Duncan & Toplis is here to help and support you through the ongoing challenges presented by the coronavirus pandemic. Whilst this is an anxious time for many, it’s important to know that there is help available.

We are summarising the measures, including eligibility requirements, as they are announced and all details can be found here in our COVID-19 Knowledgebase.

Coronavirus Job Retention Scheme Guidance

Updated 05.04.20:  With coronavirus affecting thousands of people across the country, and with many more needing to take a leave of absence for precautionary self-isolation, as a business owner, you will have concerns around how coronavirus will impact your employees and your operations.

In the previous few weeks, many businesses have needed to reduce their operations or close temporarily and, as a result, employers have been facing the possibility that they will have to make redundancies – with many sectors having already made widespread redundancies.

To prevent this, and to support those who have already been made redundant, the Government has set out a package of support that’s unlike anything that’s been attempted in the UK before.

As part of this, the Prime Minister has urged businesses to “stand by your employees, stand by your workers, because we will stand by you”.

To help you to support your workers, we’ve set out the following guidance to help explain the support that’s available to your business when it comes to supporting employees.

The information herein is up to date as of Sunday 05 April 2020 and does not constitute professional advice.  For the very latest advice for your organisation, please contact our team.


The Government’s Coronavirus Job Retention Scheme (CJRS) is a package of support that employers can access to continue paying part of their employees’ salary if those employees would have otherwise been laid off or been made redundant due to the coronavirus.

The Government will effectively pay 80% of the salary of employees who are kept on by their employer, covering wages of up to £2,500 per month. This essentially means that an employee can become classified as a ‘furloughed worker’, rather than being laid off without pay or made redundant.

It’s important to remember that during this time, employment law has not changed because of this scheme.  As such employers are still bound by the law as they would have been previously in respect of layoffs and redundancies and these changes do not allow employers to simply furlough any employee. 

For a full and updated guide to the CJRS you can download our .pdf here


  • Furloughed Workers

    The Government’s Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least 3 months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

    The overall aim for this scheme is to keep people at home while not working, receiving a proportion of their pay and enabling employers to retain employees who will be needed when they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core who have the necessary knowledge.

    What is a furloughed worker?
    Firstly, it’s important to note that the term Furlough is not a recognised legal status so has no meaning in employment law. It is simply the term the Government are choosing to use to describe this category of employee

    A Furloughed worker, is one that has been asked to stay at home and not be provided with work from their employer, who would otherwise have been made redundant or laid off without pay. A Furloughed worker can be asked by their employer to agree to a reduction in their pay to 80%, up to a maximum of £2,500 per month.

  • Eligibility

    The scheme is open to all UK employers provided that the employer:

    • created and started a PAYE payroll scheme on or before 28 February 2020
    • enrolled for PAYE online – this can take up to 10 days [if you have not already done so, do this now]
    • a UK bank account

    UK employers are eligible to designate furloughed workers, including sole traders, charities, LLPs, Limited companies etc.

    Eligible Employees
    Employers can furlough full time and part time employees as well as those on agency contracts (providing they are not working), flexible working and zero hour contracts providing they are on your PAYE scheme on or before 28 February 2020.
    Foreign nationals are eligible to be furloughed provided on your PAYE on or before 28 February 2020.
    The scheme also covers employees who have been made redundant since 28 February 2020. As a result, you could choose to re-hire them and furlough them in line with this scheme and claims can then be backdated to 1 March 2020.
    Employees that you hired after the 28 February cannot be furloughed and claimed for.

    Eligible Employees who are not Employees
    In the government guidance dated 4 April 2020, it goes further in the description of those who the employer can claim the grant for. As well as employees, employers can also furlough and claim the grant for the following, provided that they were on the PAYE on or before 28 February 2020:

    • Office holders*, including Company Directors
    • Salaried* members of an LLP
    • Agency workers*, including those employed by an umbrella company
    • Limb workers* [dependent contractors. They generally must carry out the work personally, rather than being able to send someone in their place].

    Duties whilst Furloughed
    Employees cannot undertake work for or on behalf of their employer, in order to allow the employer to be eligible for the grant. This includes providing services or generating income.

    Reduced Hours
    If an employee is working reduced hours and therefore reduced pay due to a downturn in business, they will not be eligible to be furloughed as they are still required to carry out some duties.
    This will of course be subject to employment law in the usual way

  • Apprentices

    Apprentices can be furloughed in the same way as other employees. They can also continue to carry out their training whilst furloughed.

    However, you must still pay your Apprentices at least the Apprenticeship minimum wage, National Living Wage or National Minimum Wage, whichever applies to those individuals, for all time spent training.

    Should 80% of an Apprentices salary be less than the appropriate statutory rate, the employer must top it up whilst that individual is training.

  • Fixed Term Employees

    Employees on fixed term contracts can be furloughed provided that they were on the PAYE on or before 28 February 2020.

    Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.

  • Public Sector Employers

    For public sector employers the Government expects that the scheme will not be used by many, as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.

    Where employers receive public funding for employee costs, and that funding is continuing, the Government have confirmed that they would expect employers to use that money to continue to pay their employees in the usual way and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for employee costs.

    Organisations who are receiving public funding specifically to undertake COVID-19 services are not expected to furlough any staff.
    In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.

    Contingent Workers in the Public Sector
    The Cabinet Office has issued guidance on how payments to suppliers of contingent workers impacted by COVID-19 should be dealt with where the party receiving the contingent worker’s services is a Central Government Department, an Executive Agency of a Central Government Department or a Non-Departmental Public Body.

    You can find out more about this here

  • Individual Employers

    If you are an individual employer, employing someone such as a personal housekeeper, nanny, clearer or carer, these employees can be furloughed provided that they are paid through PAYE and that they were on the payroll on or before the 28 February 2020.

  • Administrators

    Where administrators have been engaged to take over the management of a company, the administrator is able to access the Job Retention Scheme.

    However, this is only if the administrator reasonably expects to be in a position to rehire staff, for example, where the administrator is pursuing the sale of the business.

  • Directors and Office Holders*

    The government guidance of 4 April clarifies that office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

    Company Directors are eligible to be furloughed and receive support from this scheme.

    Company directors have duties to their company out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed.

    Where the board of directors decides to furlough one or more individual directors, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

    Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

    This also applies to salaried individuals who are directors of their own personal service company (PSC).

  • Salaried Members of LLP*

    Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

    The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. This agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

    To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP.

    For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

  • Agency Workers*

    Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

    Furlough should be agreed between the agency, as the employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved.

    As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

    Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

  • Limb Workers [dependant contractors]

    Where Limb Workers are paid through PAYE, they can be furloughed and receive support through this scheme.

    Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.

  • Employees with Caring Responsibilities

    The government guidance 4 April 2020 provides more clarity for this group.

    Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.

  • Employees with more than one employment

    An employee who is furloughed cannot work at all for their employer, but if they work for more than one employer, they can continue to work for that other employer whilst being furloughed by you.

    The new government guidance has made clear that your employee is permitted to get another job whilst being furloughed by you, provided that their contract of employment allows them to work for another company.

    The new employer must ensure they complete the starter checklist form correctly.

    If the employee is furloughed from another employment, they should complete Statement C.

  • Employees who do Volunteer Work

    A furloughed employee can take part in volunteer work as long as it does not provide services to or generate revenue for or on behalf of the employer. You can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.

    We believe that the government have allowed this in order to generate volunteers or additional labour for industry sectors which are perhaps front line services in need of additional personnel.

  • Employees on Maternity, Adoption, Paternity, Shared Parental leave

    Employees can continue to receive the same leave and pay in line with Government policy (or your own if enhanced).

    The scheme does not prohibit those on these types of leave from returning to work early and then being furloughed or electing to change to shared parental leave and then being furloughed.

    Note that legally women on Maternity Leave must take at least two weeks off work (four weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.

    If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.

    The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.

What about Owner/managed companies

Many owner managed company director/shareholders do pay small salaries and the balance of income as dividends. The scheme does not extend to dividends. Only the salary through PAYE is relevant to the scheme.

Once You Have Claimed

HMRC will check your claim and if you are eligible, they will pay the monies to you via BACS to your UK nominated bank account.  You must pay the full amount of grant to your employees.  Employers are not allowed to charge a fee to administer this scheme.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Ending the Scheme

When the government ends the Job Retention Scheme, you must make a decision regarding your employees.  Depending upon your circumstances, you may be able to return your employees to the workplace.  If not it may be necessary to consider redundancy.


  • Job Retention Scheme Guidance (FAQ)

    Employers will be able to claim via a HMRC portal which is likely to be available from late April.

    The Government, through HMRC portal, will reimburse the employer to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage [3%].

    Fees, Commission, Bonuses and Benefits in Kind
    Fees, commission and bonuses were previously not included. However in the government guidance dated 4 April 2020, further clarification has been provided. Employers are now able to claim for any regular payments that they are obliged to pay the employee. This includes wages, past overtime, fees and compulsory [contractual] commission payments. However, discretionary bonus payments, discretionary commission, tips and non-cash benefits in kind should be excluded. So if your employees benefit from private medical insurance or have a company car, these are not included in the calculation.

    Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

    Salary Sacrifice
    Benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

    Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

    Employer NI and Pension
    Employers remain liable for associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.

    You can choose to top-up salary to 100% for your furloughed employees, but you will only be able to claim the reduced amount when applying for the grant through the HMRC portal. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £520 per month from 6 April 2020 onwards).

    Employer NI and Pension
    An employer will still need to pay employer NI and pension contributions for all furloughed employees. These costs can be claimed for via the HMRC portal. However, you cannot claim for:

    • additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
    • any pension contributions you make that are above the mandatory employer minimum contribution of 3%.
  • What do I pay my employee if they are furloughed?

    At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month with usual tax and NI payments. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

    Auto-enrolment minimum contributions will continue on the reduced salary as stated above. If you provide enhanced pension contributions this will contractually have to continue, unless you change their terms and conditions in line with usual employment law practices.

    For full and part time employees you would calculate the employee’s actual salary before tax, as of 28 February to establish the 80%.
    Remember that an employer can take into consideration additional payments mentioned above.

    For employees whose pay varies if the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, employers can claim for the higher of either:

    • the same month’s earning from the previous year
    • average monthly earnings from the 2019-20 tax year

    If the employee has been employed for less than a year, employers can claim for an average of their monthly earnings since they started work.

    If the employee only started in February 2020, employers should use a pro-rata for their earnings so far to claim.

    Once the employer has worked out how much of an employee’s salary they can claim for, you must then work out the amount of employer National Insurance contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

  • What happens if furlough pay drops below National Minimum/Living Wage rates?

    For employees on National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working they will be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW. Remember that minimum wage rates increased on the 1st April 2020.

    However, if employees are required to study or complete online training courses whilst they are furloughed, or are Apprentices who are carrying out training whilst on furlough, then they must be paid at least the NLW/NMW or Apprenticeship wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

    Employers can decide to halt study during this time, but caution is needed if this study is contractual and this may not apply to Apprenticeships.

  • What about my employees who are currently on sick leave or Self-Isolating?

    Employees on sick leave or self-isolating due to having the coronavirus themselves, or because a member of their household has symptoms, would be entitled to receive SSP [Statutory Sick Pay].

    This should continue to be paid and you can furlough them after they would return but not during their absence. SSP is payable by the employer for a total of 28 weeks at a rate of £95.85 per week or until such time that the employee is well and ready to return to work.

    You cannot make a claim for employees while they are in receipt of SSP.

  • What do I do if my employee is shielding?

    You can furlough employees who are unable to attend work because they are shielding in line with public health guidance, or they need to stay at home with someone who is shielding, if that employee is unable to work from home and you would have otherwise made them redundant.

    Guidance regarding shielding guidelines here

  • Employees over 70, who are not shielding but who are not able to work from home

    These individuals, along with all other UK residents should only leave the house for very limited purposes:

    • shopping for basic necessities, for example food and medicine, which must be as infrequent as possible
    • one form of exercise a day, for example a run, walk, or cycle – alone or with members of your household
    • any medical need, including to donate blood, avoid or escape risk of injury or harm, or to provide care or to help a vulnerable person
    • travelling for work purposes, but only where work cannot be done from home

    If the work that these employees are required to do for you is not temporarily required, they could be furloughed.

    If they are self isolating, they can be considered in line with your current absence policy and paid SSP.

  • What do I do if an employee is on unpaid leave?

    If you have employees who were already on unpaid leave for whatsoever reason prior to the 28 February, these employees cannot be furloughed.

    You can only furlough those employees on unpaid leave, if unpaid leave started after 28 February.

  • How does an employer access the financial support?

    The employer will be required to submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.

    HM Revenue & Customs are urgently working on developing a system to deal with reimbursements as current systems do not facilitate this. However, we do not expect this to be available until late-April with repayments to employers from May 2020 if not sooner.

    Whilst waiting to access the HMRC portal for those employees you have furloughed some employers will be able to apply for the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime. We don’t know who will be eligible to claim in respect of their financial situation but do talk to us for support with this.

    The Government have confirmed that to make a claim an employer will need:

    • enrolled for PAYE online
    • your ePAYE reference number
    • the number of employees being furloughed
    • the claim period (start and end date)
    • amount claimed (per the minimum length of furloughing of 3 weeks)
    • your bank account number and sort code
    • your contact name
    • your phone number

    You will only be allowed to make a claim every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.

    Payments will be made directly to you by BACS once approved.
    Employers must calculate the amount that they wish to claim. HMRC reserve the right to retrospectively audit all aspects of your claim.

    Your Claim
    You should make your claim using the amounts in your payroll – either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.

    If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.

    Your claim must start from the date that the employee finishes work and starts furlough, not when the decision is made or when written confirmation is received.

  • How do employers furlough their employees?

    There will be some employers who have a lay off clause in their contracts of employment, for them they can in principle lay off their employees, advising them that they are furloughed. In these cases, the employer would not need the employee’s permission. Please do speak to our HR team to check your contractual wording in these instances and we can provide letters to support you.

    • As stated above furloughed employees cannot work at all for their employer. They must not make money for your company nor must they provide a service for your company.
    • They can take part in voluntary work or training.

    This is not the same as short term working which allows employers (where stated in the employment contract) to instruct employees to work less hours i.e. two days instead of five, or three hours a day instead of seven. Short term working like this is still possible but is not covered by the furlough scheme.

    For many employers they will not have a lay off clause in their contract. In these cases, they cannot simply tell the employee that they are furloughed, they must seek the employee’s permission first. Failing to do this would be a breach of contract and would create a legal risk to the employer.

    However, we would expect most employees to accept this request as the alternative in most cases would be redundancy. For some employers this could mean a complete closure of the business resulting in redundancy payments to staff, which would not be financially possible.

    If the employee agrees to furlough you must confirm this in writing and ask them to sign it. Its vital you maintain an audit trail of this process. Our HR team can assist with a template letter for your use.

    Grant Eligibility
    To be eligible for the government grant, you must confirm in writing to your employees to confirm that they have been furloughed. We would recommend that after getting their agreement, that you ask them to sign and return a copy of the letter providing their agreement. A record of this communication must be retained for five years.

  • Does the employee remain employed during time spent on furlough?

    Yes, the employee remains employed during a period of furlough and will return to work as normal once the furlough period is no longer required.

    Those studying can continue to do so during furlough if agreed with the employer.

  • What happens if the employee doesn’t agree to be furloughed?

    Remember that the reason your employee is being asked to furlough, is because there is no work for them to do. If the employee does not agree to be furloughed with pay, the alternatives would be lay off without pay or redundancy.

    In order to lay off an employee, the employer needs to rely upon a contractual right to do so which is expressly written into the contract of employment. Without this clause, again the employer must consult with the employee and seek agreement. As above this is almost certainly going to be agreed, but redundancy would be a fallback position in which case, you would still need to follow the normal legal process.

  • Can we choose whoever we want to be furloughed?

    Caution is needed here.

    1. Employers must decide first what roles need to be furloughed (i.e. those not needed as they have no or very little work).
    2. If you have a lay off clause in your contract you can then furlough these employees
    3. If you don’t you need to seek their agreement setting out the options i.e. redundancy, no pay or furlough and then get this in writing from the employee
    4. You cannot just pick and choose who to furlough where people are doing the same job. For example, if you have five employees doing the same job, but only need three in work, you cannot just choose the two to be furloughed (as the same employment law applies). Instead you should ask for volunteers first and consider scoring that affected group of employees against a fair criterion, in order to select fairly.
  • How Flexible is Furlough and Minimum Furlough Periods?

    Furlough is a for a minimum of three weeks, you could ask your employee to return to work earlier than that, but you would not then be able to claim this from HMRC.

    It is possible to furlough people more than once, but only on the basis of the three-week minimum. As employees cannot work for you at all during this period you cannot partially furlough e.g. for part of their working week. It must be 100% of their hours for a three-week minimum.

  • What happens to employee benefits during furlough?

    Employees retain rights to their benefits during this period.
    In respect of holiday this continues to accrue whilst employees are furloughed. We do not yet know if employees are allowed to take holiday during a period of furlough.

    We will continue to review this situation and update accordingly.

    Employees will remain entitled to:

    • Statutory Sick Pay
    • Maternity and Other Parental Rights
    • Unfair Dismissal
    • Redundancy payments

    Grants cannot be used to pay for redundancy payments.

    If an employer has high earnings, the differential between what the Government will reimburse, and usual monthly pay will of course be greater. Employers can consider if they wish to top up in these cases but will be entirely optional.

    As detailed previously furlough and the reduction of pay does need to be agreed with the employee so must be signed agreement.

  • What happens if my employees want to be furloughed but we don’t agree?

    This is a very likely scenario where some employees, particularly those who are vulnerable and have been made to go home on sick pay or those who are in work but don’t want to be.

    Ultimately the employer must agree to furlough so employees cannot enforce themselves. But as above you need to apply a fair policy and consider all objections fully.

  • How long will this scheme last?

    Furlough is from 1 March 2020, so can be backdated where you have already laid off employees. It will last for at least three months and will be extended if necessary.

    Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim from the point they agreed to furlough/lay off employees and they had already stopped working for the employer.

    After the three-month period and the scheme ends we do not know if the Government will extend this, if they don’t you would need to decide what actions to take with your employees e.g. they could return to work or you may need to consider redundancies. If the scheme ends you will not be able to make any further claims.

If you need support or advice in helping your business and employees overcome the impact of coronavirus, please contact us.

Duncan & Toplis

Chartered Accountants & Business Advisers