Furlough Detailed Guidance Update: 17.04.20
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Furlough Detailed Guidance
Update: 17.04.20
This ECA guidance note summarises detailed information from Government about
how furlough arrangements under the Coronavirus Job Retention Scheme should
work in practice. It is the third update of previous guidance notes published on 30
March, 9 and 15 April 2020. ECA will continue to update this detailed guidance as
and when further relevant information becomes available.
ECA guidance on furlough under the JRS – updated version
The following ECA guidance note outlines important detailed information about furlough leave under
the Job Retention Scheme (JRS). It incorporates changes and additions made by new information
from Government up to 15 April 2020. Main changes brought about on 4, 9 and 15 April include:
• Concessions and/or clarifications concerning eligibility for furlough for particular groups and in
particular situations (e.g. non-employees and those with caring responsibilities, on unpaid
leave, starting work between 28 February and 19 March, shielding, falling ill during furlough,
and after a TUPE transfer)
• More precise definitions of payments allowable (or not) for JRS grant purposes and the
information employers will require to support a claim
• Confirmation that workers may be transferred between furlough and work multiple times
(although qualified by the minimum three-week duration of any period of furlough).
We have also expanded our FAQ section substantially in this updated version, to reflect questions
submitted to our Employee Relations Helpline and during ECA’s ongoing series of webinars. These
include confirmation of the position on holidays, based on updated ACAS guidance.
1. The Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (JRS) is a Government scheme intended to provide
financial support to employers to continue paying employees – and other PAYE workers –
during the current Coronavirus outbreak. The JRS is scheduled to run for an initial period of
three months (i.e. to the end of May), although the Government may opt to extend it thereafter.
Under the JRS, employers will be entitled to claim 80% of the salary or wages of those who
would otherwise be made redundant or laid off, up to a maximum of £2500 per month.
Employees and other workers covered by the JRS should be ‘furloughed’ – meaning sent
home. It is for each employer to make a judgment about whether to furlough someone
(although note the need for agreement and some measure of fairness in selection below).
12. Government Guidance
The latest version of the detailed Government Guidance on the JRS is available online and is
called Claim for wage costs through the Coronavirus Job Retention Scheme. The Government
last updated this guidance on 15 April 2020 and on the same day issued an official Treasury
direction to HMRC as well, outlining the rules and constraints Government will impose on itself
when processing grant claims under the JRS.
Employers are strongly advised to read through the Government guidance and Treasury
direction in their entirety, but the following picks out what ECA considers the main points.
3. Who can claim
According to the Government guidance, any entity with a UK payroll can make a claim under
the scheme, provided they fulfil the other qualifying conditions (see below). Examples include:
• Businesses
• Charities
• Recruitment agencies (but only for employees and workers paid through PAYE)
• Umbrella companies
• Public authorities
• Administrators (for businesses under administration)
• Individuals (e.g. for domestic workers, such as nannies).
There are three additional qualifying conditions for making a claim under the JRS. These are
that the entity making the claim must have:
a) Created and started a PAYE payroll scheme on or before 19 March 2020 (moved back
from the original cut-off date of 28 February);
b) Enrolled for PAYE online (which can apparently take up to 10 days); and
c) A UK bank account.
4. Employees (and others) you can claim for
The Government guidance states that:
a) The JRS is applicable only to those who were on their employer’s PAYE payroll on or
before 19 March 2020 and notified to HMRC on a Real Time Information (RTI)
submission on or before 19 March 2020 (moved back from the previous cut-off date of
28 February 2020). These can be on any type of PAYE/ employment contract,
including:
2o full-time and part-time employees
o agency workers and ‘limb (b)’ workers (but only if paid through PAYE)
o apprentices
o those with fixed-term, flexible or zero-hour contracts
o officeholders (including company directors)
o salaried members of limited liability partnerships.
Given that it is now clear from the above list that the JRS applies to more than just
‘employees’ in the narrower sense (i.e. those with a contract of employment), for the
remainder of this guidance note we will adopt the broader terms ‘worker’ or ‘PAYE
worker’ unless in a particular context only ‘employees’ in the narrower sense are being
referred to.
b) A business is free to furlough all its PAYE workers or select some individuals for
furlough whilst others continue to work, to suit its own needs.
c) Salary or wages paid to furloughed workers will be subject to PAYE income tax and
national insurance contributions in the normal way.
d) PAYE workers who were previously made redundant at some point between 28
February and 19 March 2020 can be rehired and placed on furlough.
e) PAYE workers who had agreed to take unpaid leave after 28 February may also be
furloughed. Those who started an agreed period of unpaid leave on or before 28
February may also be furloughed, but only after the date on which was previously
agreed they would return from unpaid leave.
f) Workers hired after 19 March 2020 (excluding those rehired as in paragraph d) above,
or covered by TUPE/ PAYE succession/ PAYE consolidation as in paragraph u) below)
may not be furloughed or claimed for under the JRS.
g) The rules on furlough for those who are on sickness absence or self-isolating are
not straightforward and have been modified more than once – most recently in the
updated Government guidance issued on 9 April. The key principles (currently) are:
i. The JRS (which imposes a minimum three-week period for furlough) is not
suitable to cover individuals who are on short-term sickness absence from
work. SSP remains more appropriate in these circumstances.
ii. If, however, an employer has business reasons for furloughing a PAYE worker
who happens to be sick or in self-isolation at the time, then that is acceptable.
In such cases, the worker should be placed on furlough and any entitlement to
SSP will cease.
iii. In cases of long-term sickness absence, employers now have the freedom to
choose whether to keep a worker on sick leave or transfer them onto furlough.
3If the employer chooses the latter, then once again the worker will need to come
off SSP.
iv. Where a furloughed worker falls ill during furlough, then once more the
employer is now given a choice either to transfer the worker onto SSP or keep
them on furlough. The employer can claim back the money paid to the worker
from the Government either under the SSP scheme or under the JRS, but not
both.
h) PAYE workers with caring responsibilities resulting from COVID-19 may also be
furloughed. The Government guidance cites parents needing to look after school-age
children as one example. Another potential example of caring responsibilities could be
someone looking after a dependant who is off sick or self-isolating as in f) above,
although in these cases the Government has previously indicated that SSP is payable.
On balance, it appears that eligibility for furlough may now have been extended to
workers in this situation too, although ECA is currently asking Government for
clarification on this point. In any event, employers are at liberty to take the full range of
caring responsibilities into account when selecting which workers to put on furlough
(see further Section 5 below).
i) The position of those who are ‘shielding’ in accordance with public heath guidance,
or who need to stay at home with someone who is shielding, was finally clarified by
updated Government guidance issued on 9 April 2020. This conceded that such
workers may now be furloughed, although the ultimate decision on whether or not to
do so still rests with the employer (who might opt to keep them working, for example,
if they can undertake work from home).
j) If a worker has more than one PAYE employer, they can be furloughed for each job.
Each job is separate, and the cap applies to each employer individually. Such workers
may be furloughed in one job and receive a furloughed payment, but continue working
for another employer, and receive their normal wages.
k) Those on fixed-term contracts can be furloughed. Their contracts can also be
renewed or extended during the furlough period without breaking the terms of the
scheme. Once a fixed-term ends because it is not extended or renewed, however, the
employer’s right to claim under the JRS will cease.
l) Apprentices may be furloughed, just like other employees. Special measures are now
in place, however, to help ensure that apprentices continue to undertake some
(remote) training activity and maintain contact with their college/ training provider whilst
on furlough (see further FAQ 10). Where a furloughed apprentice undertakes training,
their employer must pay at least the applicable National Living/ Minimum Wage rate,
even if this means topping up their usual rate of pay for furlough.
m) Company directors (including owner-directors of personal service companies) who
receive their remuneration partly through dividends and partly through a PAYE salary
4may be included in a furlough arrangement, but for JRS grant purposes will be credited
only for that portion of their remuneration covered by the salary (i.e. dividend income
will be excluded). Where there is an intention to furlough any company director, this
needs to be formally adopted as a decision of the company, recorded and
communicated. Furloughed directors may continue to perform their statutory duties
under the Companies Act 2006 but should not do work to generate commercial
revenue or provide services to or on behalf of the company (see further FAQ 8).
n) Any furloughing of a PAYE agency worker needs to be agreed in the first instance
between the agency and worker concerned. Government guidance nevertheless
recognises realities by acknowledging that the agency will almost certainly have to
discuss the need to furlough with their end-client as well. Where workers are employed
under PAYE through an umbrella company, it will then be for the umbrella company
and the worker to agree on furlough (although in practice some end-client input is again
likely to be necessary).
o) Furloughed workers may not perform any work for their employer, or for any ‘linked
or associated’ organisation, whilst on furlough.
p) Reduced-hours arrangements are explicitly excluded from eligibility under the JRS.
Employers in these cases will be expected to continue paying the employee through
their payroll and to pay in accordance with the terms of the employment contract,
subject to any variation agreed with the employee (see further ECA’s Alternatives to
Furlough guide). Contrary to many businesses’ practical experience, the Government
guidance suggests using non-furloughed workers as a practical solution to the
challenge of undertaking critical-service-only cover.
q) Furloughed workers are, however, permitted to take part in volunteer work as long as
this work ‘does not provide services to or generate revenue for, or on behalf of their
employer’. Employers may also agree to find furloughed workers new work or
volunteering opportunities whilst on furlough if this is in line with public health
guidance.
Where an employer recruits new workers, it should ensure they complete the starter
checklist form correctly. If they are furloughed from another employment, they should
complete Statement C in the checklist.
r) Furloughed workers may also undertake training whilst on furlough and should be
encouraged to do so by their employer. As with voluntary work, however, such training
should not lead to providing a service to or generating revenue for or on behalf of their
employer. Moreover, whilst undertaking training, workers must be paid at least
the relevant National Living Wage/National Minimum Wage rate for the time spent
training, even if this involves the employer topping up their normal rate of pay during
furlough. ECA is currently running a series of ‘Technical Tuesdays’ webinars which
employers are welcome to recommend to their workforces: see here for further details.
5s) The normal rules for maternity and other forms of family leave will continue to apply
where the employees concerned are furloughed. Employers in these circumstances
can include reimbursement of any enhanced (earnings related) contractual maternity,
adoption, paternity and shared parental pay in any claim under the JRS.
t) According to the Government guidance, all employment rights and entitlements
should continue during a period of furlough: for example, SSP, holiday accrual, family
leave, unfair dismissal and redundancy. Where, however, for furloughed workers who
are not ‘employees’ in the narrower sense – for example, PAYE agency and ‘limb (b)’
workers – then the more limited range of employment rights applicable to this group
(e.g. excluding any rights to unfair dismissal or redundancy) will apply. The
Government guidance insists that apprentice levy payments and student loan
repayments must continue to be made during furlough, although neither is covered
by the JRS grant.
u) The position of employees transferred to a new employer under the TUPE
Regulations or PAYE succession rules after 19 March 2020 was finally clarified by
updated Government guidance issued on 9 April 2020. As an exception to the usual
19 March cut-off date of, the Government has conceded that employees in these
circumstances may now be furloughed by their new employer. The same principle also
applies where a group of businesses has transferred employees into a new
consolidated PAYE payroll scheme after 19 March.
5. Agreeing to furlough
An employer’s decision to select some workers for furlough, but not others, is not subject to
anything equivalent to the legal fairness requirements associated with selection for
redundancy purposes. Nevertheless, the Government guidance warns employers to avoid any
form of discriminatory treatment in breach of UK equalities legislation (i.e., on grounds of age,
race/ ethnicity, disability, sex, sexual orientation, gender reassignment, pregnancy and
maternity or religious/ philosophical belief). Seeking volunteers in the first instance is one
strategy an employer can adopt in order to minimise the risk of resistance or complaints of
unfair treatment.
The Government guidance urges employers to discuss with their staff any changes to the
employment contract and make these changes by agreement. Once a decision has been
finalised, the employer needs to obtain each worker’s agreement to being furloughed. There
is no automatic right to impose furlough on a worker without their explicit consent (see further
FAQ 9 for options when an employee refuses).
Once furlough has been agreed, employers must then write to each affected worker confirming
that they have been furloughed and keep a record of this communication for five years (see
sample letter in the Appendix). In addition, the Treasury direction issued on 15 April suggests
that the written record of the agreement between each employer and worker needs to make
clear that the worker has agreed to cease all work in relation to their employment. If this is not
already clear in the agreements you have entered into with your own workers, then we
6recommend that you write to each furloughed worker immediately stating that ‘in line with the
Treasury Direction issued on 15 April, we are stipulating that during furlough, you have agreed
to cease all work in relation to your employment with us’.
Where furlough is likely to require changes to terms and conditions of 20 workers or more, the
Government guidance indicates that collective workforce or trade union consultation may be
necessary (although see FAQ 7 which explains and qualifies this statement).
6. How much you can claim
Overview
This has been the area most subject to change over the past two weeks. Confusing wording
in the first version issued on the evening of 26 March 2020 had been amended quietly but
substantially by the afternoon of 27 March. This second, improved version established a key
distinction between those with a fixed salary and others whose pay varies. This distinction still
survives albeit modified slightly.
This modification was made on 4 April when the Government shifted position on the inclusion
of some, although not all, additional elements of remuneration into the amount employers can
claim. Whereas before 4 April the guidance was explicit in excluding bonuses, fees and
commission payments in all cases, on 4 April this was replaced by a more nuanced position,
allowing inclusion of most obligatory and monetary payments whilst excluding discretionary
payments and benefits in kind. Unfortunately, a more restrictive approach to bonus payments
now appears to have been reintroduced by the Treasury direction published on 15 April, the
implications of which are considered further below.
Starting date for claims
In theory, it is open to an employer to submit a claim for reimbursement under the JRS dating
back to 1 March. In practice, this is likely to apply only to a small number of workers such as
those who had been made redundant or agreed to be on unpaid leave between 28 February
2020 and 19 March 2020. The vast majority of claims will be for dates after the JRS scheme
was announced on 20th March 2020 as the Guidance states that claims should be started only
from the date that the worker finishes work and starts furlough, not when the decision is made,
or when they were written to confirming their furloughed status.
Calculation based on fixed salary
For full or part-time workers on a fixed salary, the initial calculation of what the employer can
claim under the JRS is reasonably straightforward, consisting of:
• the lower of 80% of the salary before tax, or £2,500 per month, plus
• 3% employer pension contributions on this amount (i.e. based on the statutory
minimum employer contribution under the automatic enrolment rules).
7For JRS grant purposes, ‘salary’ should be that payable to the worker for their last period prior
to 19 March 2020. Recognising, however, that (based on the previous cut-off date for the JRS)
many employers may have derived their calculations on the salary payable as at 28 February
2020, the Government has conceded that this earlier reference point may be used for an
employer’s first claim under the JRS, but not after that.
Although salaried personnel are probably less likely than other workers to receive obligatory
additional payments such as overtime, any such payments may now be included in the above
calculation of ‘salary’ for JRS grant purposes (see below).
Calculation for employees whose pay varies
A different calculation method applies to workers whose pay varies – including hourly-paid
employees whose pay may vary according to the amount of overtime they do week by week.
Other workers likely to fall into the same category are seasonal workers and those who are
remunerated under piecework or measured-work payment systems.
For workers whose pay varies, the initial calculation depends on how long an individual has
been in their present employment, as follows:
a) Where they have been employed for a full twelve months prior to the claim, their
employer can claim for the higher of either the same month’s earnings from the
previous year or average monthly earnings from the 2019-20 tax year.
b) If the worker has been employed for less than a year, their employer can claim for an
average of their monthly earnings since they started work.
c) If the worker started only in February 2020, then their employer should use a pro-rata
for their earnings so far.
Earnings for these purposes may include not only basic wages and overtime, but other
additional payments as well (see below). As with salaried staff, HMRC will also reimburse 3%
employer pension contributions, based on the subsidised furlough pay, on top of the 80%/
£2500 cap.
Additional payments, benefits, etc.
Since 4 April 2020, the Government guidance has included confirmation that employers can
include in their claim for salary or wages under the JRS any regular payments they are obliged
to pay their workers. According to the guidance, this will have the effect of:
• Including: ‘wages, past overtime, fees and compulsory commission payments’; but
• Excluding: discretionary bonus (including tips) and commission payments, non-cash
payments, non-monetary benefits, taxable benefits in kind and benefits provided
through salary-sacrifice schemes.
8On 9 April 2020, the Government added a proviso with regard to salary sacrifice schemes.
This was that COVID-19 counts as a ‘life event’ that could allow an individual to switch freely
out of a salary sacrifice scheme, provided that the relevant employment contract is updated
accordingly.
The Treasury direction issued on 15 April has generated some doubt about the degree to
which any bonus payments at all should be included in a claim for a grant under the JRS.
Rather than sticking to the wording used in the Government guidance cited above (viz.
excluding discretionary bonuses), the Treasury direction introduces a different and potentially
wider exclusion based on the conditionality of payments. In particular, with regard to bonus
payments, it excludes any in which payment to the worker is conditional on:
• the performance of the employer’s business (or any part of it);
• the worker’s own contribution to the performance of the business (or any part of it); or
• other aspects of the worker’s performance of their duties.
ECA can understand why Government might wish to exclude from consideration for JRS grant
purposes earnings from company profit-share, gainshare and/or subjective performance-
related pay schemes. We are less clear, however, why regular payments made in accordance
with objective incentive schemes such as those operated in many areas of construction,
should also be excluded – if that is what the Government means to do here. Unless and until
Government clarifies the position, however, employers operating attendance bonuses, safety
bonuses, price-work, measured-work and other similar schemes should bear in mind the
possibility of HMRC querying the inclusion of such payments in their claims – perhaps as part
of any later auditing process.
JIB member firms should go to the JIB’s Coronavirus information webpage for specific
guidance on how to apply the general principles outlined above to different elements of the
JIB pay and benefits package.
Employees returning from statutory leave
Further Government guidance issued on 9 April 2020 clarified the position of employees
returning from statutory leave including those returning from maternity leave, paternity leave,
shared parental leave, adoption leave, sick leave and parental bereavement leave.
Claims for full-time or part-time salaried employees should be calculated against their salary,
before tax, not the pay they received whilst on statutory leave.
Claims for those on variable pay, returning from statutory leave should be calculated using
either the:
• same month’s earnings from the previous year, or
9• average monthly earnings for the 2019-2020 tax year.
Employer National Insurance and Pension Contributions
The Government guidance confirms that employers should continue to pay employer NICs on
top of the pay of furloughed workers (up to the 80%/ £2500 cap) and that these contributions
will be reimbursable through a claim under the JRS. Together with 3% employer pension
contributions, this takes the total potentially reclaimable under the JRS from £2500 to £2804
gross. These contributions are reimbursable on subsidised furlough pay only.
‘Topping up’
The Government has confirmed that employers may choose to top-up employees’ pay, but do
not have to. Whereas employer NICs and pension contributions will still be payable on this
extra amount these are not reclaimable through the JRS grant.
Whilst top-up may seem a positive gesture in terms of employee peace of mind, financial
stability, and morale, there are also possible drawbacks as follows:
• A potentially negative response from employees who are still being asked to work.
• Financial risk from an open-ended commitment to top up when no-one currently knows
how long the present crisis will continue.
Owing to this final risk, ECA strongly recommends that when furloughing employees,
employers who initially opt to top up include a right to reduce or amend this to the amount in
the Government cap with, for example, a week’s written notice to the employee (see wording
in the sample letter in the Appendix to this guidance note).
National Living Wage/ National Minimum Wage
As furloughed workers are, by definition, not working, the Government guidance indicates that,
for most purposes, employers will not breach minimum wages legislation if the 80% earnings
figure falls below the applicable National Living/ Minimum Wage level.
The one exception already mentioned above is where workers (including apprentices)
undertake training. Here the Guidance is clear that pay received for the time spent training
must be at least in line with the applicable National Living/ Minimum Wage rate. In effect, this
means that the employer will need to top up earnings for this time if workers’ usual pay during
furlough otherwise falls short.
7. What you will need to make a claim
Once systems are set up via PAYE online, the information supplied to HMRC in support of a
claim under the JRS will need to include:
10o The employer’s ePAYE reference number
o The number of workers being furloughed
o Names, national insurance numbers and PAYE/ works numbers for the workers
whom the employer wants to furlough
o The employer’s Self Assessment Unique Taxpayer Reference or Corporation Tax
Unique Taxpayer Reference or Company Registration Number
o The claim period (start and end date)
o The amount claimed (per the minimum length of furloughing of 3 consecutive
weeks)
o The employer’s bank account number and sort code
o The employer’s contact name
o The employer’s phone number.
Additional details specified on 15 April included the following:
• Employers will need to calculate the amount they are claiming. HMRC will retain the
right to retrospectively audit all aspects of a claim.
• Employers with fewer than 100 furloughed workers will be asked to enter details of
each worker they 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), as set out above.
• Employers with 100 or more furloughed staff 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 worker: name,
National Insurance number, claim period and claim amount and payroll/employee
number (optional).
• Employers should retain all records and calculations in respect of their claims.
• HMRC cannot provide workers with details of claims made on their behalf. Employers
are therefore asked to keep their workers informed, answering any questions that
they might have, and asking them not to contact HMRC.
8. Claim
11According to the Government guidance, employers should make their claim using the amounts
in their payroll – either shortly before or during running payroll. It is now understood that claims
can start to be made from 20 April 2020.
Where appropriate, worker’s wages should be reduced to 80% of their salary within the
employer’s payroll before they are paid. This adjustment will not be made by HMRC.
Minimum furlough period
Importantly, from 4 April the Government guidance confirmed that workers may be furloughed
and return to work multiple times – opening the door, for example, to arrangements by which
different workers or groups of workers are rotated between periods of furlough and work (see
further FAQ 3).
Each period of furlough must last a minimum of three consecutive weeks, however. When
workers return to work, they must be taken off furlough until such time as they are re-
furloughed.
9. After you have claimed
Further information set out towards the end of the Government guidance includes the
following:
• Once HMRC concludes that a claim is valid it will pay out the grant for which the
employer is eligible by BACS to the employer’s UK bank account.
• Employers must pay the worker all the grant they receive for their gross pay in the
form of money. Furloughed workers must receive no less than 80% of their reference
pay (up to the monthly cap of £2500). Employers cannot enter into any transaction
with the worker which reduces the wages below this amount. This includes any
administration charge, fees or other costs in connection with the employment.
• When the Government ends the scheme, employers must make a decision, depending
on their circumstances, as to whether workers can return to their duties – see a sample
Return to Work letter in Appendix B. If not, it may be necessary to consider termination
of employment – see FAQ 15. HMRC will process all claims made before the scheme
ends.
• Payments received by a business must be included as income in its calculation of
taxable profits for income and corporation tax purposes, in accordance with normal
principles. Businesses can deduct employment costs as normal when calculating
taxable profits for income and corporation tax purposes.
1210. Further Advice and Assistance
As always, ECA members with specific queries not fully answered in the present guidance
note or FAQs below are encouraged to contact the ECA Employee Relations Helpline as
follows:
• Email: employeerelations@eca.co.uk
• Tel: 0207 313 4800
11. Frequently Asked Questions
FAQ 1: We are a JIB member company. Does this stop us furloughing our
employees?
No, it doesn’t. On 24 March 2020, the JIB issued a communication, confirming that JIB
employers and their employees are free to agree furlough arrangements in line with the JRS,
following an agreement to this effect between ECA and Unite. This deal provides a specific
and temporary exception to the established JIB 37½ hours guaranteed week, available for an
initial twelve-week period (i.e., to mid-June) and to be reviewed again by then.
FAQ 2: Can self-employed workers be furloughed?
Whereas agency, ‘limb (b)’ and umbrella company workers paid through PAYE can qualify for
furlough under the JRS, those with a similar employment status, but previously taxed as self-
employed, are excluded from the JRS alongside other self-employed individuals. They might,
however, be entitled to claim under the Government’s parallel Self Employment Income
Support Scheme.
Individuals engaged via their own limited company may be eligible for furlough under the JRS
provisions governing company directors – albeit only in regard to that proportion of their
income covered by PAYE (see Section 4, paragraph l) above).
FAQ 3: What flexibilities do we have to rotate workers between furlough and
work?
The confirmation on 4 April 2020 that workers may be furloughed, taken off furlough and re-
furloughed multiple times (see Section 8 above) is the clearest official indication so far that the
Government accepts some employers’ need and/or preference to share work more equally by
rotating different sets of workers between work and furlough.
13The key limitation on employers’ freedom of action is the continued insistence in the guidance
that the minimum duration of any period of furlough must be three weeks. Accordingly, rotation
patterns such as three weeks ‘off’ and three weeks ‘on’, three weeks ‘off’ and one/ two weeks
‘on’, and even three weeks ‘off’ and one/ two days ‘on’ appear to be acceptable. Any pattern
where the period of furlough falls short of three weeks, however, is liable to be disallowed for
the purposes of claiming a grant under the JRS.
This does not mean, of course, that once an employee has completed a minimum three-week
period of furlough, they cannot then return to work for another three weeks. Once the three-
week threshold has been passed, then furlough can subsequently be terminated by the
employer with immediate effect without compromising their entitlement to make a claim under
the JRS. Unfortunately, the same flexibility does not apply where a furloughed worker returns
to work and then has to be furloughed again. In this latter instance, the furlough clock starts
again from the beginning and three weeks will need to be completed for the employer to claim
for this period under the JRS.
FAQ 4: What happens if a period of furlough is interrupted by a need to transfer
individuals back onto work immediately?
We understand how this can happen as some clients and main contractors begin to reopen
their sites in line with the Construction Leadership Council’s Site Operating Procedures and
other safe-working guidelines.
For JRS grant purposes, of course, an employer in this case will almost certainly forfeit its
chance to claim for any part of the furlough period already completed. This ineligibility to make
a claim to HMRC should not, however, affect the contractual position between the employer
and its workers, as set out in the furlough agreement between them. Provided this agreement
is properly drafted, the employer should be able to rely on it to justify paying affected workers
in line with the furlough arrangements for those weeks and/or days during which they were
still on furlough, before switching over to normal pay and conditions as each starts back at
work.
FAQ 5: Do we need to do anything after workers have been on furlough for three
weeks?
There is no requirement for you to do anything if you intend to keep your workers furloughed
beyond the minimum three-week period. If you have given an undertaking either in the furlough
agreement or at some other stage to contact your workers then, of course, you should so do
and inform them of the continuation of their furlough status.
Even if there is no requirement to contact your workers, as a form of good employment
practice, you may wish to use the three-weekly period as a reminder to contact your workers
to ask how they are and let them know that they will remain on furlough and that you are
keeping things under review. There is also nothing stopping you having a more general catch
14up when you contact them – for example, checking on their welfare, updating them on the
business, etc.
FAQ 6: Ongoing work commitments mean that not all our workers can be
furloughed. What options are open to us to maintain them in employment when
there is not always sufficient work to keep them all busy?
The Government guidance offers little in the way of answer to this question other than to
suggest that non-furloughed workers can be used to carry out critical business activities. The
changes made to the guidance on 4 April have, however, added a further option of sharing
the work around by rotating different workers or groups of workers between periods of furlough
and work (see further FAQ 3 above).
ECA recognises the difficulty businesses face at the present time in balancing financial
sustainability concerns with a need or desire to maintain a minimum level of service where
appropriate. Accordingly, in addition to the present furlough guide, ECA’s Employee Relations
team has produced an Alternatives to Furlough guidance note, also available on the Employee
Relations section of ECA’s dedicated Coronavirus webpage.
Options, or combinations of options, outlined in our Alternatives to Furlough guide, include:
• Training
• Alternative duties
• Working reduced hours
• Annual leave
• Leave on reduced pay, including unpaid leave
• Redundancy
• Temporary lay-off and short-time working.
FAQ 7: Are we under any obligation to carry out collective workforce or trade
union consultation when considering whether to furlough 20 or more workers?
The Government guidance states that: ‘If sufficient numbers of staff are involved, it may be
necessary to engage collective consultation processes to procure agreement to changes to
terms of employment.’
On first reading, this might suggest that collective consultation provisions under the Trade
Union and Labour Relations (Consolidation) Act 1992 should be applied whenever an
employer is contemplating asking 20 or more of their workers to agree to be furloughed. The
minimum consultation periods under the 1992 Act are 30 days for 20 to 99 workers and 45
days for 100 or more.
For employers and employees subject to the JIB Agreement, ECA understands that the 24
March 2020 agreement between ECA and Unite has had the effect of varying JIB employees’
contracts already, without the need for any negotiation on this point at company level (although
15further discussion with your workforce and individual agreement to be furloughed will of course
still be required, as outlined in Section 5 above).
For employers as a whole, a further qualification to the statement in the Government guidance
is that it is difficult to reconcile the prolonged exercise envisaged in the 1992 Act with the
declared purpose of the JRS, which is an emergency measure designed to help employers
retain their workforce when faced with a sudden and dramatic drop in work and revenue.
Rather, the present situation seems to us a textbook example of (in the words of the 1992 Act
itself) ‘special circumstances which render it not reasonably practicable… to comply’ with the
usual collective consultation rules. Furthermore, by entering into discussions and a written
agreement with affected workers, in line with Government guidance (see Section 5 above), an
employer should have fulfilled the alternative requirement under the 1992 Act to ‘take all such
steps towards compliance… as are reasonably practicable in those circumstances’.
On reflection, therefore, it seems likely that the collective consultation provisions under the
1992 Act might apply to their full extent only in the event that a large number of employees
refuse to be furloughed, such that their employer is faced with making 20 or more
redundancies within 90 days.
FAQ 8: What implications does furloughing myself have on what I can and
cannot do as a company director/ senior manager?
The Government guidance indicates that whilst furloughed directors may continue to perform
their statutory duties as directors under the Companies Act 2006, they may not undertake
work for, or on behalf, of the organisation. This includes providing services or generating
revenue.
Most companies will need to have someone on hand to handle on-going administration such
as post, bookkeeping, tax filings and banking. These kinds of duties can be performed by a
director in their statutory capacity, and seem more or less compatible with the Treasury
direction issued on 15 April, which confirms that ‘the filing of company accounts or provision
of other information relating to the administration of the director’s company’ are permissible.
Writing to staff about furlough, negotiating with customers about part-completed projects,
ongoing tenders, snagging recently completed jobs, seeking new work after the crisis, applying
for loans, negotiating HMRC grants and delays to the payment of tax almost certainly go
beyond directors’ statutory duties.
If you have two directors, then one option could be to furlough just one, leaving the other in
charge of statutory obligations (and possibly rotating back and forth every three weeks).
FAQ 9: What can we do if an individual refuses to agree to be furloughed?
Furlough must be agreed with the worker concerned and may not be imposed in any
circumstances. If someone refuses, even after you have done your best to persuade them,
the main options will be either keeping them at work, possibly as part of a core group
16continuing to undertake critical business activities, or – assuming no work is available –
redundancy.
Even where redundancy might initially seem the only choice, employers are encouraged to
consider all the other options carefully as in general and particularly during the current
Coronavirus outbreak, redundancy should only be considered as a last resort. ECA’s guidance
on Alternatives to Furlough is available on our dedicated Coronavirus webpage. ECA
members also have access to the ECA Redundancy guide in the members-only section of our
website and one-to-one expert advice via the ECA Employee Relations helpline.
FAQ 10: What can be done to minimise any negative impact on our apprentices’
progress if we need to furlough them?
Employers should liaise with their college or apprenticeship training provider to help minimise
any negative impact on an apprentice’s progress.
Both the Education and Skills Funding Agency (ESFA) in England and the Welsh Government
have published special guidance for employers and training providers about managing the
effects of the current emergency. ECA understands that similar guidance has also been issued
by Northern Ireland’s Department of the Economy, but we have not yet managed to track this
down.
Both the English and Welsh guidance encourage colleges and training providers to make more
online resources available, so that even though in-person training has now ceased,
apprentices can continue to make some progress with their learning, whether on furlough or
still at work. In our own industry, for example, the largest apprentice training provider, JTL,
has issued a statement confirming that it is putting in place a remote learning plan for all
learners, including online resources updated weekly and (after Easter) online tutor support for
all apprentices attached to a JTL training centre.
Under normal ESFA funding rules, any break in learning for an apprentice in England should
be initiated by the apprentice. However, in the light of the present emergency, ESFA is
temporarily allowing employers and training providers to initiate a break in learning. Formal
breaks in learning lasting more than four weeks should be reported to the ESFA. In Wales,
training providers are empowered, where there is no reasonable alternative, to place
apprentices on authorised absence ‘for as long as required’.
FAQ 11: We cannot afford to continue paying 80% earnings until we start
receiving our JRS grant money from the Government. What can we do?
It is currently unclear what attitude HMRC will take towards claims under the JRS where the
employer has paid its workers significantly less than the 80% potential value of the JRS grant
(or even nothing at all).
17Some of the wording used in the Government guidance and Treasury direction can be
interpreted as suggesting the 80%/ £2500 figure as the minimum an employer must aim to
pay in order to qualify for the scheme. Other wording, however, indicates a potentially less
restrictive approach.
It remains ECA’s view that by far the safest option is for employers to do all they reasonably
can to pay in line with the 80%/ £2500 benchmark. The Government is continuing to steer
SME firms towards its Coronavirus Business Interruption Loan Scheme as a means of
supporting cashflow and thereby assisting them to maintain expected levels of pay to the
workforce. If you have previously applied for a loan under the CBILS and your application has
been rejected, you could try to use this as evidence to support your claim for a JRS grant in
the event that this initially gets queried by HMRC on the above grounds.
Other evidence that might prove helpful in supporting a claim in these circumstances would
be inclusion in your written furlough agreement with each of your workers (see Section 5
above) explicit confirmation of their acceptance of a level of pay lower than the 80%/ £2500
benchmark.
An important further factor to bear in mind is that ECA has received feedback on Government’s
approach to grants in other contexts which casts doubt on the likelihood of HMRC reimbursing
an employer for any sum higher than what that employer has itself already paid out. It is
therefore conceivable that employers who opt to pay a lower amount might succeed in
receiving a grant for that amount and no more. If this proves to be the case for the JRS, then
it would be unwise for an employer to indicate to its workers that they can expect ‘backpay’ in
future, funded by an HMRC grant exceeding the amount they have already received.
ECA will continue to seek Government clarification on this point, although such clarity might
not finally be forthcoming until the first claims have been submitted under the JRS and begun
to be processed.
FAQ 12: How should we handle the public/ bank holidays in relation to our
furloughed workers?
ECA has already published separate guidance note on this subject, entitled Bank Holidays
and COVID-19 and available on our dedicated Coronavirus webpage. The main points made
in that guidance note are that:
• Good Friday (10 April), Easter Monday (13 April), VE Day (8 May) and the Spring Bank
Holiday (25 May) remain on the UK Government’s lists of recognised public/ bank
holidays in both England and Wales and Northern Ireland.
• Existing contractual and/or collective-agreement arrangements (under the JIB, for
example) whereby workers take recognised public/bank holidays as part of their
statutory and/or contractual holiday entitlement also remain unchanged. Accordingly,
employers are free to treat the upcoming public/ bank holidays in the normal way for
all their workers, whether furloughed or still at work.
18• The above view is now supported by an important independent public body, the
Advisory Conciliation and Arbitration Service (ACAS). Recently updated ACAS
guidance confirms that ‘Employees and workers may still be required to use a day’s
paid holiday for bank holidays, including when they’re furloughed’.
• Holiday pay on these public/ bank holidays should be calculated in the normal way for
both furloughed and non-furloughed workers. This will need to take account of the fact
that, with effect from 6 April 2020, the reference period for calculating average earnings
has increased to 52 weeks. Additionally, non-working weeks (including those where
workers are furloughed) should be excluded from the average earnings calculation for
holiday pay purposes. ECA members can access guidance on calculating holiday pay
from the Members-only section of our website.
• Where workers are furloughed, employers should still be entitled to be reimbursed for
this holiday payment up to the value of the 80%/ £2500 furlough grant provided for
under the JRS. Any difference between furloughed workers’ holiday pay and the JRS
grant should, however, be funded by the employer.
• The updated ACAS guidance cited above also backs the principle that ‘Employees and
workers must get their usual pay for bank holidays’.
FAQ 13: How does annual leave operate whilst workers are on furlough?
As with public/bank holidays, it now appears clear that the usual rules on annual leave will
continue to operate for workers who are furloughed, as much as for those who remain at work.
The updated ACAS guidance confirms this position. Whilst employers are strongly
recommended to read the ACAS guidance in full, some key takeaways include:
• Holiday pay for furloughed workers should be worked out in the normal way, including
discounting non-working weeks (such as periods of furlough) when calculating
average earnings. This sum may of course exceed the amount you can then claim
back from the HMRC under the JRS. ECA Members can access guidance on
calculating holiday pay from the members-only section of our website.
• Given present circumstances, employers should look sympathetically at requests to
cancel previously booked holiday
• Whilst an employer is legally entitled to require workers to take and/or cancel holiday
on notice, this power should be exercised sparingly and sensitively
• Both in managing holidays over the shorter term and planning further ahead,
employers should take account of the Government’s relaxation of the usual limits on
carrying over holiday, as set out in the Working Time (Coronavirus) (Amendment)
Regulations 2020. So far as possible, employers should look to agree with their
19workers how this new freedom to carry up to four weeks’ untaken holiday over into the
next two years will operate in practice.
FAQ 14: What are our options if we had already started/ completed a redundancy
exercise before the JRS and furlough came into being?
In some cases, an employer may have already started a redundancy exercise before the
option of furlough under the JRS had become available. In others, there might be wider
business reasons underlying the need to make redundancies which are unaffected by the
current emergency, or (as outlined at FAQ 12 above) the employer may feel it cannot afford
to wait to receive grant money under the JRS.
In all these cases, and any others where redundancies are still being considered, an employer
will face the risk of unfair dismissal claims if the furlough option is not considered along with
all the other, more usual methods of avoiding redundancies.
Employers should remember that as part of the redundancy process they need to explore
alternatives. Bearing in mind that the aim of the JRS is to ensure that employers who cannot
afford to pay their workers do not make redundancies, workers could at least argue that any
redundancy decisions made from the JRS being announced on 20 March 2020 and during the
subsequent (initial) three-month period of the scheme, would be unfair.
As already explained in this guidance note (at Section 4, paragraph d) above), it is open to an
employer to rehire workers made redundant after 28 February and place them on furlough. In
such a case, redundancy payments, payments in lieu of notice and holiday pay on termination
may need to be reversed by agreement. Perhaps these can be offset against future salary
payments and deducted from workers’ salary for subsequent months if this is agreed as part
of the reinstatement. If holiday pay received on termination is repaid, then holiday entitlement
would need to be reinstated.
It might be the case that employers had already given notice of redundancy to their workers
before the JRS was announced. These employers can ask the workers to agree to the
withdrawal of the notice, and to agree to a period of furlough instead.
Once notice of redundancy has been issued to a worker, it is legally binding and cannot be
unilaterally withdrawn by the employer, even if the worker is still working out their notice period.
Therefore, the employer must obtain the express consent of the worker. In the circumstances,
it is likely that workers will agree to keeping their jobs, while staying at home on reduced pay,
as an alternative to redundancy.
Employers who decide they have no alternative but to press ahead with redundancies now,
despite the existence of the JRS, should fully consult and keep careful records to show why
the redundancies are still needed despite the existence of furlough. ECA members also have
access to the ECA Redundancy guide in the members-only section of our website and one-
to-one expert advice via the ECA Employee Relations helpline.
20FAQ 15: What are our collective redundancy consultation obligations if it looks
like the JRS could terminate at the end of May?
Under the Trade Union and Labour Relations (Consolidation) Act 1992 an employer is under
an obligation to consult trade union or workforce representatives whenever it is contemplating
making 20 or more workers redundant within the next 90 days. The minimum consultation
periods under the 1992 Act are 30 days for 20 to 99 workers and 45 days for 100 or more.
Given that the JRS is currently scheduled to run only until the end of May 2020, employers
contemplating the possibility of 100 or more redundancies in the event that furlough is
removed as an option then, would need to issue an HR1 and begin the consultation process
during week commencing 14 April 2020. Similarly, employers facing the prospect of between
20 and 99 redundancies would need to begin by the start of May.
The Government has stated its appreciation of these obligations on employers and is expected
to make an official statement confirming a (limited) extension of the JRS during week
commencing 14 April.
21Appendix A
Sample letter: Agreement for Furlough Leave
Dear
I refer to our discussions with you on [insert date], during which we discussed the Company’s
proposal to vary your contract of employment, to implement furlough leave and take advantage
of the government’s Coronavirus Job Retention Scheme.
It was agreed that with effect from [insert date] you will be on Furlough Leave. This means
your contract of employment continues, but you will not be required to work. You will be paid
[80% subject to a maximum liability for us of £2,500 per month, ] / [*%] of your salary during
that time.
[INSERT ONLY FOR SALARIED EMPLOYEES RECEIVING 80% OF THEIR SALARY:
The furlough pay due to you will be 80% of your gross salary as at 28th February 2020]
[INSERT FOR EMPLOYEES WHOSE PAY VARIES AND WHO WILL RECEIVE 80% OF
THEIR PAY:
The furlough pay due to you will be the higher of 80% of the earnings in the same month last
year or your average earnings in the 2019/20 tax year. If you have been employed by us for
less than a year, your furlough pay will be 80% of your average earnings during your
employment with the company.]
[INSERT ONLY IF YOU MIGHT BE PAYING MORE THAN THE SUMS AVAILABLE FROM
THE JRS:
Any sums above that which is recoverable from the Government JRS scheme is subject to
review by the company and we reserve to amend or remove this additional sum with one
week’s notice.]
Your Furlough Leave will end on the earliest of any one of the following events:
(a) the Government’s Coronavirus Job Retention Scheme ending;
(b) either you or the company is not eligible for funding under that scheme; or,
(c) the company cancels Furlough Leave and instructs you to return to work.
By agreeing to be furloughed and this letter you confirm your acceptance that it applies to the
period of furlough commencing on [insert date] and any subsequent periods of furlough leave
including periods of furlough following a period when you are recalled to work.
During your Furlough Leave, you may not work for the company or any linked or associated
organisation, although you may undertake training as long as it does not lead to providing a
22service to or generating revenue for or on behalf of the company or any linked or associated
organisation.
We reserve the right to recover by deductions from wages or any other means any sums we
have paid you under this scheme if we are unable to reclaim it from HMRC and/or become
liable to repay it to the Government.
Since we may need you to return to work at short notice, and so that we can keep you informed
of any developments, we expect you to check your email/post/phone regularly, and at least
once a day, during your furlough leave and to respond to our communication within any
timeframe specified.
If you need to contact the company during your furlough leave, please contact [insert name
and contact details].
Please reaffirm your agreement by signing and returning this letter to [insert name and
contact details].
[DELETE IF JIB AGREEMENT APPLIES:
When your Furlough Leave ends, while we will always endeavour to provide you with work, in
the event of insufficient work being available you agree we are entitled to place you on short
time or lay you off without any pay except for statutory guarantee payments.]
Signed: _________________ Date ___________
(Employer)
Signed: _________________ Date ___________
(Employee)
* Insert the percentage you have agreed to pay.
23Appendix B
Sample letter: Return to Work
Dear [ ]
Return to work from furlough leave
Thank you for agreeing to be furlough under the Government’s Coronavirus Job Retention
Scheme (JRS) from [insert date]. This has helped us to continue employing you during the
Coronavirus outbreak and lockdown. During this time you received [your normal pay/80% of
your pay in accordance with the JRS rules/80% of your normal pay up to a maximum of
£2500 per month in accordance with the JRS rules] and were instructed not to carry out
any work for us.
Your return to work
We are pleased to inform you that we are now able to provide you with work and stop your
furlough leave. You are required to report to [insert details of name and place] at [insert
time] on [insert date].
If circumstances change and we need to put you back on furlough, we will write to you again
to seek your agreement to return you to furlough in the meantime, thank you once again for
your cooperation at this very difficult time for everyone. If you have any queries or concerns,
please do not hesitate to contact [me/name of individual].
Yours sincerely,
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