Furlough leave and the Coronavirus Job Retention Scheme

Since then the CJRS evolved and was extended throughout the course of the summer until 31 October 2020 when it was due to be replaced with the Job Support Scheme (JSS). However, further changes to the tier systems and national lockdowns led to a revised CJRS which itself was also extended and is now in place until 30 September 2021.

This Q&A covers the CJRS as from 1 November 2020 and was last updated on 21 June 2021. 

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What is the Coronavirus Job Retention Scheme?

The Government introduced a new temporary Coronavirus Job Retention Scheme (CJRS) starting from 1 March 2020 where employers who cannot maintain their workforce because their operations have been affected by coronavirus, can agree with their employees to change their work status to a furloughed worker and the Government will provide financial support for employers who do this. The CJRS is designed to help employers whose operations have been severely affected by coronavirus to retain their employees and protect the UK economy. The government recognise that different businesses face different impacts from coronavirus and therefore all employers are eligible to claim under the scheme.  Furlough is a new concept in UK employment law, but it means the employee is on a period of leave.

The CJRS was due to end on 31 October 2020.  However, following the Government’s announcement on that day that England was to go back into lockdown for 4 weeks from Thursday 5 November, they also confirmed that the CJRS was to be extended until December 2020. Since then the CJRS has been further extended until 30 April 2021. HMRC have stated that the original CJRS rules will remain the same except where they have been specifically changed.

Employers can find more information from HMRC on the government website.

Check if you can use the scheme:

• Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme
• Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme

Work out what you can claim:

• Steps to take before calculating your claim using the Coronavirus Job Retention Scheme
• Calculate how much you can claim using the Coronavirus Job Retention Scheme
• Find examples to help you calculate your employees' wages

Claim and report earnings:

• Claim for wages through the Coronavirus Job Retention Scheme
• Reporting employees' wages to HMRC when you've claimed through the Coronavirus Job Retention Scheme

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How  will the CJRS change following the March 2021 Budget?

The government is extending the CJRS for a further five months from May until the end of September 2021. Employees will continue to receive 80% of their current salary for hours not worked. There will be no employer contributions beyond National Insurance contributions (NICs) and pensions required in April, May and June. From July 2021, the government will introduce an employer contribution towards the cost of unworked hours of 10% in July 2021, 20% in August 2021 and 20% in September 2021.
Employees who were first reported on your payroll between 31 October 2020 and 2 March 2021 can be furloughed from 1 May 2021.

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What is flexible furlough?

Employees can either be fully furloughed for all of their normal working hours, or furlough can be flexible. This can be on any basis as agreed between the employer and employee. The number of hours and/or the working pattern can be varied to suit both the employer and employee depending on the circumstances at the time. Employers can decide the hours and shift patterns their employees will work and will be responsible for paying their wages while in work. The usual hours that are not worked will be classed as furloughed hours where the employee will be entitled to receive 80% of their usual wage, which the employer may claim from the CJRS. The working pattern does not need to be the same for the period of flexible furlough as it can be changed, with agreement throughout the time the employee is furloughed to suit the needs of the business.

Any time they are on annual leave, leave taken on account of time worked under a flexible work time arrangement (flexi-leave), family related statutory leave, or reduced rate paid leave following a period of family related statutory leave, while flexibly furloughed will be counted as furloughed hours and not as time actually worked.

If an employee is flexibly furloughed, you must pay them their full contracted rate of pay for the hours that they work and you cannot claim a grant towards these wages you must pay.

Who can claim?

Any UK business that has employees on their PAYE payroll by 23:59 30^th October 2020 for claim periods ending on or before 30 April 2021. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made between 20 March 2020 and 30th October 2020. This date has been extended from the original qualifying date for the CJRS and has been further extended by the March 2021 Budget. Employees who were first employed by you between 31 October 2020 and 2 March 2021, can be included in a claim period starting on or after 1 May 2021 so as long as they have been included in a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee.  A UK bank account which accepts BACS payments will be needed. 

Neither the employer nor the employee needs to have previously used the CJRS. Eligible employers can claim whether their businesses are open or closed, and not all of their employees need to be furloughed. For further information on how to select which employees to furlough when there is work for only some of them, please see What should I do if I have enough work for some but not all my employees and would still like to make use of the CJRS?

The government expects that publicly funded organisations will not use the scheme, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.

• Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees and will be able to vary the hours worked with the employee’s agreement.
• Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period.
• Employers will be paid upfront to cover wages costs.
• When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of seven consecutive calendar days.
• Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.
• For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

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Who can I furlough?

All employees on your payroll on 30 October 2020 and who you made an RTI submission notifying payment in respect of that employee to HMRC between 20 March 2020 and 30 October 2020 can be furloughed. Employees who were first employed between 31 October 2020 and 2 March 2021, can be included in a claim period starting on or after 1 May 2021 so as long as they have been included in a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. Employees can be on any type of employment contract, subject to the correct procedure being followed. This will include those employed on full time, part time, fixed term, apprenticeship, zero hours or flexible contracts. Foreign nationals employed by you are included in the scheme and it has been confirmed that grants under the scheme are not classed as ‘access to public funds’ and are not classed as state aid.

There is no limit to the number of employees that you can furlough. You can choose whether you furlough any of them and if you do, you can choose who to furlough where you believe it to be appropriate to do so or just some of your employees, subject to the CJRS rules.

Fixed term contracts can be extended or renewed during a furlough period. There is no minimum period which must be left to run on a fixed term contract to enable it to be renewed or extended.

If the employee’s fixed term contract has not already expired, it can be extended, or renewed. For claim periods ending on or before 30 April 2021, employers can claim for them if an RTI payment submission for the employee was notified to HMRC between 20 March 2020 and 30 October 2020. If an employee’s fixed term contract expired on or after 23 September 2020, they can be re-employed and claimed for. This applies as long as the employee was employed by you on 23 September 2020 and an RTI submission was made to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

For periods starting on or after 1 May 2021, employee on a fixed term contact can be put on furlough as long as they were employed by you on 2 March 2021, and you have made an RTI submission to HMRC between 20 March 2020 and 2 March 2021.

If you use any agency workers employed by an agency, they will be the employer responsible for making any decision about to furlough them or not.

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How long must furlough be for?

Unlike the original CJRS up until 30 June 2020, there is no minimum period of furlough needed under the extended CJRS, regardless if an employee is fully or flexibly furloughed, although the period claimed for must be for a minimum claim period of seven consecutive calendar days. There is also no maximum period of time for furlough or limit on the number of times an employee may be furloughed while the CJRS is live.

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What will I need to pay my employees?

That will depend on what you have agreed with them as part of the terms of the furlough leave. During furlough, the employee should be paid at least 80% of their normal wage for the time that they are not working. An employee is fully furloughed if they do not do any work for you during the claim period. If an employee is on flexible furlough, they will need to be paid their usual wage for the time spent working and 80% of their wage for the time they are furloughed. 

The CJRS will reimburse 80% of the usual monthly wage cost up to a maximum of £2,500 per month. The cap will be proportional to the hours not worked. Employers need to pay the associated Employer National Insurance contributions and minimum automatic auto enrolment pension contributions on that wage as these costs are not covered by the CJRS.

From 1 July 2021 the level of grant from the government will be reduced and employers will need to contribute towards the costs of furloughed employees’ wages. Employees will still be entitled to 80% of their normal wages for their furloughed hours, subject to the cap of £2500 per month. For claim periods from 1 July 2021, employers will need to pay 10% and this will increase to 20% for claims periods starting on 1 August 2021 and 1 September 2021.

The minimum furlough pay is the lesser of either:

• 80% of their usual wage
• the maximum wage amount

If your employee is flexibly furloughed the minimum furlough pay depends on their working and furloughed hours. Start with the lesser of:

• 80% of their usual wages
• the maximum wage amount

1. Multiply by the employee’s furloughed hours.
2. Divide by the employee’s usual hours.

This is the minimum amount you must pay your employee for the time they are recorded as being on furlough. You can choose to pay more than this but you do not have to.

If any of the furlough hours are taken as paid holiday or annual leave, you need to top up the pay for these hours to the employee’s full contracted rate.

Fees, non-discretionary commissions and past overtime payments that you are obliged to pay are included in the CJRS, however discretionary commissions, tips, bonuses, non-cash payments and benefits in kind such as the costs of a company car or gym membership are excluded. Benefits that are received in exchange for giving up an amount of pay under a salary sacrifice scheme are also excluded.

When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee had an enforceable right.

When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.

If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary.

Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked. Further detail from HMRC on what should and should not be included is available here.

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Do I have to pay national minimum wage

National minimum wage (NMW) rules do not apply to furloughed hours and this may mean that the 80% rate is below the NMW, which is legally acceptable. However, while it’s not stated in the guidance, HMRC are of the opinion that employers should top up any furlough pay to meet NMW rates, although there is no obligation on employers to do so. If any compulsory training is undertaken NMW will apply for this time, even if this is more than the 80% being funded through the scheme. 

If an employee is flexibly furloughed, they must be paid their normal wage which must be at least NMW for the hours that they have worked.

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How do I calculate what I can claim from the CJRS?

HMRC have an online calculator, however, the calculator does not cover all scenarios and HMRC are clear that it is the employer’s responsibility to check that the amount being claimed is correct. HMRC advise employers to use the calculation they think best fits the way their employee is paid. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice of approach is made.

This calculator can be used to work out what you can claim. It can be used for most employees who are paid either regular or variable amounts each pay period (for example, weekly or monthly). See here for the circumstances where the calculator can and cannot be used.

If you are claiming for an employee who is flexibly furloughed, you will need to work out their usual hours before you use the calculator.

HMRC have produced worked examples of how to work out employee’s usual hours, furloughed hours and 80% of their normal wage.

Before you can calculate how much you can claim from the CJRS you’ll need to work out your employee’s usual wages. The calculation of the employee’s usual wages is based on the amount they were paid in a particular period, so if their pay or working arrangements have recently changed then the amount you can claim (and the amount you must pay them for the hours not worked) may be based on the previous arrangements. You will need to work out:

• the length of your claim period – this is the number of days you are claiming a grant for
  • the start date of your first claim period is the date your first employee was furloughed
  • claim periods must start and end within the same calendar month and last at least 7 days
  • you can claim for a period of less than 7 days if you’re claiming for the first few days or the last few days in a month. You can only claim for a period of fewer than 7 days if the period you are claiming for includes either the first or last day of the calendar month, and you have already claimed for the period ending immediately before it
  • you can only make one claim for any period so you must include all your furloughed or flexibly furloughed employees in one claim even if you pay them at different times
  • if you make more than one claim, your subsequent claim cannot overlap with any other claim that you make
  • where employees have been furloughed or flexibly furloughed continuously (or both), the claim periods must follow on from each other with no gaps in between the dates
  • you can claim before, during or after you process your payroll as long as your claim is submitted by the relevant claim deadline
  • you cannot submit your claim more than 14 days before your claim period end date
• what you can include when calculating wages
• your employees’ usual hours and furloughed hours – you will need to identify the correct reference date for each employee

Reference date for employees who you have made a CJRS claim for in a claim period ending any time on or before 31 October 2020, or were on your payroll on 19 March 2020 and you made an RTI submission for them on or before 19 March 2020.

To work out an employee’s usual hours you will need to consider their contracted hours at the end of their reference date. For fixed pay employees you should base the calculations on the last pay period ending on or before 19 March 2020, and for variable paid employees you should calculate 80% of the higher of: 

• the wages earned in the corresponding calendar period in the previous year (calendar lookback method)
• the average wages payable in the tax year 2019 to 2020 (averaging method)

If an employee with fixed pay has worked enough overtime to have a significant effect on the amount an employer needs to claim, the 80% of their usual wages should be calculated using the method for employees whose pay varies.

Reference date for employees who you have made a CJRS claim for in a claim period between 1 November 2020 to 30 April 2021, or were on your payroll and you made an RTI submission for them between 20 March 2020 and 30 October 2020.

These employees will only be eligible for claim periods starting on or after 1 November 2020.

For all employees on a fixed salary who were on the payroll on 30 October 2020, the employee’s reference date will be their last pay period ending on or before 30 October 2020.

For those employees whose pay varies, they will be entitled to 80% of the average number of hours worked between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their furlough periods begins on or after 1 November 2020 (averaging method).

Reference date for employees who were first on your payroll and you made an RTI submission for them between 31 October 2020 and 2 March 2021.

These employees can be furloughed from 1 May 2021. Their reference date will be 2 March 2021.

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How do I calculate the usual hours of an employee?

Fixed hours

To calculate the number of usual hours for each pay period (or partial pay period):

1. Start with the hours your employee was contracted for at the end of the last pay period ending on or before their reference date.
2. Divide by the number of calendar days in the repeating working pattern, including non-working days.
3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
4. Round up or down if the result isn’t a whole number.

If an employee with fixed hours was on annual leave, off work sick or on family related statutory leave at any time during the last reference date, the usual hours should be calculated as if the employee had not taken that leave.

See here for examples of working out average hours.

Variable hours

Employers should identify the hours the employee worked using pay records, time sheets and other records which show time worked. If these aren’t available then use other records, such as rotas or work diaries. If these records are not available, employers may use the pay rate to work back from gross pay.

When you calculate the usual hours, you should include:

• any hours of leave for which the employee was paid their full contracted rate (such as annual leave)
• any hours worked as ‘overtime’, but only if the pay for those hours was not discretionary

Averaging method for employees whose reference date is 19 March 2020:

To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked in the tax year 2019 to 2020:

1. Start with the number of hours actually worked (or on paid annual leave or flexi-leave) in the tax year 2019 to 2020 before the employee was first furloughed, or the end of the tax year if earlier.
2. Divide by the number of calendar days the employee was employed by you in the tax year 2019 to 2020, up to (and including) the day before they were first furloughed, or the end of the tax year if earlier (excluding any days where the employee was on a period of SSP or family related leave or receiving a reduced rate of pay following a period of SSP or family related leave).
3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
4. Round up or down if the result is not a whole number.

See here for examples of working out average hours.

Averaging method for employees whose reference date is 30 October 2020 or 2 March 2021:

For employees whose reference date is 30 October 2020, ‘the date to calculate up to’ is the day before the employee’s first day spent on furlough on or after 1 November 2020.
For employees whose reference date is 2 March 2021, ‘the date to calculate up to’ is the day before the employee’s first day spent on furlough on or after 1 May 2021.
To work out the usual hours for each pay period (or partial pay period) based on the average number of hours worked from 6 April 2020 (or the day the employee’s employment started if later) up to (and including) the day before the employee’s first day spent on furlough on or after 1 November 2020 or on or after 1 May 2021:

1. Start with the number of hours actually worked (or on paid annual leave or flexi-leave) from 6 April 2020 (or the day the employee’s employment started if later) and up to (and including) the date to calculate up to.
2. Divide by the number of calendar days the employee was employed by you from 6 April 2020 (or the day the employee’s employment started if later) – including non-working days – up until (and including) the date to calculate up to, (excluding any days where the employee was on a period of SSP or family related leave or receiving a reduced rate of pay following a period of SSP or family related leave).
3. Multiply by the number of calendar days in the pay period (or partial pay period) you are claiming for.
4. Round up or down if the result is not a whole number.

See here for examples of working out average hours.

Calendar lookback method:

To work out the usual hours for a pay period or partial pay period based on the corresponding calendar period in a previous year:

1. Identify the pay periods that include at least one calendar day in the lookback period and correspond to at least one calendar day in the pay period (or partial pay period) you are claiming for.
2. If the pay period (or partial pay period) you are claiming for starts and ends on the same calendar days as the pay period identified in Step 1 - use the number of hours they actually worked in that pay period.
3. If the pay period (or partial pay period) you are claiming for does not start and end on the same calendar days as the pay periods identified in Step 1 – you’ll need to add together a proportion of the hours worked in each of the pay periods you’ve identified.

If your pay periods end on the last day of February you will need to adjust the number of hours worked, because 2020 being a leap year, means they will not end on the same calendar day.

If your employee did not work for you in the lookback period, you can only use the averaging method to calculate their usual hours.

If you have to work out the usual hours based on the hours worked in more than one pay period in a previous year, please refer to HMRC’s guidance.

See here for examples of working out average hours.

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How do I calculate 80% of my employee's wages

80% of wages is capped at the maximum wage amount, which is £2,500 a month, or £576.92 a week for the time that they are furloughed. The way you should work out 80% of your employee’s usual wages is different depending on the way they’re paid. You must check what you can include as wages first.

Choose the calculation you think best fits the way your employee is paid, this might not be the same way that you have worked out their usual hours. For example, if you pay your employee a fixed regular salary, use the calculation for fixed pay amounts. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice is made. Where a claim covers multiple pay periods, this calculation should be done for each and then added together.

Fixed Salary

To work out 80% of your employee’s wage who is on a fixed salary:

1. Start with the wages payable to your employee in the last pay period ending on or before their reference date - if you’re claiming for a full pay period, skip to step 4.
2. Divide by the total number of days in the pay reference period.
3. Multiply by the number of furlough days in the pay period (or partial pay period) being claimed.
4. Multiply by 80%.

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.

Please see HMRC’s guidance on how to work out 80% of your employee’s usual wage  for more detail on how to calculate the maximum wage amount.

If you have an employee with annual pay, or their first pay period ends after their reference date or their reference period is not a full pay period or the pay frequency has changed please see HMRC guidance for more detail. 

Variable pay

For employees with a reference date of 19 March 2020, you will need to calculate 80% of the higher of the:

• wages earned in the corresponding calendar period in a previous year
• average wages payable in the tax year 2019 to 2020

For employees with a reference date of 30 October 2020, you will need to calculate 80% of the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they were first furloughed on or after 1 November 2020.

For employees with a reference date of 2 March 2021, you will need to calculate 80% of the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the date before they were first furloughed on or after 1 May 2021.

If your employee has variable hours, you’ll have completed a similar comparison to work out their usual hours but the outcome may be different.

To work out 80% of the average monthly wages for tax year 2019 to 2020 using the averaging method for employees with 19 March 2020 reference date:

1. Start with the amount of wages that were payable to the employee in the 2019 to 2020 tax year up to (and including) the day before they were first furloughed.
2. Divide it by the number of days from the start of the 2019 to 2020 tax year – including non-working days (up to and including) the day before they were first furloughed, or 5 April 2020 – whichever is earlier).
3. Multiply by the number of furlough days in the pay period (or partial pay period) you are claiming for.
4. Multiply by 80%.

To work out 80% of your employee’s average earnings for an employee who started working for you on or after 6 April 2019:

1. Start with the amount of wages that were payable to the employee in the 2019 to 2020 tax year up to (and including) the day before they were first furloughed.
2. Divide it by the number of days they’ve been employed since the start of the 2019 to 2020 tax year – including non-working days (up to and including) the day before they were first furloughed or 5 April 2020 – whichever is earlier).
3. Multiply by the number of furlough days in the pay period (or partial pay period) you are claiming for.
4. Multiply by 80%.

Every day after the employee commenced employment with you is counted in making this calculation. This includes non-working days.

To work out 80% of your employee’s average wages whose pay varies and whose reference date is 30 October 2020 or 2 March 2021, using the averaging method:

Before you work out 80% of the average monthly wages using this calculation, you need to know what ‘date to calculate up to’.

For employees whose reference date is 30 October 2020, the ‘date to calculate up to’ is the day before the employee’s first day spent on furlough on or after 1 November 2020.

For employees whose reference date is 2 March 2021, the ‘date to calculate up to’ is the day before the employee’s first day spent on furlough on or after 1 May 2021.

1. Start with the amount of wages that were payable to the employee from 6 April 2020 and up to (and including) the day to calculate up to.
2. Divide it by the number of days they’ve been employed from 6 April 2020 – including non-working days (up until and including the day to calculate up to.
3. Multiply by the number of furlough days in the pay period (or partial pay period) you are claiming for.
4. Multiply by 80%.

If you have an employee with variable pay and their first pay period ends after their reference date or their reference period is not a full pay period or the pay frequency has changed please see HMRC guidance for more detail. 

When using the calendar lookback method, you calculate 80% of the wages from the corresponding calendar period in a previous year, the period you look back to depends on the period you are claiming for.

To calculate 80% of the wages from the corresponding calendar period in a previous year:

1. Start with the amount they earned in the corresponding part of the lookback period.
2. Divide by the total number of days in that pay period - including non-working days.
3. Multiply by the number of furlough days in the pay period (or partial pay period) you are claiming for.
4. Multiply by 80%.

If your employee did not work for you in the lookback period, you can only use the averaging method to calculate 80% of their wages.

Please see HMRC’s guidance on how to work out 80% of your employee’s usual wage for more detail on how to calculate the maximum wage amount, including on what to calculate when days and wages are related to any SSP or statutory family leave. 
 

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What is the minimum furlough pay my employee should receive and how do I calculate this?

The minimum furlough pay is the lesser of either:

• 80% of their usual wage
• the maximum wage amount

If your employee is flexibly furloughed the minimum furlough pay depends on their working and furloughed hours.

• Start with the lesser of:
  • 80% of their usual wages
  • the maximum wage amount
• Multiply by the employee’s furloughed hours.
• Divide by the employee’s usual hours.

This is the minimum amount you must pay your employee for the time they are recorded as being on furlough. You can choose to pay more than this but you do not have to.

If any of the furlough hours are taken as paid holiday or annual leave, you need to top up the pay for these hours to the employee’s full contracted rate.

If your employee is only furloughed or flexibly furloughed for part of your claim period, when calculating the number of furloughed hours you can claim for make sure you:

• only calculate the employee’s usual hours for the days covered by the furlough agreement
• do not include any working hours on days not covered by a furlough agreement

This applies even if your claim period includes days before or after the employee’s furlough agreement.

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How do I calculate the maximum amount I can claim from the CJRS?

The maximum wage amount you can claim is 80% of your employee’s wage, with the maximum claim capped at £2,500 a month, or £576.92 a week for the time that they are furloughed. If they are flexibly furloughed at any time, the cap is adjusted pro rata. The £2,500 cap is proportional to the hours not worked. From July 2021, employers will need to contribute towards the wages for their employees’ furloughed hours. 

For periods up to 30 June 2021 you can claim a grant for the full amount of the minimum furlough pay.

For periods starting on or after 1 July 2021 you’ll need to calculate the grant amount as follows:

1. Start with the amount of minimum furlough pay.
2. Divide by 80.
3. Depending on which month you’re claiming for, multiply by:

• 70 for July 2021
• 60 for August 2021
• 60 for September 2021

If you are calculating for the entire claim period you should use the monthly maximum wage amount if the claim period is a full month, otherwise you should use the daily maximum wage amount.

If you’re calculating for each pay period, or part of a pay period, that falls within your claim period you should use the:

• weekly maximum wage amount for each period that is a full pay period lasting 1, 2 or 4 weeks
• daily maximum wage amount for any other pay period or partial pay period

To work out the maximum amount you can claim, multiply the daily maximum wage amount by the number of days your employee is furloughed for in your claim.

If you’re claiming for multiple pay periods in one claim, you can calculate the total maximum using a mixture of:

• the daily maximum wage amount
• the weekly maximum wage amount
• the monthly maximum wage amount

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Can I claim for employees who are unable to work due to health conditions or caring responsibilities?

Yes, employees can be furloughed under the extended CJRS where they are unable to work because:

• they are clinically extremely vulnerable, or at the highest risk of severe illness from coronavirus and following public health guidance (the employer does not need to be facing wider reduction in demand or to be closed to be eligible to claim for these employees)
• They have caring responsibilities resulting from coronavirus, including looking after children

When agreeing to furlough employees due to their caring responsibilities, it is advisable to ensure they are obliged to notify you of any change in their circumstances and you may want to take steps to ensure they are not authorised to take another job whilst being furloughed by you IF you have work available for them to do. 

Employers should remember there is no obligation to furlough any employee including where the employee has requested it. Employers should make any furlough decisions based on what the needs of the business are. 

The CJRS is not intended for short-term sick absences. If, however, employers want to furlough employees for business reasons and they are currently off sick, they may do so but short-term illness/self-isolation should not be a consideration in deciding whether to furlough an employee.

Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP) or any contractual sick pay they are entitled to. As it was previously under the CJRS, it is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate ensuring that they receive at least their minimum sick pay entitlement within that rate.

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Can I claim for an employee who was previously made redundant or stopped working for me?

Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for if the claim period is between 1 November 2020 and 30 April 2021. You must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 30 October2020, notifying a payment of earnings for those employees.

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What about employees who are already away from the workplace due to sickness or become sick while furloughed?

Employees who are on sick leave or self-isolating would continue to be entitled to SSP or employers’ sick pay as appropriate, unless it has been agreed that they are eligible and should be furloughed, in which case they would be entitled to a furlough wage instead. It will be for the employer to decide if they wish to furlough an employee who is off sick.

Employers can claim from both the CJRS and SSP rebate scheme for the same employee but not in relation to the same period of time. 

For more detail on calculating furlough pay for employees who have returned from sickness absence and are being furloughed afterwards, please refer to HMRC’s guidance.

Furloughed employees retain their statutory rights, including their right to Statutory Sick Pay (SSP). This means that furloughed employees who become ill must be paid at least SSP, in most cases the furloughed wage will meet this requirement. It is up to employers to decide whether to move these employees onto sick leave and SSP or to keep them on furlough, at their furloughed rate.

If a furloughed employee who becomes sick is moved onto SSP, you will no longer be able to claim through the CJRS for this time on sick leave as you are required to pay SSP yourself. If the employee is absent due to coronavirus you may qualify for a rebate for up to 2 weeks of SSP through the SSP rebate scheme. If you decide to keep the sick furloughed employee on the furloughed rate, you will remain eligible to claim for these costs through the CJRS scheme, subject to the scheme’s rules. For more detail concerning the SSP rebate scheme, please see ‘What SSP can I reclaim and how do I do this?’ in our separate coronavirus Q&A.

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Can I claim for employees who are on or are returning from statutory parental leave?

If your employee returns from maternity, shared parental, adoption, paternity or parental bereavement leave and you are claiming in respect of a period that starts on or after 1 November 2020, the normal scheme rules apply.
If you have any employees who plan to take maternity, adoption, paternity, shared parental leave or parental bereavement leave then you should pay them their statutory pay rights as the normal rules apply. Although, you may need to calculate your employee’s average weekly earnings differently, if your employee was furloughed and then started leave on or after 25 April 2020 for:

•    maternity pay
•    adoption pay
•    paternity pay
•    shared parental pay 
•    parental bereavement pay

For more detail on calculating furlough pay for employees who have returned from family-related statutory leave and are being furloughed afterwards, please refer to HMRC’s guidance.

Employers can claim through the CJRS any enhanced additional contractual payments made in relation to a period of paid maternity, adoption, paternity, shared parental leave or parental bereavement leave. 

Ending maternity leave early to be furloughed

If your employee decides to end their maternity leave early to enable them to be furloughed (with your agreement), they will need to give you at least eight weeks’ notice of their return to work unless you have been able to agree a shorter notice period. You will not be able to furlough them until the end of the eight8 weeks, or the date that you have agreed they can return to work.

If your employee is getting Maternity Allowance while they’re on maternity leave, they should not get furlough pay at the same time. If your employee has agreed to be put on furlough, they will need to contact Jobcentre Plus to stop their Maternity Allowance payments.

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How do I furlough an employee?

Once you have either agreed to change the employee’s status to furlough worker or have established that you have the express contractual right to make such a change, you must write to your employee confirming the arrangements, including when it will take affect from and what contractual rights may or may not apply during the furlough leave period. Please see our online template letter to send to your employees.If you need to re-furlough any employees who have previously been furloughed, it is advisable that you use the latest version of the letter available on our website at every time of furlough.  It is best practice, although not essential, to ask the employee to sign a copy of the letter and return it to you. ACAS have template letters you can use if you need to extend a period of furlough. Employers should review the furlough agreements they have in place to see if they need to be extended or updated in light of the extension to the CJRS brought in by the March 2021 Budget.

If you are changing the furlough agreement to a flexible furlough arrangement you will need to have and keep records of new, up to date written confirmation of this. Please see our template letter for arranging flexible furlough.

Any new agreements or changes to existing agreements must be made prior to the change in hours as it is not possible to agree any retrospective changes. The agreement must still be made in accordance with the conditions of the CJRS. 

HMRC’s guidance asks employers to keep their employees informed, answering any questions that they might have and to ask their employees not to contact HMRC as they will be unable to provide employees with details of claims made by their employer.

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What should I do if I have overclaimed from the CJRS or no longer need the grant received?

If you have overclaimed from the CJRS or if you do not need the grant and want to make a voluntary repayment you should refer to HMRC’s guidance on how to Pay Coronavirus Job Retention Scheme grants back.

If you’ve overclaimed a grant and have not repaid it, you must notify HMRC by the latest of (one of the following):

• 90 days after the date you received the grant you were not entitled to
• 90 days after the date you received the grant that you were no longer entitled to keep because your circumstances changed
• 20 October 2020

If you do not do this, you may have to pay a penalty. If you do repay any overclaimed grant, this will prevent any potential tax liability in respect of the overpayment of Coronavirus Job Retention Scheme. HMRC will not be actively looking for innocent errors in their compliance approach.

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Do I need to keep any records?

Employers must confirm in writing than an employee has been furloughed and ensure that a record of this is kept for five years from the date of furlough (until at least 30 June 2025). Records of any change to the furlough arrangement, including flexible furlough, will also need to be kept.

Usual payroll records must also be kept for 6 years. Your records must show:

• The amount claimed and claim period for each employee
• The claim reference number
• Your calculations in case HMRC need any further information
• For flexible furloughed employees: the usual hours they work and the actual hours worked.

If you need to re-furlough an employee this must be confirmed in writing again. ACAS has template letters you can use if you need to extend a period of furlough.

What do I do if my employee doesn’t agree to be furloughed?

Employees cannot be forced onto furlough leave unless there is an express applicable lay off clause in their contract or you follow the correct change of contract procedures. Where there is no such clause and the employee refuses to agree to a period of furlough leave you should consider if they are going to be at risk of redundancy or termination of employment. Please contact CallFirst for further advice before taking any further action.

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What should I do if I have enough work for some but not all my employees and would still like to make use of the CJRS?

It would be advisable to adopt a selection process similar to that in a redundancy situation but also giving priority where appropriate to vulnerable groups, as any selection made must be fair. This may appear to some to be discriminatory but it can be defended as a reasonable adjustment for disabled employees who are deemed to be vulnerable and a reasonable and proportionate means of achieving a legitimate business aim for others. Other employees may feel disgruntled by this but you should explain to them the circumstances that you are in.

Some employers may be willing to offer some sort of reward or benefit to those employees who continue working while others are on furlough leave, but this of course is not compulsory and entirely at the discretion of the employer. 

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How do I claim on the CJRS?

Claims made through the original CJRS were through an online portal and this continues to be the case for the extended CJRS. The extended CJRS will operate as the previous scheme did, in several respects:

• Employers must report and claim for a minimum period of seven consecutive calendar days.
• Employers will need to report actual hours worked and the usual hours an employee would be expected to work in a claim period.

The claim period must start and end within the same calendar month. If the pay period includes days in more than one month, each of those claims will need to be calculated separately. Claim periods cannot overlap, and employees claimed for will need to be included in each separate claim made.

An employer can make a claim in anticipation of an imminent payroll run, at the point they run their payroll or after they have run their payroll.

Claims relating to each calendar month should be submitted by day 14 of the following month. If this time falls on the weekend or bank holiday then claims should be submitted by the next working day. HMRC may accept a claim made after the relevant deadline if there is a reasonable excuse for failing to make a claim in time and the claim was made without delay after the excuse no longer applied. However, reasonable excuses will not be considered in advance of a claim deadline. Employers should use the service as normal and submit a request from the page where they choose their claim month. The closing date for claims up to and including 31 October remains 30 November 2020.

If you are claiming for 16 or more employees, there is a template you can download depending on how many you’re claiming for:

• 16 to 99 employees (should be used for claims on or after 27 May 2021)
• 100 or more employees (should be used for claims on or after 1 July 2020)

You need to upload the template when you claim.

Using these templates will help make sure your claim is processed quickly and successfully. Your template may be rejected if you do not give the information in the right format.

Grants payments will be made within six working days of claims.

If you make an error in your claim that has resulted in you receiving too little money, you will still need to make sure you pay your employees the correct amount. 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 or bank holiday and then it is the next working day). For example, to amend a claim for November 2020, you must amend the claim by 11.59pm on Tuesday 29 December 2020.

Can I claim from the CJRS for wages paid to a furloughed employee during their notice period?

For claim periods starting on or after 1 December 2020, it is no longer possible to claim for wages paid for any day to a furloughed employee for which they were serving a contractual or statutory notice period (for whatever reason they are serving their notice, including resignation). If an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, the claim will need to be adjusted unless it was for a day prior to 1 December 2020.

New legislation was introduced from 31 July 2020 requiring employers to ensure that furloughed employees who receive statutory notice payments have those sums calculated on the basis of their full, normal rate of pay rather than any reduced rate they may have been receiving while on furlough under the CJRS. The legislation also applies to furloughed employees who receive statutory redundancy payments, however the CJRS will not fund any part of redundancy payments.

What happens to the employee’s rights during a period of furlough?

The employee will remain employed during the leave and continue to benefit from their statutory and contractual rights, other than the right to pay. Holiday rights will continue to accrue, see – What happens to holiday rights during furlough?. As part of the agreement to furlough it may be possible to agree to vary some of the contractual rights so that they don’t apply during furlough but this will be a matter of negotiation between employer and employee. For those employees with two years of more service, they will continue to be protected employees and have the right to make a claim for any unfair dismissal during a period of furlough. 

Employees who are flexibly furloughed will be entitled to be paid their normal wage for the hours they work. There is no Government contribution towards any of these wage costs.

What happens to holiday rights during furlough?

Furloughed employees continue to accrue leave as per their employment contract. During furlough the employer and employee can agree to vary holiday entitlement only which is over and above the 5.6 weeks of statutory paid annual leave. HMRC has confirmed that employees can take holiday whilst on furlough, although employees should not be furloughed just because they are going to be on paid leave or it is a typical less busy time of year for the business, such as the festive period. This means that employees should only be placed on furlough because the business’ operations have been affected by coronavirus and not just because they are on paid leave.

If a furloughed employee takes holiday, the employer should pay the usual holiday pay in accordance with the Working Time Regulations (WTR). Employers will be obliged to top up the grant from the CJRS for any time deemed to be holiday and ensure that full holiday pay is paid for that day/s.

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. Employees should not be placed on furlough for a period simply because they are on holiday for that period.

Any requests for holiday from the employee or requirements by the employer to take holiday should be made as per the employer’s and WTR procedures.

If an employee usually works bank holidays then the employer can agree that this is included in the furloughed period and payment. If the employee usually takes the bank holiday as leave then the employer must either top up the furlough pay to their usual holiday pay or keep it as a furlough day and give the employee a day of holiday in lieu.

HMRC has said that as this is such an unprecedented time, they are keeping the policy on holiday pay during furlough under review. If there are any further changes our guidance will be updated to reflect this.

The government has produced a new online guide: Holiday entitlement and pay during coronavirus (COVID-19) which gives an explanation of how holiday entitlement and pay operate during the coronavirus pandemic and where it differs from the standard holiday entitlement and pay guidance, including how furloughed employees may be affected.

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Can my employee take part in training, work for another employer or take part in any voluntary work while they are furloughed under the extended CJRS?

During the hours which employees are recorded as being on furlough, they cannot do any work for their employer that makes money or provides services for their employer or any organisation linked or associated with their employer. This includes any work at home, even if it’s just checking work related emails, however you will still be able to use email as a means of keeping in touch with them. If an employee is flexibly furloughed, they may work from home during their working hours only, not during their furlough hours.

It is possible for furloughed employees to volunteer for another employer or organisation or complete training for their employer during their furloughed hours as long as they do not provide services to or generate revenue for, or on behalf of your organisation or an organisation linked to or associated with your organisation. You cannot furlough your employee and then ask or expect them to volunteer for you in the same or a different role.

If your employee is required to complete any training such as online training courses during their furloughed hours, then they must be paid at least national minimum wage (NMW) for the time spent training, even if this is more than the 80% of their wage that will be subsidised. Government guidance states employees should be encouraged to undertake training but it’s not compulsory and will be for individual employers to decide if this is appropriate.

If you have furloughed an apprentice their training may continue throughout the period of furlough, subject to NMW requirements mentioned above.

If your employee has an existing second job they may still work for their other employer whilst furloughed by you, subject to any prohibitions in their contract with you or any conditions you make the offer of furlough leave subject to. If they are furloughed by their second employer it will be classed as two separate furloughs which are not linked to each other in any way.

Whilst furloughed, your employee may want to start a second job. Some employment contracts may have a restriction on working for a second employer. Where there is such a restriction in the contract it is possible for an employer to choose to waive the clause. This will be the choice of the employer but furloughed workers are being encouraged to help fill in the gaps of workforces in certain industries such as the care sector, farming and food production, therefore employers with these types of restrictions in their contracts may want to allow their employees to help where they are able to.

Where furloughed employees are taking up further employment during a period of furlough, they should be made aware they are expected to return to their original work when the period of furlough ends and may not be able to continue working in the new second role.

If you are flexibly furloughing an employee and they have a second job with another employer, you may allow them to continue with that job, provided that it does not prevent them from being able to work for you during their working hours. If they took up their second job whilst they were on furlough from the business and it prevents them from being able to work for you during their working hours, you will need to make sure that the employee has either changed their working hours in that job or resigned from it.

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What do I need to do if I take on a new starter who is being furloughed by their current employer?

If you take on a new employee, you will need to complete the starter checklist form correctly, available here. If the employee is furloughed from another employment, they should complete Statement C.

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What about new employees that I have under TUPE?

For claim periods between 1 November 2020 and 30 April 2021, a new employer is eligible to claim in respect of the employees of a previous business transferred as long as:

• the TUPE or PAYE business succession rules apply to the change in ownership
• the employees being claimed for have been:
  • transferred from their old employer to their new employer on or after 1 September 2020
  • employed by either their old employer or new employer on 30 October 2020
  • on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee

For claim periods beginning on or after 1 May 2021, a new employer is eligible to claim in respect of the employees of a previous business transferred as long as:

• the TUPE or PAYE business succession rules apply to the change in ownership
• the employees being claimed for have been:
  • transferred from their old employer to their new employer on or after 1 January 2021
  • employed by either their old employer or new employer on 2 March 2021
  • on a PAYE Real Time Information (RTI) submission to HMRC, by their old or new employer between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee

For more information on this please refer to HMRC’s guidance.

Will my details be published by HMRC if I make a claim under the CJRS?

For claims that have been made during December 2020 and onwards, from February 2021 HMRC will publish on .GOV.UK on a monthly basis:

• the employer’s name
• an indication of the value of the claim within a banded range and, 
• for companies and Limited Liability Partnerships (LLPs) the company registration number of those who have made claims under the scheme. 

HMRC will not publish details of employers claiming through the scheme if they can show that publicising these would result in a serious risk of violence or intimidation to certain individuals, or any individual living with them.

Those individuals include:

• employers that are individuals - a relevant individual can be the employer themselves, or any employee of the employer
• employers that are companies - a relevant individual can be a director, officer or employee of that company
• employers that are partnerships - a relevant individual can be a partner, officer or employee of that partnership
• employers that are limited liability partnerships - a relevant individual can be a member or employee of that limited liability partnership
• trustees of a trust - a relevant individual can be a settlor, trustee or beneficiary of the trust

If you think that a serious risk of violence or intimidation will come from publicising your name, company registration number and amount of claim, you will need to inform HMRC with evidence of why you think this. This evidence could include:

• a police incident number if you’ve been threatened or attacked
• documentary evidence of a threat or attack, such as photos or recordings
• evidence of possible disruption or targeting

Further details on how to request that HMRC does not publish your details will be available soon, providing employers enough time to do this before the first publication date.

Will I be eligible for the Job Retention Bonus?

On 8 July 2020, the Chancellor announced the introduction of the Job Retention Bonus (JRB) as part of his ‘Plans for Jobs’.

This is a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed until 31‌‌‌ ‌January 2021.

The intention was for employers to claim the bonus from 15 February 2021 once accurate RTI data to 31 January has been received, but it was announced on 5 November that the JRB will not be paid in February and a retention incentive will be deployed at the appropriate time. The purpose of the JRB was to encourage employers to keep people in work until the end of January. However, as the CJRS is now being extended to 30 September 2021, the policy intent of the JRB no longer applies.

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Will I be entitled to claim via the Job Support Scheme?

The Job Support Scheme (JSS) is designed to protect viable jobs in businesses which are facing lower demand over the winter months due to COVID-19, to help keep their employees attached to the workforce. The scheme was due to be available from 1 November 2020 but it was delayed due to the extension of the CJRS with the intention that it would be introduced when the CJRS ends but there has been no further indication that this will still go ahead.

It is separate from the CJRS and it will have no impact if employers have claimed from the CJRS or not previously.

The JSS provides different types of support to these businesses so they can get the right assistance, at the right time, according to their situation. Businesses that are operating but facing decreased demand can get support for wages through JSS Open. Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by the governments can get the support they need through JSS Closed, this was previously referred to as the expanded Job Support Scheme.

To be eligible for a claim under the JSS Open, the employee must work a minimum of 20% of their usual hours and the employer will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.

The JSS Closed will pay two thirds of eligible employees’ usual wages, up to a maximum of £2,083.33 per employee per month. Employers are not required to contribute towards wages but are required to cover employer National Insurance and pension contributions.

HMRC produced guidance the day before it was announced that the scheme was being delayed due to the extension of the CJRS. The guidance has since been withdrawn.

Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

For more information on the JSS Open and JSS Closed please see our separate advice page on the Job Support Scheme.

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What happens at the end of furlough?

When the government ends the scheme, you will need to assess the situation at that time to determine if all of your furloughed employees can return to work. You should then contact them to make the appropriate arrangements for their return. ACAS have template letters for employers to use when ending or extending a period of furlough.

They should then return to the same role as before their furlough leave and on the same terms and conditions. Their continuity of employment will not have been broken.

Please see our separate Q&A for queries you may have about bringing people back into the workplace after furlough or other periods of absence. If you have any queries about making your workplace ‘COVID-19 secure’ please see our Q&A specifically dealing with these issues.

If it is not possible to for them to return to the same role either because it is no longer available or because you are not planning to continue with the business then you will need to start a consultation process for redundancy. The CJRS will not cover any redundancy payments.  Please contact CallFirst for further advice if you find yourself in such a situation after furlough has ended.

We will need to wait to see if there are any further extensions or other similar schemes brought into force such as the Job Support Scheme.

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What are the tax implications 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.

A new reporting payments in PAYE Real Time Information from the Coronavirus Job Retention Scheme webpage has been launched with guidance on how to report the payments.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes. For further advice please contact CallFirst to speak with one of our tax specialists.

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