Coronavirus Job Retention Scheme

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There have been a number of questions about the Scheme since it was announced last week.  The updated guidance from the Government may not answer all those questions but there is now at least a bit more clarity to assist employers in making key decisions. 

In particular, the Government has now given clarification on:

Minimum Length of Time of Furlough

The Government has announced that the minimum time an employee can be furloughed is three weeks.  

Correspondence with Employee

The Government is advising that for employers to be eligible for the subsidy,  records must be retained of correspondence to an employee put on furlough.  Many employers will be speaking with employees about this decision but the Government guidance suggests they should (also) write to the employee.   The Government notes that it reserves the right to audit all aspects of a claim at a later date, so this will provide useful evidence.

Salary Rates Used for Salaried Employees

For full-time and part-time salaried employees, the salary rate used to calculate the 80% rate is the salary in place at 28 February 2020.  Fees, commission and bonuses are not included. 

Salary Rates Used for Zero-hours Contracts or Variable hours Contracts

If a variable hours employee has been employed for at least 12 months, then the salary rate to be used is the higher of:  the same month’s earning from the previous year, or;  average monthly earnings for the 2019-20 tax year.  

If a variable hours employee has been employed for less than 12 months, an average of the monthly earnings since the start of employment can be used.  

Payments to Employee and Employers Optional Top-up

A furloughed employee should be paid at least the lower of 80% of salary (as calculated above) or £2,500 a month.   The guidance confirms that an employer may, but is not required to, top-up a furloughed employee’s salary.

Employer National Insurance and Pension Contribution

The wages of a furloughed employee remain subject to employer national insurance contribution and minimum employer pension contributions.  

Employees on Statutory Sick Pay (SSP)

The guidance distinguishes those on sick leave and self-isolating and those who are ‘shielding’ in line with public health guidance.  This is quite an important distinction; if an employee has been asked to work from home due to them having underlying health conditions, for instance, this would be classed as ‘shielding’ and they can be placed on furlough.   For those who would have been unable to go to work due to illness, they could be paid SSP and, when recovered, can be placed on furlough.

Employee with multiple jobs

Each job is separate and they could be placed on furlough for each job, or one of their jobs.  The cap of £2,500 per month would apply separately to each employer.  Whilst it is very clear that a furloughed employee cannot do any work for the organisation that put them on furlough – subject to an exemption on training (see below) –  this does not clarify that a furloughed employee can take on another employment elsewhere during their period of furlough and this seems dependent on whether such restrictions are in the employee’s contract.  

Training Time for Furloughed Employee

A furloughed employee cannot do any work for the employer that furloughed them but if they are required to complete training courses whilst furloughed, they must be paid National Living Wage/National Minimum Wage for time spent training, even if this takes them above the 80% of wage being subsidised. 

Making a Claim

Once HMRC’s portal is up and running, claims can be made every 3 weeks.   Doing so monthly in most cases would seem to make more sense coinciding with most organisations’ pay runs.  

Costs Covered in the Claim

The Government’s guidance now clarifies that an employer’s claim for the grant  is based on the revised Gross Pay to the furloughed employee (not Net Pay) but that it also includes employment costs such as employer’s national insurance contributions and employer’s minimum auto-enrollment pension contributions for the furloughed employee. 

Employees Rights

Furloughed employees have the same rights as other employees, regarding sick pay, maternity leave, holiday entitlement, etc, which was to be expected. 

National Living Wage/National Minimum Wage

The guidance confirms that NLW/NMW entitlement is for hours worked.  The obligation to pay 80% salary costs still applies even if the furloughed employees furloughed pay would take it below the level of NLW/NMW (had they been working normal hours).  

Tax and Accounting Treatment for the Grant

This is a taxable grant and will be classed as Income.   Employment costs through the payroll for furloughed employees will be classed as wages as normal.  

Please see For more details and conditions of the scheme.

Many of the uncertainties around the Scheme are clarified with this guidance, but anomalies and further questions will arise when the Scheme is fully up and running and we’ll keep you updated as and when we know more.  


Stay safe.

Alexander Sloan