pay and would be classified instead as furloughed
• You may claim SSP and CJRS for the same employee but not for the same time period
• When returning from leave claims are made against contracted salary or equivalent
earnings not pay received while on statutory leave
• Furloughed employees should be encouraged to undertake training and you may make
materials available to them providing it doesn’t provide services or generate revenue
• Apprentices can be furloughed and can continue to train whilst furloughed but you must pay
them at least the appropriate NMW for the time they spend training. There is additional
guidance on the continuing and pausing of apprenticeships
• If individuals want to undertake on-line training in their own time they may do so, but if they
are required to do so then you must make sure that they are paid at least NMW/NLW for the
time spent in training even if this is more than 80% of salary
• Unless your employment contracts already have a furlough provisions within them, there is
a formal requirement to consult with your workers and seek their agreement to the proposal
to furlough them and the terms on which they are furloughed. There are no minimum
timescales but you should get their agreement in writing. A template letter is available here
• You should record your decisions about who to offer furlough to and write formally to your
employees to confirm your furlough proposals. This will include making changes to their
employment contract by agreement if necessary eg reduced hours or pay. You must keep
these records for 5 years. If staff do not agree, then you may need to consider redundancy.
• There are no set consultation timescales and processes, but where sufficient numbers are
involved, you may need to engage collective consultation process to secure changes in
contracts. You will need to demonstrate that in taking a decision to furlough you have
followed equality and discrimination laws if only certain workers have been selected.
• Workers may be placed on furlough for a minimum of 3 weeks – this will allow you to rotate
workers during prolonged closure or if you have part of your business still operating
• Claims are made from the date the employee finishes work and starts furlough - not the
date the decisions was made - or when they were written to confirming furlough status
Work out what to claim
• You will make a claim for wage costs through an online portal and receive a grant from
HMRC to recover 80% of usual monthly wage costs, up to £2,500 a month, plus Employer
NIC and minimum pension contribution (max 3% of qualifying earnings)
• You will be able to submit 1 claim at least every 3 weeks, which is the minimum length an
employee can be furloughed for. You should make your claim in accordance with actual
payroll amounts at the point at which you run the payroll or in advance of an imminent
payroll and you must pay the employee all the grant you receive for their gross pay.
• The claim will be for a total amount of the grant and workers will continue to be paid
through the payroll to provide an audit trail
• An employer can choose to top this up but is not obliged to. If you do top up, you are liable
for the employer NIC and pension on the top up element.
• For full and part time salaried employees, you use the actual salary before tax as of 28 Feb
• For variable hourly paid staff, you can use either the same month’s earnings from the
previous year or average monthly earnings from the 2019/20 tax year, whichever is higher.
If the employee has been employed for less than 12 months you can claim an average of
their monthly earnings since they started. If an employee only started in February 2020, use
a pro rata of earnings to date.
• You can claim for any regular payments you are obliged to pay your employees. This
should include past overtime and compulsory payments. You should therefore review
carefully your contracts and formal arrangements with staff to determine earnings.
• Discretionary bonuses, including tips and non-cash payments should be excluded and the
cost of non-monetary benefits such as taxable benefits in kind, salary sacrifice schemes
and pension contributions which reduce taxable pay should not be included in the
reference salary. HMRC has determined that COVID19 is a life event that could allow
employees to freely opt out of a salary sacrifice scheme providing the employment
contract allows this
How to claim
• If you use a payroll agent authorised to act for you for PAYE purposes, they may make a
claim on your behalf. If they use a file only agent, then you will need to claim yourself
• To claim you need your e-PAYE/payroll works/Corporation Tax/Company Registration no,
number of employees being furloughed together with their names and NI numbers, start
and end date of the claim period (the earliest date you have furloughed anyone from to
end of the April payroll run as you may claim for imminent payrolls as well as ones past),
total amount claimed, bank account and contact details
• You make the claim using the amounts in your payroll - HMRC will retrospectively audit all
aspects of your claim so you must keep records – and must pay the employee all of the
grant you receive for their gross pay. No admin charge, fees or costs of employment may
be deducted aside from income tax and student loan deductions
Frequently Asked Questions
Q. Do I need to furlough all my staff?
No, the decision will be yours to make and will depend on whether you are wanting to
continue to provide reduced services. You may choose to furlough only part of your team
and leave a skeleton staff working reduced hours, particularly where there are necessary
tasks to carry out.
Q. Am I required to furlough staff which have left?
A decision to furlough must be agreed between employers and employees. You can agree to
reemploy someone who has previously been made redundant or stopped working for your
employer after 28 February – and Government is encouraging this – but a decision will be
dependent on the individual circumstances of the company.
Q. When will the online portal be set up and when will I receive my first payment?
The portal will open for initial claims on 20 April. Businesses will be able to register online
and submit a self-assessment claim for a gross payment covering salaries, employer NICs and
minimum pension payments. The first payments will be made via BACS 4-6 days after the
claim is submitted.
Q. Are staff who were taken on after 1 March covered?
The guidance makes clear that staff who were hired or contracted after 28 February are not
covered by the scheme and staff should be on the payroll on that date. It also states that
staff who were hired or contracted before that date are eligible to be furloughed providing
there is evidence to support this.
There is nothing to stop you from retaining staff who were taken on after 1 March and
putting them on unpaid leave or reduced or no pay to provide them with certainty about
their job at the end of the crisis, but you may not make a claim to recover their salary or
employment costs. This measure will simply protect their job and ensure that they are
retained by you. These workers would still be eligible for enhanced UC and housing benefit
Q. I have a number of staff who were hired and contracted before 28 February but only
started work 1 March – are these staff covered?
The guidance refers clearly to contracted or hired by 28 February so if you have previously
had seasonal staff on the payroll prior to 28 February and have a clear audit trail to
demonstrate that they had been contracted and had started working, then they may be
capable of being furloughed. You should carry out detailed due diligence and seek advice
Q. Do I need to ensure that staff are not working when they are furloughed? What about
You need to make sure that any staff you furlough are not undertaking any work for you
during the period, but an employee may have multiple jobs and may be furloughed by all
employers or only some. The fact that an employee remains working for another employer
during a furlough period will not invalidate your furlough claim. They may also seek an
additional job with a different employer during the furlough period, providing your
employment contract allows.
Q. Is there a means testing which would be applied?
No, the furlough scheme is not subject to any form of means testing – any worker at any
level who is unable to work and would otherwise lose their job is capable of being
furloughed and you will be able to recover 80% of their salary up to a maximum of £2,500
pcm. The only requirement relates to them being employed
Q. How is existing salary to be calculated?
For salaried workers, you will claim for 80% of salary as at 28 February 2020. For variable or
zero hours workers, the payment will be 80% of an average of wages paid over the last
financial year (April 2019-March 2020), or average monthly earnings since they started, if
they have been employed for less than 12 months. If an employee only started in February
work out a pro rata of earnings so far and claim 80%
Q. If staff receive a regular guaranteed tronc or service charge through PAYE, should this be
There is no absolute answer to this, and it will be dependent on the arrangements you have
in place through your contracts of employment and the way in which your service charge
and tronc payments are structured and contracted. The guidance explicitly excludes tips and
any discretionary payment, however it is paid, but allows any regular, monthly payments
which are either subject to obligation or contractual agreement, made and taxed through
the payroll to be used to calculate pay. This suggests that service charge and some form of
tronc payments may be included provided they meet the requirements of being regular,
obligated or compulsory payments. Schemes which only pay out on a discretionary basis or
for tips should be excluded
Tips and service charges are not the same thing, a point accepted and supported in existing
HMRC guidance. Service charge re-distribution are contractually considered to be part of
salary. In line with existing UK and European case law when service charges are paid by
customers to the business they become the legal property of the business, and when – by
whatever method – they are then received by employees they are classified as earnings
from employment as defined in law. In the case of service charge, these earnings will be
subject to a contractual arrangement and there will be a guaranteed minimum amount paid
irrespective of attendance – it is paid throughout holiday and sickness – or performance.
Q., What about individuals who have been on sick pay, SMP or otherwise not working full
time over the calculation period – is there an alternative mechanism to be used?
The guidance makes clear that you would use normal salary or normal average pay rather
than the amounts paid should an employee only be in receipt of statutory pay
Q. Does holiday entitlement continue to accrue throughout the furlough period?
The guidance makes no reference holidays during furlough. Unless you specifically amend
contractual elements as part of the furlough agreement and letter – for example requiring
accrued holiday to be taken - they will continue to accrue throughout the furlough period.
The Government has extended the period unused holiday may be rolled over to 2 years.
Q. Will tax, NI and pension still be deducted from furloughed worker payments?
The payment to the employee must be made through the payroll and therefore subject to
the normal tax deductions. Your employees may wish to opt out of any pension deductions
made under auto enrolment but unless they do, this should also be deducted. So you claim
for gross salary and pay out net to them. You are able to claim back the employer NI and
pension contribution. Income tax remains payable.
Q. Am I supposed to pay my staff ahead of the rebate being received in April?
Unfortunately, the timing of the scheme going live will case a problem for businesses and
staff which operate a weekly payroll and there will be a delay with this initial payment being
received. Going forward, the guidance makes reference to the fact that you may make a
claim ahead of an imminent payroll, but there seems to be no provision for making a weekly
claim – we are confirming. There is no requirement for you to make payment in advance
providing you amend your contract terms. It may be possible for you to propose to your staff
that they move to monthly or fortnightly payroll during the furlough period, but we
appreciate that this will be challenging for many individuals.
Q. What other help will government make available to bridge the gap between pay and
process of claim?
When operational, the scheme should provide a rapid process and payment of claims and is
designed to be paid ahead of an imminent month end payroll. The challenge comes from
weekly payroll. Other than seeking worker agreement to change this, some companies may
receive cash grants through the business rates system (premises of less than £51k RV receive
£25k grant for each such premises) and the business rates holiday and VAT deferment as
well as potential rent deferment may help manage this in April. Otherwise commercial
lending or CBIL/CLBIL may be required to ease cashflow and allow payments to be made in
Q. What information will need to be submitted to claim relief for a specific employee?
To claim, you will need your ePAYE number and other payroll works numbers, corporation
tax or company registration numbers for verification. In addition, you need the number of
employees being furloughed, their names and NI numbers, the claim period (start and end
date), amount claimed, bank account and sort code, contact details. You do not need to
provide specific details of pay per employees, just a gross amount claimed of all furloughed
wages, employer NIC and employer pension contributions and you make the claim on behalf
of the business. HMRC will pay the claim into your bank account by BACS
Q. When can I start my furlough claim from? I had to lay people off and close my business in
advance of government guidance – can I claim for that?
Claims may be backdated to 1 March but you would need to be able to demonstrate that the
business was closed or employees were not working from the date that you choose as your
start date. For the majority of the sector, this will be either 16 or 20 March when social
distancing guidelines were imposed but it would be possible to furlough people from an
earlier date providing you have clear evidence to support this and highlight that they were
laid off or their job was at risk. You should make this date clear in your furlough letter. The
minimum period you then claim for is 3 weeks but you may choose to set a longer furlough –
at the moment the furlough rules will apply for an initial 3 month period, but may be longer
and you may find it more reassuring for workers in closed businesses to set the furlough
period for the initial 3 months March-May
In making your first claim your start date will be the start of the furlough period in March
and is the date on which you confirmed furlough with your employees and you will be asking
for a longer period than the minimum 3 weeks, ending with the date you submit the claim pr
the imminent April payroll date. You will need to calculate wages and wage costs over this
period. For subsequent claims it will be for 3 weeks from the date you make your last claim.
We are checking to see whether for subsequent claims the HMRC portal will facilitate weekly
Q. Can I move a worker in and out of furlough to allow a rota for reduced production of
delivery and takeaway?
Yes, you can, but the rota must be a consecutive 3 week one as the minimum period of time
a worker may be furloughed is a consecutive 3 weeks. For businesses choosing to operate at
reduced levels, if they reduce all staff hours or reduced working days, they will be unable to
furlough them at all or even for the reduced part and will need to continue paying the
employee through payroll.
Q. I had to lay staff off during March – can I now take them back on?
Yes, the guidance makes clear that staff made redundant due to COVID 19 can be reemployed and then furloughed. For these staff, their employment will be deemed to be
continuous and any employment costs paid during this period recovered. We are clarifying
the details of how staff laid off without pay should now be reimbursed and whether
salary/wages which would have been paid if they had been retained may be recovered and
passed on to them, but we assume that this will be the case as this is the intent of the new
scheme and legislation.
Q. Can furloughed workers volunteer for activities?
Yes, workers undertaking voluntary activities or duties during furlough eg helping out NHS,
social care, local government, retail and delivery would not invalidate their furlough.
Q. What happens if an employee has booked a period of annual leave during furlough?
You should make clear provisions regarding the treatment of leave which has already been
accrued or the taking of leave during furlough in the furlough agreement letters. This would
be governed by existing Working Time Regulations and employment law. If, prior to
furlough, an employee had booked a period of annual leave, you may decide to waive this
should you choose. Equally, you could require employees to take a period of obligated leave
at the end of a furlough period and/or during furlough – this is at your discretion.
Q. What happens about maternity leave and pay?
Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work
(4 weeks if they work in a factory or workshop) immediately following the birth of their
baby. This is a health and safety requirement and must be provided for.
Employees who qualify for SMP, will still be eligible for 90% of their average weekly earnings
in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly
earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently
£148.68 a week, rising to £151.20 a week from April 2020. If you offer enhanced earnings
related contractual maternity pay, this is included as wage costs you can claim through the
scheme. The same principles apply where your employee qualifies for adoption, paternity or
shared parental pay
Q. What do I need to do about National Living Wage/National Minimum Wage?
Individuals are only entitled to NLW or NMW for the hours they are working (including
employer-mandated training) and furloughed workers, who are not working, must be paid
the lower of 80% of their salary or £2500 even if, based on their normal working hours, this
would be below NLW/NMW
Q. What about Directors, can they be furloughed?
Yes, providing they are not working (no more than fulfilling directors’ statutory obligations)
directors can be furloughed and will receive the lower of 80% of salary or £,2500 pcm. This
would also apply to owner operators paid through the payroll.
Q. What about post relief – are there conditions/requirement about continuing employment
for furloughed staff after the scheme ends?
No. Noone knows what state the economy will be in at the end of the crisis and there are no
ongoing obligations to provide employment at the end of the process. When the scheme
ends, you will need to make a decision, depending on your circumstances, whether
employees can return to their duties or whether it is necessary to change the term of their
employment or consider redundancy. At that point, normal employment law will cover their
Employees that have been furloughed have the same rights that they did previously in terms
of unfair dismissal, redundancy payments and SSP or parental leave/pay entitlement.
Q. How is this to be enforced?
Employees who are on furlough will be able to raise concerns with ACAS if they believe that
they are not being paid what they are entitled to
Q. What happens at the end of the process?
The scheme will run for an initial 3-month period and may be extended. When the
Government ends the scheme employees can return to their duties or you may need to
consider redundancy. HMRC will process all claims made before the scheme ends.
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