Taylor Walton Coronavirus Update 11 November 2020 – Further Guidance on the extended Coronavirus Job Retention Scheme has been published

As promised, the Government issued further guidance on the extended Coronavirus Job Retention Scheme (CJRS) on 10 November 2020.  Our previous note on the extended CJRS can be viewed here.

There are 10 new or updated guidance notes on the extended CJRS for employers.  We have set out below links to the relevant guidance for employers.  Separate guidance has also been issued for employees and can be found on the gov.uk website.

In addition to the new and updated guidance, existing guidance on holiday and furlough is unchanged and can be viewed at the link here.

The Government has also updated its guidance on Clinically Extremely Vulnerable persons to confirm that they can be furloughed under the extended CJRS.  This guidance can be viewed at the link here. 

The Government has made some significant comments in the new guidance about an employer’s ability to claim a grant under the CJRS in respect of employee who is working their notice period.  This will affect businesses who are conducting redundancy programmes with furloughed employees.  The new guidance states that the Government is reviewing whether employers should be eligible to claim the grant for employees serving contractual or statutory notice periods.  The Government states that it will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.  It is therefore possible that from 1 December 2020, employees who are working their notice period will no longer meet the eligibility requirements of the CJRS.  We will provide an update on this matter once further guidance becomes available later this month however it may be advisable to serve notice on potentially redundant employees prior to 1 December 2020, where possible and subject to the usual employment law considerations including meaningful consultation with the employees affected.

Employers should note that as the CJRS has changed, 30 November 2020 is the last day employers can submit or change claims under the CJRS for periods ending on or before 31 October 2020.  Claims in relation to the period commencing on 1 November 2020, can be submitted from 11 November 2020.

We appreciate that there is a significant amount of information for employers to get to grips with and that some areas of the guidance is detailed and is not straightforward.  Whilst we strongly recommend that any employer who intends to make use of the extended CJRS carefully reviews the available guidance, we are able to assist you with any queries that you may have about the extended CJRS including preparation of appropriate furlough agreements and any necessary calculations.

Unless otherwise stated, all information in this note relates to the extended CJRS from 1 November 2020.  The information in this note is not applicable to the previous version of the CJRS which ended on 31 October 2020.  Our notes on the previous scheme can be found on our website.

The links to the new and updated guidance are:

  1. Check if you can claim: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme 
  2. Check which employees can be furloughed: https://www.gov.uk/guidance/check-which-employees-you-can-put-on-furlough-to-use-the-coronavirus-job-retention-scheme 
  3. Guidance on claiming for atypical workers: https://www.gov.uk/government/publications/individuals-you-can-claim-for-who-are-not-employees 
  4. Steps to take before calculating your claim: https://www.gov.uk/guidance/steps-to-take-before-calculating-your-claim-using-the-coronavirus-job-retention-scheme 
  5. Calculate how much you can claim: https://www.gov.uk/guidance/calculate-how-much-you-can-claim-using-the-coronavirus-job-retention-scheme 
  6. How to claim: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme 
  7. Reporting employees’ wages to HMRC when using the CJRS: https://www.gov.uk/guidance/reporting-payments-in-paye-real-time-information-from-the-coronavirus-job-retention-scheme 
  8. Examples of how to calculate wages 1 (fully furloughed employees): https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/examples-of-how-to-work-out-80-of-your-employees-wages-national-insurance-contributions-and-pension-contributions
  9. Examples of how to calculate wages 2 (flexibly furloughed employees): https://www.gov.uk/government/publications/find-examples-to-help-you-work-out-80-of-your-employees-wages/example-of-a-full-calculation-for-an-employee-who-is-flexibly-furloughed 
  10. CJRS grants (for example where you have over claimed): https://www.gov.uk/guidance/pay-coronavirus-job-retention-scheme-grants-back  

We have also summarised the main issues relating to the extension of teh CJRS berlow:

1. Which Employers an use the extended CJRS

The new guidance states that if an employer cannot maintain their workforce because operations have been affected by coronavirus, the employer can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs.  However, there is no indication in the guidance that employers will have to demonstrate that their operations have been affected in any particular manner.

All employers with a UK bank account and UK PAYE schemes can claim the grant under the extended CJRS.  However, if the employer has staff costs that are publicly funded (even if the employer is not in the public sector), it should use that money to continue paying staff rather than making use of the CJRS.

The employer does not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.

The guidance warns employers that HMRC will check claims and that payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information.  It is therefore important for employers to properly understand the extended CJRS prior to making claims.

Details of employers who make use of the CJRS from December 2020 onwards will be made public by HMRC.

2. Which employees can be furloughed?

Generally, employers can only claim for employees that were employed and on payroll on 30 October 2020. This means the employer must have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

However, if you made employees redundant, or they stopped working for you on or after 23 September 2020 you can re-employ them and put them on furlough. This applies as long as the employee was employed and on your PAYE payroll on or before 23 September 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made between 20 March and 23 September 2020.  It would be sensible for employers to take further advice prior to re-employing an individual for the purposes of placing them on furlough leave.

In relation to claims starting from 1 November 2020, there is no maximum number of employees that can be furloughed.  This is significantly different from previous versions of the CJRS.

The guidance is clear that employees on any type of employment contract can be furloughed where eligible, including full-time, part-time, agency, flexible or zero-hour contracts.

Specific guidance has been issued in relation to different types of employees.  In particular:

a. Fixed term employees – if the employee’s fixed term contract has not already expired, it can be extended or renewed. You can put the employee on furlough as long as they were employed by you on or before 30 October 2020. You must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.  If the employee’s fixed term contract expired after 23 September, they can be re-employed and claimed for as long as the other relevant eligibility criteria are met.

b. Apprentices – can be furloughed in the same way as other employees and they can continue to train whilst on furlough.  However, employers must pay apprentices at least the relevant National Minimum Wage for all the time they spend training whilst on furlough.  This means that the employer is obliged to top up wages for time spent training if furlough pay is below the relevant National Minimum Wage.

c. Employees who have been subject to a “TUPE” transfer – the guidance on this point is confusing.  The guidance states that a new employer is eligible to claim in respect of the employees of a previous business transferred to them under TUPE. However, the guidance also states that the employees being claimed for should have been employed by their prior employer on or before 30 October 2020 and transferred from them to their new employer on or before 1 September 2020.  This does not appear consistent with the general eligibility criteria for the CJRS and is a mistake.  We expect that this aspect of the guidance will be subject to further clarification in due course.  For now, if you are thinking of furloughing an employee who transferred to your business pursuant to TUPE after 31 August 2020, specific advice should be sought.

d. Other types of “employee” – the Government has issued separate guidance in relation to eligibility under the CJRS of office holders, directors, members of LLPs, workers and agency workers.  This can be viewed at link 3 above.

e. Employees with more than one job – an employee who has more than one employer can be furloughed for each job. Employees can be furloughed in one job and receive a furlough payment but continue working for another employer and receive their normal wages

f. Vulnerable employees and those with caring responsibilities – the guidance states that if an employee is  unable to work because they are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus (in accordance with the relevant public health guidance which can be viewed at the link referred to on page 1 of this note); or unable to work because they have caring responsibilities resulting from coronavirus (including caring for children) they are eligible for the CJRS grant and can be furloughed.

This does not cover individuals who live with clinically extremely vulnerable persons (although such an employee could be furloughed for other reasons).

In relation to caring responsibilities, it is not clear from the guidance how closely linked to Coronavirus the caring responsibilities must be.  It is advisable for employers to take further advice prior to placing an employee on furlough as a result of caring responsibilities to ensure that the requirements of the CJRS are met.

3. The extension covers full furlough and flexible furlough arrangements

Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. The Government has issued worked examples in relation to calculating wages for employees on full furlough and flexible furlough.  The links to the examples are set out above and employers are strongly advised to review these examples prior to submitting a claim.

4. What can employees do whilst on furlough?

During hours which you record your employee as being on furlough, you cannot ask them to do any work for you that:

  • makes money for your organisation or any organisation linked or associated with your organisation; and/or
  • provides services for your organisation or any organisation linked or associated with your organisation.

Your employee can take part in training, volunteer for another employer or organisation (they cannot volunteer for the business from which they have been furloughed) and work for another employer (if contractually allowed).

Furloughed employees can engage in training during hours which you record your employee as being on furlough, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation or a linked or associated organisation. Furloughed employees should be encouraged to undertake training.

Where training is undertaken by furloughed employees during hours which you record your employee as being on furlough, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete ‘statement C’ on the list.

5. Implementing  furlough and record keeping

The guidance indicates that employers should discuss furlough arrangements with their staff and make any changes to the employment contract in relation to the new arrangements by agreement. In addition, when employers are making decisions in relation to who to offer furlough to, equality and discrimination laws will apply in the usual way.

Any agreements that you reach with employees to place them on furlough or flexible furlough must be confirmed in writing and retained for 5 years.  If the agreement is not confirmed in writing, the employer is not eligible to claim under the CJRS.   However, the guidance clearly states that employees do not have to confirm their agreement to the furlough arrangements in writing.  Accordingly, if you write to your employees seeking their agreement to place them on furlough or flexible furlough, the fact that an employee may not reply to confirm their agreement in writing does not preclude a claim under the CJRS.

Employees can be furloughed retrospectively for periods commencing on the 1 November.  However, only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a claim. This means that if you have agreed with an employee that they will be on furlough from 1 November but you have not yet documented this in writing, you must do so by 13 November 2020 (this Friday) at the very latest.

In addition to written confirmation of the furlough arrangements, employers must keep the following records for 6 years: the amount claimed and claim period for each employee; the claim reference number for your records; your calculations in case HMRC need more information about your claim; usual hours worked, including any calculations that were required, for employees you flexibly furloughed and actual hours worked for employees you flexibly furloughed.

6. What does the reimbursement cover?

From 1 November 2020, employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.

Employers are not obliged to top up wages to normal levels (save in limited circumstances in respect of training – see above).  Employers will be responsible for paying employees in respect of any hours that they work (where there is a flexible furlough arrangement in place) plus they will have to meet the costs of Employer’s National insurance Contributions and pension contributions on the payments made to the employee.

Before an employer can claim reimbursement under the CJRS, it is necessary to calculate:

  • the length of your claim period.  This depends on each employers’ specific arrangements.  Employers should review the guidance at link 4 in relation to claim periods.  The minimum claim period is 7 calendar days;
  • what you can include when calculating usual wages.  Further guidance appears at links 4,5 and 6 above and we have set out comments on the most significant aspects of the guidance in this section; and
  • your employees’ usual hours and furloughed hours.  This only applies where the employee is on flexible furlough or ceases to be on furlough part way through a claim period.  Further guidance on the relevant calculations appears at link 4 above and the calculation to be used will depend on whether the employee has variable or fixed hours of work.

These calculations are a complex task in some cases.   The guidance at link 4 includes a calculator to assist employers in working out how much they can claim.

Employers will need to identify the reference period that it will use to work out the employee’s usual wages.  This differs according to whether the employee has fixed or variable hours and also whether they have previously been placed on furlough.

The reference period for employees with fixed working hours is the last pay period ending on or before 19 March 2020 for employees who either:

  • were on your payroll on 19 March 2020, that is you made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020;
  • you made a valid CJRS claim for in a claim period ending any time on or before 31 October 2020.

For all other employees with fixed hours the reference period is the last pay period ending on or before 30 October 2020.  This will only apply for periods starting after 1 November 2020.

The reference period for employees with variable hours differs according to when they were on the employer’s payroll.

For employees’ who were on your payroll on 19 March 2020, that is you made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020 you should calculate 80% of the higher of: the wages earned in the corresponding calendar period in the tax year 2019 to 2020 or the average wages payable in the tax year 2019 to 2020.  This also applies to employees’ for whom an employer made a valid CJRS claim in a claim period ending any time on or before 31 October 2020.

For all other employees’ you should calculate 80% of the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they are furloughed on or after 1 November 2020

The amount that an employer should use when calculating 80% of the employees’ wages for hours not worked, is made up of the regular payments you are obliged to make, including regular wages you paid to employees; non-discretionary payments for hours worked, including overtime; non-discretionary fees; non-discretionary commission payments and piece rate payments.  Further guidance about the difference between discretionary and non-discretionary payments is set out at link 4 above.

You cannot include the following when calculating wages: payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including any tips, including those distributed through troncs, discretionary bonuses, discretionary commission payments, non-cash payments, non-monetary benefits like benefits in kind (such as a company car) and benefits received under salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay.

New rules have been published in relation to employees with fixed hours who work regular overtime.  The guidance states that if your fixed pay employee has worked enough overtime to have a significant effect on the amount you need to claim, you should calculate 80% of their usual wages using the method for employees whose pay varies. Examples of situations where overtime could have a significant effect on the claim amount include where the employee worked overtime: in the reference period, in the corresponding calendar period to the pay period you are claiming for and/or a lot, or often, in the tax year up to the reference period.

7.  Use of the furlough grant and special rules relating to salary sacrifice arrangements

The entirety of the grant received to cover an employee’s furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.  Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

With regard to salary sacrifice schemes, normally, an employee cannot switch freely out of most salary sacrifice schemes unless there is a life event. HMRC agrees that coronavirus counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

8. How do we treat employees on family leave (such as maternity or paternity leave)?

Under the extended CJRS, employers are able to furlough employees returning from a period of family leave in the usual way.  No special rules apply although employers will need to ensure that the employee returning from leave is treated in a fair manner to avoid potential claims for discrimination.  It is advisable for employers to take advice prior to furloughing an employee returning from a period of family leave.

The Government is aware that some employees may wish to end their period of family leave in order to be placed on furlough leave as they may be paid at a higher rate when on furlough.  The Government has made it clear in the guidance that if an employee decides to end their maternity leave early to enable them to be furloughed, they must give at least 8 weeks’ notice and the employer must not furlough the employee until the end of the 8 weeks.

It is not clear in the guidance as to whether this notice requirement also applies to other types of family leave such as adoption leave and shared parental leave.  Employers should consider taking advice in relation to employees on these types of leave prior to ending the period of family leave and placing the employee on furlough to ensure the requirements of the CJRS are met.

The guidance states that where the employer is paying enhanced contractual payments to an employee on family leave who qualifies for statutory payments (for example maternity pay), it may be possible to claim those enhanced payments under the CJRS.  Employers should review the guidance on this point carefully before submitting any such claim.

9. Sickness absence and furlough

The guidance states that if your employee is on sick leave or self-isolating as a result of coronavirus, they may be able to get Statutory Sick Pay (SSP). The CJRS is not intended for short-term absences from work due to sickness.

However, the guidance also states that short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee. If an employer wants to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees. In these cases, the employee should no longer receive sick pay and would be classified as a furloughed employee.

As set out above, employers can furlough employees who are clinically extremely vulnerable, and at the highest risk of severe illness from coronavirus.  The guidance also states that employer can furlough employees who are off on long-term sick leave. It is up to employers to decide whether to furlough these employees.

If your employee becomes sick while furloughed, it is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.  However, if a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to two weeks of SSP if the sickness is related to coronavirus.

If employers keep the sick furloughed employee on the furloughed rate for the period that they are sick, they remain eligible to claim for these costs through the CJRS.

10. How do we deal with holiday?

Furloughed employees continue to accrue leave as per their employment contract.

The guidance states that the employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

Employees can take holiday whilst on furlough. If an employee is flexibly furloughed then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

The Working Time Regulations 1998 require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.  This means that the employer may need to top up wages to normal levels during the holiday period, depending on the furlough arrangements.

The guidance stated that employees should not be placed on furlough for a period simply because they are on holiday for that period.
If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu.

11. Can we conduct redundancy consultation with staff whilst they are furloughed?  What is the position on notice for furloughed employees?

Yes.  The guidance states that where the employer must make redundancies, it should do so in accordance with the normal rules. The guidance states that this includes consultation and a notice period.

At present, you can continue to claim for a furloughed employee who is serving a notice period, however the guidance is clear that grants cannot be used to substitute redundancy payments.  As set out on page 1, the Government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.

If you make an employee redundant and they are or have been furloughed, the employer must base statutory redundancy and notice pay on their normal wage rather than the reduced furlough wage.

12. Employer Tax Treatment of CJRS grants

Payments made to employer under the CJRS are to offset the deductible revenue costs of your employees. You must include them as income when you calculate your taxable profits for Income Tax and Corporation Tax purposes.  Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

13. How to claim

To make a claim, you will need:

  • to be registered for PAYE online
  • your UK, Channel Island or Isle of Man bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
  • the billing address on your bank account (this is the address on your bank statements)
  • your employer PAYE scheme reference number
  • the number of employees being furloughed
  • each employee’s National Insurance number (you will need to search for their number using basic PAYE Tools if you do not have it, or contact HMRC if your employee has a temporary number or genuinely has never had one)
  • each employee’s payroll or employee number (optional)
  • the start date and end date of the claim
  • the full amounts that you’re claiming for in respect of employee’s wages
  • your phone number
  • contact name
  • your Corporation Tax unique taxpayer reference
  • your Self-Assessment unique taxpayer reference
  • your company registration number
  • If you’re claiming for employees that are flexibly furloughed, you’ll also need the number of usual hours your employee would usually work in the claim period, the number of hours your employee has or will work in the claim period and you will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period

Claims from 1 November 2020 must be submitted by 11.59 pm 14 calendar days after the month you’re claiming for. If this time falls on the weekend then claims should be submitted on the next working day.

For claims relating to periods after 1 November 2020, you will only be able to increase the amount of your claim if you amend the claim within 28 calendar days after the month the claim relates to (unless this falls on a weekend and then it is the next working day).


Members of the Taylor Walton Employment Team are available to assist you with any employment law queries or concerns arising out of the Coronavirus Pandemic including the CJRS. In the first instance please contact: Alec Colson on alec.colson@taylorwalton.co.uk or on 07711 589574.