Flexible Furlough and the Coronavirus Job Retention Scheme - Updated 06 November 2020
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Flexible Furlough and the Coronavirus Job Retention Scheme Updated 06 November 2020
CONTENTS
The Job Retention Bonus Scheme postponed 3 18 oliday accrual and pay for furloughed workers
H
without fixed hours 11
The Coronavirus Job Retention Scheme extended 3
19 Requirement to take Holiday During Flexible Furlough 12
01 Extended period 3
20 Bank holidays during Flexible Furlough 12
02 Employer eligibility 3
21 nder Flexible Furlough can employers negotiate
U
03 Employee eligibility 4
reduced pay to apply in respect of worked hours? 13
04 Rehiring employees to place them on furlough 4
22 Voluntary work during Furlough 13
05 Details of CJRS Extension 4
23 Training during Furlough 13
06 Furlough Agreements 5
24 Disciplinary and Grievance Procedures during Furlough 14
07 JRS Claims for Claim periods from
C
25 F urloughed employees working as Union or Employee
1 November 2020 5
Representatives 14
Guidance on the Coronavirus Job Retention Scheme
26 Redundancy Consultation during Flexible Furlough 14
for claim periods from July to 31 October 2020 6
27
Notice pay and Statutory Redundancy Pay where
08 Flexible Furlough 6
notice given during flexible or full furlough 15
09 Tapering of the CJRS 6
28 mployees that were rehired by their employer after
E
10 losure of CJRS to New Entrants for claim period
C 28 February and placed on furlough 16
to 31 October 2020 6
29 Statutory Parental Leave following flexible furlough 16
11 he claim process for flexible furlough claims
T
30 Employees with more than one job 16
under the CJRS 7
31 mployees who have had multiple employers over
E
12 Reference salary/wages under the CJRS 9
the last year 16
13 Benefits in Kind and Salary Sacrifice Schemes 9
32 Employees who may be furloughed under the CJRS 17
14 Record keeping requirements 10
33 Shielding Employees 17
15 Correction of Errors made when Claiming 10
34 Employees with caring responsibilities 17
16 The Flexible Furlough agreement 10
35 Apprentices 17
17 hat about employees who are vulnerable due
W
36 ompany directors who are on the PAYE payroll
C
to being at greater risk of serious illness should they
of their company 18
contract coronavirus, including those who are currently
in the “extremely clinically vulnerable” category but 37 Company directors with an annual pay period 18
who are no longer advised to shield in England and
Northern Ireland from August 2020? Can they be
required to return to work under flexible furlough? 11
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 2CONTENTS
Employees may be placed on flexible furlough or The Job Retention Bonus Scheme
full furlough under the Coronavirus Job Retention
Scheme where this is “to continue the employment of
postponed
employees in respect of whom the CJRS claim is made Due to the extension of the CJRS to 31 March 2021, the Job
whose employment activities have been adversely Retention Bonus, which was a financial incentive for employers
affected by the coronavirus and coronavirus disease, to retain staff after the CJRS was due to come to an end, will
or the measures taken to prevent or limit its further not be paid in February 2021. HMRC has stated that a retention
transmission”. incentive will be introduced in future ‘at the appropriate time’.
This factsheet sets out guidance on the Coronavirus Job
Retention Scheme (CJRS) which applied to claim periods The Coronavirus Job Retention
from July 2020 to 31 October 2020. It also provides
guidance on the extension to the CJRS across the UK
Scheme extended
from November 2020. This factsheet was last updated on
6.11.20. 01 Extended period
The HMRC guidance on the CJRS which applies for claim
The CJRS, which was due to end on 31 October, was originally
periods from 1 July to 31 October 2020 is as follows:
extended for one month until 1 November. On 5 November, the
– Guide for employers to check if they can claim under Chancellor announced the extension of the CJRS until 31 March
the CJRS; 2021. The outline of the extended CJRS period to 31 March
– Guide for employees to the CJRS; 2021 is set out by HMRC in a policy paper: https://www.gov.
– Guide for employers to check which employees they uk/government/publications/extension-to-the-coronavirus-
can put on furlough to use the CJRS job-retention-scheme/extension-of-the-coronavirus-job-
– Guidance for employers on steps to take before retention-scheme. A further Treasury direction and new HMRC
calculating your claim using the CJRS guidance is expected in light of the extension of the CJRS,
– Guidance for employers to calculate how much you can following which, this factsheet will be further updated.
claim using the CJRS
The extension to the CJRS applies to all eligible employers and
– Claim for wages through the CJRS
employees in all 4 nations of the UK, although the extension to
– Reporting payments in PAYE RTI from the CJRS
the CJRS has been introduced as a financial measure in light of
– Examples of how to calculate your employees’
the lockdown in England.
wages, national insurance contributions and pensions
contributions
– Example of how to calculate the amount you should
claim for an employee who is flexibly furloughed 02 Employer eligibility
The Treasury issued a third direction on 25 June 2020
UK employers are eligible for the extended Scheme provided
which sets out the legal basis for the CJRS from July 2020
they have a UK bank account and UK PAYE schemes. However,
to 31 October 2020: https://assets.publishing.service.gov.
the Government “expects that” publicly funded organisations
uk/government/uploads/system/uploads/attachment_
will not use the scheme, as has already been the case for CJRS,
data/file/895778/Further_Treasury_Direction_made_
but partially publicly funded organisations may be eligible
on_25_June_2020_under_Sections_71_and_76_of_the_
where their private revenues have been disrupted.
Coronavirus_Act_2020.pdf
HMRC has stated that it will publish details on 10 November
The Job Support Scheme, which was originally scheduled
2020 of which employers can claim the CJRS grant under the
to start on 1 November, has now been postponed until the
extended CJRS scheme.
extension of the CJRS ends. A separate factsheet on the
postponed Job Support Scheme, which provides guidance
on the new Scheme which will eventually replace the
Coronavirus Job Retention Scheme (furlough) after the
CJRS extension comes to an end on 31 March 2021, is
available on the Hub.
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 3CONTENTS
03 Employee eligibility they were employed on 23 September and notified to HMRC
on an RTI submission by that date. Of course, there is no legal
Unlike claim periods to 31 October, the CJRS is now open to obligation to do so. Rehiring an employee in this circumstance
new entrants. To be eligible for the extended CJRS, employees will generally break continuity of service for the purpose of
must have been on an employer’s PAYE payroll by 23:59 on future eligibility for a statutory redundancy payment (i.e. they
30 October 2020. Further, a Real Time Information (RTI) would need to accrue 2 years’ service from the date of rehiring
submission notifying payment for that employee to HMRC must to be eligible for a further statutory redundancy payment, if
have been made at some point between 20 March 2020 and 30 made redundant in future). However, employees may retain
October 2020. continuity of employment for other purposes (such as the right
to bring an unfair dismissal claim in future). Where employers
Neither the employer nor employee needs to have previously
are concerned about employees retaining continuity of service,
used the CJRS to be eligible for furlough from 1 November
a minimum 2-week break in employment prior to re-hiring is
2020.
advised.
The same category of employees can be furloughed under the
CJRS extension as under claim periods to 31 October 2020.
These include employees who cannot attend work because they
are required to shield, employees who are unable to work due
05 Details of CJRS Extension
to the lack of availability of childcare and employees who are
For claim periods running to January 2021, furloughed
unable to work due to measures as a result of the coronavirus
employees will receive 80% of their current salary for hours
pandemic.
not worked up to a maximum of £2,500.
As previously, the CJRS is not intended for short-term sick
Employers will be required to cover National Insurance and
absences. However, where employers want to furlough
employer pension contributions. For the average claim, this
employees who are currently off sick, they are eligible to do so.
accounts for 5% of total employment costs. This means that
Furloughed employees who are unable to work due to sickness the extended scheme is more generous for employers than
incapacity, must be paid at least Statutory Sick Pay (SSP). it was in September and October (i.e. it mirrors payments
As under the CJRS previously, it is up to employers to decide available under the CJRS in August). The Government will
whether to move these employees onto SSP or to keep them on review this arrangement in January 2021 to decide whether
furlough, at their furloughed rate. economic circumstances are improving enough to ask
employers to contribute more to employees’ wages in respect
of the unworked hours.
04 Rehiring employees to place them on When claiming the CJRS grant for furloughed hours, employers
will need to report and claim for a minimum period of 7
furlough consecutive calendar days.
If employees were on the employer’s payroll on 23 September As before, employers will be paid upfront to cover wages
2020 (i.e. notified to HMRC on an RTI submission on or before costs, except for a ‘short period’ at the outset, which is to
23 September) and were made redundant or stopped working allow HMRC time to change the legal terms of the scheme and
for the employer after that date (regardless of the reason for update its systems. During this short period, employers will
termination i.e. not only redundancy), they can also qualify for have to bear the cost of paying furloughed employees and will
the CJRS as extended if the same employer re-employs them. then receive payments in arrears for that period.
Similarly, an employee who was on a fixed term contract and The Government has stated that it will confirm shortly when
on the PAYE payroll on 23 September, and whose contract claims can first be made in respect of employee wage costs
expired after 23 September can be re-employed and claimed during November via an updated claims service, but there will
for, provided that the other eligibility criteria are met. be no gap in eligibility for support between the previously
announced end-date of CJRS and this extension to the CJRS.
This means that where, for example, employers have already
made employees redundant in anticipation of the furlough
scheme coming to an end on 31 October, employers can choose
to rehire those employees and place them on furlough provided
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 4CONTENTS
06 Furlough Agreements 07 CJRS Claims for Claim periods from
As before, subject to agreement, employees can be fully or
1 November 2020
flexibly furloughed as before. Please refer to our template
The closing date for claims up to and including 31 October is
full and flexible furlough agreements available on the Hub,
30 November 2020, using existing CJRS guidance.
which can be used both for new entrants to the CJRS following
its extension and for employees that have been previously All employees on an RTI submission on or before 19 March
furloughed. We also have a template letter to extend a period 2020 will be able to use the CJRS calculations as applied in
of furlough. Where employers have already agreed short-time August 2020 for determining reference pay and, in respect
working with employees under the Job Support Scheme in of flexible furlough, for calculating usual hours. Please refer
anticipation of its introduction in November, employers will to the below guidance (under the sections headed, ‘The claim
need to provide updated agreements to those employees, process for flexible furlough claims under the CJRS’ and
which is likely to be a new or extended furlough agreement. ‘Reference salary/wages under the CJRS’) on the calculation
This will replace any agreement for short-time working under that applies for claim periods to 31 October and which applies
the Job Support Scheme. to those employees.
To be eligible for the CJRS grant, employers must have For new employers claiming and new employees hired between
confirmed to their employee (or reached collective agreement 20 March 2020 and 30 October 2020 HMRC will update the
with a trade union) in writing that they have been furloughed or reference pay and usual hours to take account of the period
flexibly furloughed. covered by the extension.
Employers must: For employees on fixed pay employed on or after 20 March
2020, the last pay period prior to 30 October 2020 provides
– make sure that the agreement is consistent with
the basis for calculation. For employees on variable pay or
employment, equality and discrimination laws
hours, employed after 20 March, the average of tax year 2020
– keep a written record of the agreement for 5 years
to 2021 up to the start of the furlough provides the basis for
– keep records of how many hours their employees work and
calculation. HMRC has stated that full details of the calculation
the number of hours they are furloughed (for example, not
for those employers/employees will be published in guidance
working), for 6 years
on 10 November 2020.
The employee does not have to provide a written response.
Employers will be able to claim the CJRS grant from 8am on
Any flexible furlough or full furlough agreement made Wednesday 11 November 2020. From that date, claims can be
retrospectively that has effect from or after 1 November made:
2020 will be valid for the purposes of a CJRS claim as long as
– in respect of an employee for a minimum 7 day claim
it is made according to the conditions above. However, only
window
retrospective agreements put in place up to and including the
– in advance
13 November 2020 may be relied on for the purposes of a CJRS
– in arrears for the period from 1 November 2020 to 11
claim.
November 2020, from the week commencing 9 November
2020
Claims relating to November 2020 must be made by 14
December 2020. Claims relating to each subsequent month
should be submitted by day 14 of the following month. The
closing date for claims up to and including 31 October remains
30 November 2020.
Grants payments are anticipated 6 working days after the first
claims.
Agents who are authorised to do PAYE online for employers
will be able to claim on their behalf.
HMRC has stated that further guidance on how to claim will be
published on 10 November 2020.
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 5CONTENTS
Guidance on the Coronavirus Job – During September 2020, HMRC paid 70% of wages up to
a cap of £2,187.50 per month for the hours the employee
Retention Scheme for claim periods does not work. Employers will pay employer National
from July to 31 October 2020 Insurance and pension contributions and 10% of wages
(i.e. up to £312.50 per month) to make up 80% of the
The rest of this factsheet sets out the guidance to the CJRS employee’s normal wages up to a cap of £2,500.
as applied to claim periods from July to 31 October 2020, – During October 2020, HMRC paid 60% of wages up to a
prior to the extension of the CJRS. cap of £1,875 per month for the hours the employee does
not work. Employers paid employer national insurance
contributions and pension contributions and 20% of wages
08 Flexible Furlough to make up 80% of the employee’s normal wages up to a
cap of £2,500 per month i.e. the employer was required to
Since 1 July 2020, employees have been permitted to return contribute up to up to £625 per month.
to work on reduced hours, with the employer being able to – From November 2020 to January 2021, the CJRS is
claim the CJRS grant for their wages in respect of their normal extended on the same terms as applied in August. During
hours not worked. Employers cannot claim via the CJRS for November 2020, HMRC will continue to pay 80% of wages
employees’ wages for the periods when they are carrying out up to a cap of £2,500 per month under the CJRS. However,
work. Under the previous rules of the CJRS, until 30 June 2020, employers need to pay employer National Insurance and
employees were required to cease all work for a minimum pension contributions. The government estimates that for
period of 21 days as a condition for employers claiming their the average CJRS claim, this represents 5% of the gross
furloughed wages under the CJRS. employment costs the employer would have incurred had
the employee not been furloughed.
Employers are required to submit details of the usual hours an
employee would be expected to work in a CJRS claim period
(based on the number of hours the employee was contracted
for at the end of the last pay period ending on or before 19
10 Closure of CJRS to New Entrants for
March 2020) and the actual hours worked, or hours which claim period to 31 October 2020
will be worked, to HMRC. When claiming the CJRS grant for
furloughed (unworked) hours, employers will need to report As set out above, for the month of November, the CJRS has
and claim for a minimum period of a week in most cases. been extended to employees and employers who have not
previously used the CJRS. Until the change in rules in November
It is also open to employers to keep employees fully
2020, the CJRS was closed to new entrants who had not been
furloughed.
previously furloughed for the minimum 3-week period in any
Since July, there has no longer been a requirement to keep period prior from 1 March to 30 June 2020, with the following
employees on full furlough for a 21-day minimum period, such exceptions:
that employees may be rotated on and off furlough for any
Parental Leave New Entrant Exemption
period, thus avoiding the flexible furlough scheme calculations,
where this full furlough rotational pattern meets staffing Parents that were on statutory maternity and paternity
requirements. leave, adoption leave, shared parental leave and parental
bereavement leave who returned to work from leave were
eligible to be furloughed for the first time under the CJRS
09 Tapering of the CJRS after the 10 June cut-off date. This meant that employers who
had not furloughed employees on statutory parental leave
During July, employers were not required to contribute towards previously are not prevented from doing so after 10 June 2020.
furloughed wages. For the periods when employees were on This was provided that:
furlough and not working throughout July, as with previous
– the employer had previously submitted a claim for any
claim periods, employers were able to claim 80% of normal
other employee in their organisation in relation to a
wages up to a cap of £2,500 per month as well as employer
furlough period of at least 3 consecutive weeks taking
National Insurance and auto enrolment pension contributions
place any time between 1 March 2020 and 30 June;
for the hours the employee does not work.
– the employee the employer wished to furlough for the
– During August 2020 HMRC continued to pay 80% of wages first time started maternity, shared parental, adoption,
up to a cap of £2,500 per month under the CJRS. However, paternity and parental bereavement leave before 10 June
employers need to pay employer National Insurance and and had returned from that leave after 10 June; and
pension contributions.
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 6CONTENTS
– the employee was on the employer’s PAYE payroll on or The number of employees an employer could claim for in any
before 19 March 2020 and an RTI submission notifying claim period could not exceed the maximum number they have
payment in respect of that employee to HMRC was made claimed for under any previous claim submitted under the
on or before 19 March 2020 CJRS rules as applied for the period to 30 June 2020 (although
employees returning from any family leave or military reservist
TUPE New Entrant Exemption
returners or who transfer under TUPE and are then placed on
Employers were eligible to claim under the CJRS for employees furlough i.e. the new entrant exemptions, were excluded from
they had inherited via a TUPE transfer or where the PAYE this “high-watermark number” count).
business succession rules apply to the change in ownership,
Employers must include all furloughed staff in one claim even
where those employees transferred after 10 June 2020,
if they are paid at different times. Employers can submit a
provided that:
claim up to 14 days before the end of the relevant claim period.
– the employees being claimed for had previously had a claim However, employers will need to adjust the claim next time,
submitted for them by their prior employer in relation to if the worked hours differ to those provided for in the claim,
a furlough period of at least 3 consecutive weeks taking resulting in an over-claim. Where the actual worked hours
place any time between 1 March 2020 and 30 June result in an under-claim, employers will need to contact HMRC
to obtain advice. HMRC, therefore, recommends that employers
In these circumstances, the maximum number of employees
do not claim until they are sure of the exact number of hours
that the new employer could claim for was the total of both:
their staff will have worked during the claim period.
– the maximum number of employees the new employer
HMRC has set out some examples of how to work out claim
claimed for in any one claim ending on or before 30 June
periods in the following guidance: (https://www.gov.uk/
– the number of employees that were being transferred to
government/publications/find-examples-to-help-you-work-
the new employer which had a claim submitted for them
out-80-of-your-employees-wages/examples-of-how-to-
in relation to a furlough period of at least 3 consecutive
work-out-80-of-your-employees-wages-national-insurance-
weeks taking place any time between 1 March 2020 and
contributions-and-pension-contributions)
30 June. This was subject the maximum cap the previous
employer was subject to. There is an online calculator for making a claim under the
flexible furlough scheme:
Military Reservists New Entrant Exemption
https://www.tax.service.gov.uk/job-retention-scheme-
Military reservists who had been in active service during the
calculator/
coronavirus outbreak and who returned to work after 10 June
2020 but who had not previously been furloughed, could The online calculator gives a detailed breakdown of
be placed on furlough for the first time after 10 June 2020, calculations for each pay period for the employer’s (or their
provided that they worked for an employer who has previously agent’s) records.
furloughed employees.
The calculator cannot be used for employees who:
– Have returned from statutory leave such as maternity leave
11 The claim process for flexible furlough in the last 3 months
– get director’s payments
claims under the CJRS – have been transferred under TUPE
– have been employed at separate times throughout the year
As set out above, we await details of when claims can first
– receive employer pension contributions outside of an auto-
be made in respect of employee wage costs during November
enrolment pension scheme
under the extended CJRS, via an updated claims service.
In these cases, the claim will need to be worked out claim
An employee is fully furloughed if they do not do any work for
manually using the HMRC calculation guidance.
their employer during the claim period.
The three main steps employers will need to take when making
Where employees do return to work on reduced hours under
a flexible furlough claim are to:
flexible furlough, employers will need to work out how many
hours each employee usually works and offset this from the 1. Decide a claim period (claim periods must be a minimum of
number or hours they have been furloughed under the new 7 days and a maximum of 1 month, except where claiming
flexible furlough scheme. for fewer than 7 days at the beginning or end of the month,
as claim periods must be within the same month);
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 7CONTENTS
2. Calculate an employee’s worked hours and furloughed – The average hours worked in the 2019-20 tax year; or
hours; and – The number of hours worked in the same calendar period in
3. Calculate the employee’s reference salary for furloughed the 2019-20 tax year.
hours.
To work out the usual hours for each pay period (or partial
Employers who are claiming for 100 or more employees can pay period) based on the average number of hours worked in
download an Excel spreadsheet template and upload this when the tax year 2019 to 2020 for employees whose hours vary,
they make the claim. employers are required to:
1. Claim period 1. Start with the number of hours actually worked (or on paid
annual leave or flexi-leave) in the tax year 2019 to 2020
Employers will need to determine the length of their claim
before the employee was furloughed, or the end of the tax
period (the number of days for which they are claiming the
year if earlier.
CJRS grant). Claim periods can be a minimum of seven days
2. Divide by the number of calendar days (i.e. including non-
(in most cases) and a maximum of one month. The guidance
working days) the employee was employed by the employer
says that employers should choose a period that matches their
in the tax year 2019 to 2020, up until the day before they
payroll.
were furloughed, or the end of the tax year if earlier.
Employers can make a claim before, during or after running
When calculating the number of calendar days at step 2,
payroll. Claims can be made up to 14 days before the end of
employers should not count any calendar days where the
a claim period. Claims should not be made until employers
employee was on a period of:
know exactly how many hours a flexibly furloughed employee
will work. Claim periods cannot run over into a new month. For – statutory sick pay related leave
example, if an employer wishes to claim for a period from 28 – family related statutory leave
July to 8 August, there will need to be two claim periods: 28 – reduced rate paid leave following a period of statutory sick
July to 31 July and 1 August to 8 August. In such cases, a claim pay related leave
period can be shorter than the minimum seven days. – reduced rate paid leave following a period of family related
statutory leave
2. Calculating worked hours and furloughed hours
3. Multiply by the number of calendar days in the pay period
If an employee is flexibly furloughed, employers will need to
(or partial pay period) the employer is claiming for.
calculate how many hours they worked and how many they
were furloughed. This is done by reference to an employee’s This number, rounded up to the next whole number, is the
‘usual hours’. The method of calculating ‘usual hours’ is set employee’s ‘usual hours’.
out in the HMRC guidance as follows: https://www.gov.uk/
Once ‘usual hours’ have been calculated, the employer deducts
guidance/steps-to-take-before-calculating-your-claim-using-
the number of hours worked in the claim period to arrive at the
the-coronavirus-job-retention-scheme#usual-hours
number of furloughed hours.
For employees with fixed hours (hours set out in the contract)
The example giving in the HMRC guidance is of an employee
the starting point is the number of hours they were contracted
who works 10 hours in the period 22 July 2020 to 28 July
to work in the last pay period before 19 March 2020.
2020. During this period they would usually work 37 hours:
A worked example of the full calculation for an employee who
Start with 37 (the employee’s usual hours)
is flexibly furloughed who works fixed hours can be found here:
Subtract 10 (the number of hours the employee actually
https://www.gov.uk/government/publications/find-examples-
worked in the claim period)
to-help-you-work-out-80-of-your-employees-wages/example-
of-a-full-calculation-for-an-employee-who-is-flexibly- The employee is therefore furloughed for 27 of their 37 usual
furloughed hours.
For employees whose hours vary (i.e. those with no contractual Some employers have preferred to use working days in the
fixed hours and Government guidance which was updated in work pattern at step 2, rather than calendar days to save
August states this also applies to those that work overtime time. The difference in the calculation result between using
that significantly impacts their pay), the starting point is the calendar days and working days is minimal. However, whichever
higher of: calculation method is used, employers should be consistent
in the method they adopt and are required to retain the
calculations used for 6 years from the date of the claim.
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 8CONTENTS
Calculating the number of working and furloughed hours for 12 Reference salary/wages under the CJRS:
an employee that comes off furlough or flexible furlough
partway through a claim period Past Overtime, Fees, Commission, Bonuses and non-
cash payments and the definition of “non-discretionary”
If the employee stops being flexibly furloughed partway
payments
through a claim period, when calculating the number of
furloughed hours that can be claimed for, employers should: Employers can claim for any regular payments that employers
are obliged to pay their employees i.e. regular contractual
– only calculate the employee’s usual hours up to the last
payments. This includes wages, past overtime worked (prior to
day of furlough, instead of to the end of the claim period;
furlough), fees and compulsory commission payments. These
and
amounts can be claimed for at 80% of their cost subject to the
– not include any working hours after the last day of
£2,500 cap. Where employers are not topping these payments
furlough
up to 100%, as this would amount to a variation of contract,
This applies even if the claim period includes days after the employees’ consent would be required to withhold the full
employee’s last day of furlough (for example, because the payment. However, discretionary bonuses, tips (including tips
employer is claiming for multiple employees and some of them paid through a tronc), commission payments and non-cash
stay on furlough). payments should be excluded.
Employers should use this calculation for any claims from 14 Non-discretionary payments for hours worked, including
September 2020, for an employee who stops being flexibly overtime, can be claimed under the CJRS. These include regular
furloughed partway through a claim period. contractual payments made for non-discretionary overtime,
fees, commission or piece rate payments; or regular non-
Evidence that can be used to determine usual hours for
discretionary payments made in recognition of the employee
employees without fixed hours
undertaking additional responsibilities (so, for example would
Where the employee’s pay varies by the amount of time include “acting up” payments), or payments made due to the
worked, employers have been required under legislation, time the duties are undertaken (so, for example, would include
which applies from April 2019, to set out the number of hours shift payments).
worked on their employees’ payslips. Payslips showing the
These are payments which employers have a contractual
number of hours will be evidence of the usual hours worked for
obligation to pay and to which the employee has an
the tax year 2019 to 2020.
enforceable right. The guidance states that variable payments
Other pay records suggested in the HMRC guidance include specified in an employee's contract that are always paid should
time sheets or similar records which show time worked. Where also be treated as non-discretionary and included in the CJRS
these aren’t available, employers may refer to other records, claim.
such as rotas or work diaries. In the absence of such records,
Payments for overtime worked are non-discretionary when
employers may use the pay rate to work back from gross pay.
the employer is contractually obliged to pay the employee at
3. Calculate the employee’s reference salary a set and defined rate for the overtime that they have worked.
This means that overtime that is not guaranteed or which the
Once an employer has calculated worked hours and furloughed
employer is not obliged to offer will be non-discretionary and is
hours they must work out 80% of the employee’s reference
to be included in the CJRS claim where the employer is obliged
salary.
to pay for the overtime once it is worked at a specified rate, as
An employer must then multiply this figure with the number of is invariably the case.
furloughed hours divided by the employees’ usual hours. This
gives the figure the employer can claim from HMRC.
There are a number of worked examples of flexible furlough
13 Benefits in Kind and Salary Sacrifice
claims in the HMRC guidance for employees who work variable Schemes
hours, including where an employee has been on a period of
adoption leave: The reference salary for claiming under the CJRS should
not include the cost of non-monetary benefits provided to
https://www.gov.uk/government/publications/find-examples-
employees, including taxable Benefits in Kind. Similarly,
to-help-you-work-out-80-of-your-employees-wages/
benefits provided through salary sacrifice schemes (including
examples-of-how-to-work-out-80-of-your-employees-wages-
pension contributions) that reduce an employee’s taxable
national-insurance-contributions-and-pension-contributions
pay should also not be included in the reference salary (the
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 9CONTENTS
reference salary is the post salary-sacrifice amount as of when making the new claim. A record of this adjustment should
19 March 2020). Where the employer provides benefits be kept for 6 years. If not making another claim, claimants can
to furloughed employees, this should be in addition to the contact HMRC to obtain a payment reference number to make
wages that must be paid under the terms of the CJRS (to the the payment.
extent these contractual payments are not validly varied as a
Where employers have overclaimed a grant and have not repaid
temporary variation of contract).
it, they must notify HMRC by the latest of either:
All the grant received to cover an employee’s subsidised
– 90 days after the date you received the grant you were not
furlough pay must be paid to them in the form of money. No
entitled to;
part of the grant should be netted off to pay for the provision
– 90 days after the date you received the grant that you were
of benefits or a salary sacrifice scheme. In other words, the
no longer entitled to keep because your circumstances
lower, post salary sacrifice salary, should be used for the
changed; or
purposes of a claim under the CJRS and the employer must
– 20 October 2020
pay any ongoing benefits, including through a salary sacrifice
scheme, itself, unless these benefits are contractually varied. Where employers do not do this, under new legislation, they
may have to pay a penalty where HMRC determines that the
Normally, an employee cannot switch freely out of a salary
wrongful claim is a result of deliberate and concealed conduct
sacrifice scheme unless there is a 'life event’. HMRC agrees
rather than an “innocent error”. Where an overclaimed grant
that the coronavirus epidemic counts as a life event that
is repaid in accordance with the above dates, this will prevent
could warrant changes to salary sacrifice arrangements, if the
any potential tax liability in respect of the overpayment of
relevant employment contract is updated accordingly i.e. where
Coronavirus Job Retention Scheme.
the salary sacrifice scheme is varied as a temporary variation of
contract in accordance with the employee’s agreement. Guidance on penalties under the CJRS is available here: https://
assets.publishing.service.gov.uk/government/uploads/system/
HMRC guidance on salary sacrifice schemes, which includes
uploads/attachment_data/file/904535/CC-FS48.pdf
guidance on changing the terms of a salary sacrifice
arrangement is available here: https://www.gov.uk/guidance/ Where an error has resulted in an underclaimed amount, the
salary-sacrifice-and-the-effects-on-paye claimant should contact HMRC to amend the claim: https://
www.gov.uk/guidance/if-youve-claimed-too-much-or-not-
enough-from-the-coronavirus-job-retention-scheme
14 Record keeping requirements
Employers must keep a copy of all claim records for 6 years,
including:
16 The Flexible Furlough agreement
– the amount claimed and claim period for each employee The guidance for employers states that employers wishing
– the claim reference number for the employer’s records to flexibly furlough employees will need to enter into a
– the calculations used in case HMRC needs more “new written agreement” with them. The flexible furlough
information about the claim agreement can last any amount of time; it can be open-ended,
– usual hours worked, including any calculations that were or employers may decide to include a fixed end date. The
required, for employees that are flexibly furloughed Treasury Direction makes it clear that the agreement needs to
– actual hours worked for employees that are flexibly be notified in writing. From an employment law perspective, to
furloughed avoid a breach of contract and potential claims where a flexible
furlough working arrangement is a variation of contract,
Additionally, the flexible furlough agreement must be retained
employers will need to obtain employees’ agreement to the
for 5 years, in case HMRC makes an enquiry.
flexible furlough arrangement and confirm the agreement
in writing, as a temporary variation of contract. A template
flexible furlough agreement is available on the Hub.
15 Correction of Errors made when Claiming
Employers can make provision for changes to be made to
Where errors made in a claim have resulted in an overclaimed working patterns/hours to be worked and furloughed hours
amount, the overclaimed amount must be paid back to HMRC. in one document, which provides for the flexibility, rather
In any future claims the overclaimed amount can be offset than needing to enter into new, separate flexible furlough
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 10CONTENTS
agreements with their employees each time the working Pregnant women can, subject to the findings of their risk
pattern changes. However, it is advisable for employers to assessment, continue to travel to and attend their workplaces.
confirm any changes to working patterns envisaged by the Where the risk assessment concludes that it would not be
flexible furlough agreement in writing (e.g. by separate safe for her to do so and there is no suitable alternative work
letter or email notification) and retain copies of the written available for her that enables social distancing, the employee
notification, in case of any subsequent HMRC enquiry or will need to be suspended on full pay (any reduced furlough
employee dispute. pay would need to be topped up by the employer in this
circumstance).
The flexible furlough agreement must be retained for 5 years,
in case HMRC makes an enquiry. Similarly, where a risk assessment for a clinically vulnerable
employee indicates that the ‘Covid secure’ measures cannot
reasonably be implemented and the employer instructs
them not to attend work for that health and safety reason,
17 What about employees who are arguably the employer would need to suspend them on full
vulnerable due to being at greater risk pay, or keep them on furlough. Whilst Government guidance
on the Coronavirus Job Retention Scheme is silent on use
of serious illness should they contract of the CJRS for those who are clinically vulnerable but not
coronavirus, including those who are shielding, employers may wish to agree with those employees
that they continue to be fully furloughed where there is no
currently in the “extremely clinically alternative employment that enables social distancing and the
vulnerable” category but who are no longer risk assessment indicates that they should not return to work
and they cannot work from home. Conversely, where the risk
advised to shield in England and Northern assessment indicates that it would be safe for them to return
Ireland from August 2020? Can they be to work but the employee refuses to do so, the employee
would not be entitled to pay. An unreasonable refusal to attend
required to return to work under flexible work would amount to unauthorised absence, which may be
furlough? addressed under the employer’s disciplinary procedure.
Clinically extremely vulnerable employees have been strongly
They can be asked to return to work provided that their
advised not to work outside the home during the period of
workplace is “COVID secure” on the basis that they are no
lockdown in England from 5 November, so should not be
longer required to shield from August 2020 in accordance
required to attend their workplace during this period. They
with public health advice; although people who can work
should continue to work from home where possible. They may
from home should continue to do so. As with other clinically
be furloughed or may be entitled to SSP where they cannot
vulnerable employees (including pregnant employees), they
work from home during this period.
should be offered the option of the safest available on-site
roles, enabling them to stay 2 metres away from others, or
1 metre with risk mitigation where 2 metres is not viable
(please refer to the factsheet on Coronavirus Health and Safety 18 Holiday accrual and pay for furloughed
Guidance for Employers). If social distancing cannot reasonably
be implemented, employers are required to carefully assess
workers without fixed hours
whether this involves an acceptable level of risk.
Employees and workers continue to accrue statutory holiday
Where employees have a disability under the Equality Act whilst the contract remains in place. There is no requirement
2010, the employer will have certain legal duties towards under the Working Time Regulations 1998 that workers
them, including the duty to put in place any reasonable actually carry out work in order to accrue statutory holiday,
adjustments required. Flexible furlough may assist in this such that statutory holiday still accrues during furlough
regard, where the reasonable adjustment required is to the where the contract continues. However, some contracts may
employee’s hours of work or shift pattern. Employers may provide, for example, that workers accrue holiday according
also be required to conduct risk assessments to assess any to hours actually worked, typically at 12.07% of each hour
particular risks to their health in returning to the workplace worked (i.e. there is no overarching contract between periods
due to their vulnerability. Employers may require occupational of work, so that holiday stops accruing when the worker stops
health or GP advice in relation to the employee to assist in working, including during furlough). The 12.07% method does
assessing the risks and identifying the measures required. not derive from statute and as such it is not legally binding.
However, it can be used as a helpful and simple method
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 11CONTENTS
by which to calculate holiday entitlement for workers on furlough, they would need to give written notice of double the
temporary casual hour contracts or for casual staff who have length as the amount of holiday employees are required to take
no contract between each assignment who work irregular hours (please see the template ‘Notice Requiring Employee to take
(please, however, see our factsheet on Holidays, as the Court of Annual Leave During Furlough’). Where an employee is flexibly
Appeal has ruled that a pro rata formula does not comply with furloughed, any hours taken as holiday during the claim period
statute for calculating holiday pay for ‘term time’ workers). should be counted as furloughed hours rather than working
hours. Employees should not be placed on furlough for a period
Unfortunately, statute does not provide for a method of
simply because they are on holiday for that period. Doing so
holiday accrual for workers without fixed working hours; it
would be an abuse of the CJRS and HMRC may later claw back
simply provides that all workers are entitled to 5.6 weeks’
the grant paid in this circumstance. Employees may however
holiday (with the exception of the first and final year of
take holiday, or be required to take holiday during any period of
employment, where that entitlement is pro-rated in accordance
full furlough or flexible furlough. Government guidance states
with the proportion of the year worked). Accordingly,
that employers should exercise caution in serving notice on
employers may wish to determine a sensible reference period
employees to take their 4-week statutory annual leave during
where statutory holiday continues to accrue during furlough,
furlough where any restrictions the worker is under, such as
or where employers are prepared to agree that it does. For
the need to socially distance or self-isolate, would prevent the
example, employers may decide to base this on ‘usual hours’
worker from resting, relaxing and enjoying leisure time, which
worked on average in the last financial year by adopting the
is the fundamental purpose of holiday under the European
method used for determining ‘usual hours’ under the flexible
Working Time Directive, where furloughed employees may be
furlough scheme for workers without fixed hours, although
unable to benefit from this. With the easing of the lockdown
employers should bear in mind that this method does not
and the change in public advice around shielding, employers
have any statutory basis. Holiday pay for statutory holiday
can afford to be less cautious when requiring employees
for workers without fixed hours is calculated over a 52-week
to take annual leave in terms of whether this may breach
reference period working backwards from the date of holiday,
the purpose of holiday under the Working Time Directive.
excluding any weeks during which no remuneration is received.
Employers should however address any objections that may
Holiday pay in respect of the 4-week holiday entitlement
arise due the employee’s individual circumstances, to maintain
under the Working Time Directive should be based on ‘normal
trust and confidence and good employee relations.
remuneration’, which can include overtime, commission and
standby payments, but may exclude reduced furlough pay or
statutory payments such as statutory sick pay, where this is
not the employee’s ‘normal remuneration’. Employers can pay
20 Bank holidays during Flexible Furlough
basic salary to employees for the additional 1.6 weeks’ holiday
Employers should confirm to employees how bank holidays
under the Working Time Regulations and for any additional
will be treated during furlough. Where an employee has a
contractual holiday.
contractual entitlement to paid bank holidays (i.e. where their
Employers may wish to nominate a period which will be paid contract of employment specifies that bank holidays are part
as holiday during furlough, or agree this with the employee of their annual holiday entitlement), employers will need to
(including where employers still carry out the practice of pay holiday pay, rather than reduced furlough pay for bank
operating ‘rolled up’ holiday pay). Holiday pay should be shown holidays that fall during a period of furlough. As taking holiday
separately on the employee’s payslip. does not break the furlough period, employers can continue to
claim the 80% grant from the government to cover most of the
cost of holiday pay. Where an employee is flexibly furloughed
then any hours taken as holiday during the claim period should
19 Requirement to take Holiday During be counted as furloughed hours rather than working hours.
Flexible Furlough Employers will need to top up the CJRS grant in respect of
statutory holidays that coincide with a period of furlough (and
Employers may wish to encourage employees to take their in respect of contractual holiday, where this has not been
holiday during the unworked periods of flexible furlough for renegotiated). The principle is that pay received by a worker
operational reasons where possible. This could be agreed while they are on statutory holiday should reflect what they
informally, provided this still ensures employees are able to would have earned if they had been at work and working. This
take their full holiday entitlement. Where employers require includes bank holidays that make up the employee’s statutory
employees to take statutory holiday during (unworked) flexible holiday entitlement.
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 12CONTENTS
Where an employee usually works bank holidays, these days pre-negotiated full pay during flexible furlough (up to the
can be paid at the furloughed rate in accordance with the £2,500 cap) for unworked hours, but a reduced salary rate
furlough agreement. when working. However, where the potential alternative is
redundancy and as employers are generally not obliged to keep
Where employers do not wish employees to take authorised
employees on furlough, this may persuade employees to accept
or contractual holiday during for any reason, e.g. because of
a pay cut.
temporary cashflow issues where employers are required to
top up furloughed wages, or because of an upturn in work, Employers are entitled to receive at least the National
employees should be given written notice to cancel the Minimum Wage rate for work carried out during flexible
holiday by giving notice equal to the length of the holiday, furlough or for compulsory training. This will need to reflect
e.g. a day’s notice to cancel a day’s bank holiday (although the April 2020 increase in the National Minimum Wage/
employers are of course advised to give more notice where National Living Wage rates (although furloughed wages do not
possible). Employers must ensure this is done in accordance reflect this increase).
with the implied duty of mutual trust and confidence by giving
clear business reasons for the cancellation in the notification.
Employers must still ensure that employees receive their 22 Voluntary work during Furlough
statutory holiday entitlement for the year (including where
bank holidays make up employees’ statutory holiday A furloughed employee can take part in volunteer work during
entitlement), by giving lieu days to be granted at some other hours they are on furlough as long as it is for another employer
time to avoid a breach of the Working Time Regulations 1998. or organisation.
The Working Time (Coronavirus) Amendment Regulations 2020
permit the carry-over of any untaken Working Time Directive
leave (i.e. the 4-week basic statutory entitlement) where it 23 Training during Furlough
was not reasonably practicable for the employee to take it in
the leave year "as a result of the effects of the coronavirus". In Furloughed employees can engage in training during unworked
those circumstances the employee may carry over any of the hours when they are recorded as being on furlough, provided
4-week basic statutory annual entitlement to the next leave that the training does not provide services to, or generate
year and for up to 2 years from the end of the annual leave revenue for, or on behalf of their organisation or a linked or
year to which it relates. associated organisation. HMRC guidance states that furloughed
employees should be encouraged to undertake training.
Unfortunately, the guidance does not provide examples as to
21 Under Flexible Furlough can employers when training would fall within the scope of the permitted
training under paragraph 36.2 of the Treasury Direction under
negotiate reduced pay to apply in respect of the terms of the CJRS i.e. when the training is not directly
worked hours? providing a service to the employer or generating revenue for
the employer. However, it is our view that, for example, training
Furloughed pay is calculated according to the CJRS rules and staff on new “covid-secure” health and safety workplace
cannot be renegotiated, although employers may agree to top measures would be permitted under the CJRS, provided they
this up. However, employers are free to negotiate pay with are not required to carry out work in implementing those
employees under their existing contracts of employment in measures, which would go further than training.
respect of working hours in accordance with employment law
The Education Secretary has appealed to businesses to
considerations. Any existing agreement to reduce salary will
encourage their furloughed employees to use The Skills Toolkit,
continue to apply during flexible furlough for worked hours.
which are free online courses, to improve their knowledge,
Please see our factsheet on Varying Contracts of Employment
build their confidence and support their mental health during
for guidance on this. For example, employees may agree to
the coronavirus outbreak. These courses focus on digital and
take a 10% pay cut, including on a temporary basis, in order
numeracy skill development, as previous research indicates
to avoid potential redundancies. In doing so, employers may
that these are the key skills that employers require.
wish to offer to honour current pay rates in the event that
does not successfully avoid the need to make compulsory Where training is undertaken by furloughed employees during
redundancies and redundancies subsequently take place within hours they are on furlough, at the request of their employer,
a specified set period, as a negotiating tool. The existence of they are entitled to be paid at least their appropriate national
the CJRS may mean that employees are reluctant to agree to minimum wage for this time. In most cases, the furlough
a salary reduction where they would be getting 80% of their payment of 80% of an employee’s regular wage, up to the
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 13CONTENTS
value of £2,500, will provide sufficient monies to cover – it's possible to get hold of all the evidence needed for the
these training hours. However, where the time spent training investigation or hearing, for example records or files that
attracts a minimum wage entitlement in excess of the furlough are kept in the office
payment, employers will need to pay the additional wages. – any witness statements or other evidence can be seen
clearly by everyone involved during an interview or hearing
Please note the increase in the NMW rates which applied from
and provided in advance where appropriate
April 2020, although the NMW increase will not be reflected in
– it will be possible to fairly assess and question evidence
the reference salary for the CJRS claim as the reference salary
given by people interviewed during a video meeting
predates the April increase in the NMW for most claims.
– it's possible for the person under a disciplinary
investigation or who raised a grievance to be fairly
accompanied during the hearing
24 Disciplinary and Grievance Procedures
The guidance is available here: https://www.acas.org.uk/
during Furlough disciplinary-grievance-procedures-during-coronavirus
The Acas Code of Practice on disciplinary and grievance
procedures still apply during the coronavirus pandemic. This
includes while social distancing and lockdown measures are in
25 Furloughed employees working as Union
place. Please refer to our factsheets on Disciplinary Hearings or Employee Representatives
and Appeals – Fair Procedure and Grievance Hearings and
Appeals – Fair Procedure which set out what a fair procedure Government guidance confirms that whilst on furlough,
should include. employees who are union or non-unions (employee)
representatives may undertake duties and activities for the
ACAS has published guidance on disciplinary and grievance
purpose of individual or collective representation of employees
procedures during the coronavirus pandemic. The previous
or other workers. However in doing this, they must not
version of the ACAS guidance stated that participants in a
provide services to or generate revenue for, or on behalf of
disciplinary or grievance process should only participate on
your organisation or a linked or associated organisation. This
a voluntary basis during furlough, but this guidance has now
means that it will not be a breach of furlough for a colleague
been revised. The guidance now states that where employees
to accompany their colleague during a disciplinary, grievance or
are on furlough they can still raise a grievance or take part in a
redundancy consultation meeting on an individual basis; or act
disciplinary or grievance investigation or hearing, provided that
as an employee or trade union representative, including during
HMRC's guidance on the Coronavirus Job Retention Scheme is
a TUPE consultation or a collective redundancy consultation
followed.
meeting. Whilst the government guidance does not address
During the coronavirus pandemic, these procedures must this point, it would not be a breach of furlough for an employee
be carried out in a way that follows public health guidelines to participate in a disciplinary, grievance, redundancy or
around social distancing and the closure or phased re-opening TUPE consultation process whilst they are on furlough as it is
of certain workplaces. If all those involved in the procedure extremely unlikely that, in doing so, the employee would be
can go to the workplace, the employer should firstly consider provided services to or generating revenue for, or on behalf
whether a face-to-face hearing can be safely arranged and of the employer or an organization linked to the employer.
ensure that the employee's chosen companion can also attend Employers may, for example, need to commence a redundancy
the meeting in person if the employee wishes. Video meetings consultation process or serve notice of redundancy with
may need to be used for any investigation interviews and employees who are on furlough and the CJRS rules do not
hearings if a procedure is carried out remotely, as long as the currently prohibit this. Employees may continue to be paid their
procedure is still fair and reasonable. furloughed wages (subject to payment of the minimum NMW/
NLW) during consultation periods.
Where remote meetings are arranged it is important to
consider if:
– everyone involved has access to the technology needed for 26 Redundancy Consultation during Flexible
video meetings, for example the necessary equipment and
internet connection
Furlough
– anyone involved has any disability or other accessibility
Employers may need to start planning for redundancies where
issues that might affect their ability to use video
certain roles are at risk or where the extension of the CJRS
technology, and whether any reasonable adjustments
to the end of November 2020 will not prevent redundancies.
might be needed
Employers who are proposing to make at least 20 employees
Flexible Furlough and the Coronavirus Job Retention Scheme | Updated 06 November 2020 | 14You can also read
