The government has published the details of the Coronavirus Job Retention Scheme, under which staff can be furloughed with their consent.

Please see our latest update on the Coronavirus Job Retention Scheme here.

The full government briefing on the Coronavirus Job Retention Scheme, and how organisations can claim, can be found here.

It will be remembered that furlough is only an option if staff consent.  If they won’t and the employer needs to reduce cost, the only alternative will be to give staff notice and to terminate by reason of redundancy.

The following points have become clear:

  • The Coronavirus Job Retention Scheme is open to all UK employers that had a PAYE scheme in place on 28th February 2020.
  • It only applies in respect of staff employed before that date.  Staff commencing after 28th February 2020 are not eligible.
  • Anybody who was on the payroll on 28th February 2020 and has since been made redundant can be re-hired and put on the scheme.
  • Where staff are furloughed employers can claim up to 80% of wage costs up to a cap of £2,500 per month plus the associated employer NICs and minimum auto enrolment pension contributions on that wage.  Fees, commissions and bonuses are not included.
  • An employer is free to top up the salary to 100% should they wish to do so (the cost of which to the employer is only 20%, assuming that the salary would otherwise be not more than £2,500 per month).
  • For employees whose pay varies, the employer can claim for the higher of:
    • The same month’s earnings from the previous year (earnings from March 2019).
    • Average monthly earnings in the 2019/2020 tax year. 
  • It appears that zero hours workers will be eligible to be furloughed. The entitlement will be 80% of that figure, subject to the standard cap.
  • If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
  • Individuals are only entitled to minimum wage for the hours they work so minimum wage does not apply to furloughed staff.
  • Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.
  • It appears possible to rotate furlough leave amongst employees thus ensuring that staff remain skilled and make their contribution to the work place rather than leaving it only to those who are retained, provided each employee is off for a period of at least three weeks.
  • During the furlough period the employee must not work at all for that employer.  They are however able to undertake training and do volunteer work provided they do not offer services to make any money for their employer.
  • Prioritising for furlough vulnerable workers including those with underlying medical conditions or over a certain age, even if discriminatory, is likely to be objectively justifiable and those who do not suffer from serious health conditions are not a protected class.
  • Employees on sick pay or self-isolating cannot be furloughed but can be furloughed once the sick pay period ends.
  • Employers can only claim reimbursement once every three weeks.  Claims are to be backdated to 1st March 2020.
  • Public sector organisations and organisations receiving public funding, specifically earmarked for salary costs, are expected to continue to use that funding for salary costs rather than furloughing staff.
  • Staff with more than one employer can be furloughed for each job, and the cap applies to each employer.

How to make a claim

To make a claim employers will need to provide:

  • Your ePAYE reference number.
  • Number of employees being furloughed.
  • The claim period (start and end date).
  • Amount claimed (per the minimum length of furloughing of three weeks).
  • Your bank account number and sort code.
  • Your contact name.
  • Your phone number.

It appears that claims will be paid on submission, subject to HMRC’s right to retrospectively audit all aspects of the claim.

Payments will be by BACS to a UK bank account.

Ending the Coronavirus Job Retention Scheme

When the government ends the scheme a decision will need to be taken as to whether or not employees can return to their duties, or whether or not they will be terminated on grounds of redundancy.  If there has been no consultation with staff about redundancy prior to them consenting to be furloughed, fairness will dictate that consultation does occur prior to a decision being taken.  It is likely that there will be sufficient time to do this whilst staff are still being furloughed.


Wages of furloughed employees will be subject to income tax and NI as usual.  Employers will also pay automatic enrolment contributions on qualifying earnings unless they have chosen to opt out or to cease saving into a workplace pension scheme.  Employers will be liable to pay employer’s NI on wages paid as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out.

Payments received by the business under the scheme are made to offset deductible revenue costs so must therefore be included as income in the business’ calculation of its taxable profits.