Sit comfortably & get ready to wade your way through the latest furlough guidance which we’ve aimed to make sense of and summarise, in addition highlighting any areas that may still be unclear.

Extended Furlough Period

We have confirmation that the furlough period is now extended until the end of June.


Previous guidance referred to eligibility for furlough primarily being to avoid redundancy.  The Treasury Direction issued last week now states that the Scheme applies to anyone who is furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease“.  A much broader definition that encompasses the groups such as those shielding or with childcare responsibilities that were mentioned before but in very unclear terms.  It is no longer necessary for the purpose of furlough just to be to avoid redundancy.

It would seem that those we might classify as workers rather than employees (casuals / bank staff etc) can be furloughed just so long as they are paid through your PAYE scheme.  This is not explicitly stated but it is implied sufficiently that you may decide you are confident to to do this.  The problem here is that the terms zero hours employees and workers are often used interchangeably (and are broadly misunderstood!) but it would seem that if an individual was paid through your PAYE scheme you can include them. 

The Employer Gov Guidance states “Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.”

To agree or not to agree – that is the question?!

So on Weds we were told that you must get written agreement from all employees to furlough & specifically to the fact that they must not  do any work.  There was even panicked talk that this must be agreed before furlough starts (a nonsense in my opinion as it has always been the case that furlough could be backdated to 1 March if you had already sent staff home with no work making prior agreement impossible without a time travel machine!).  Anyway – it seems the backlash on this has caused a bit of a retreat as the HMRC answered a tweet on Friday that states

hmrc tweet furlough

In response to this – the HMRC then said “good point we’ll change the Gov guidance” – which they have!!!  (really – you couldn’t make it up could you…oh except it seems the Gov literally are making it up as they go along!?!)

The Employer Gov Guidance now states: “To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.”

We’d still recommend you simply get some kind of confirmation from your staff just in case – an audit trail is never going to be a bad thing and the worst that happens is it wasn’t needed – how else would you record that you had communicated and keep that record for 5 years?  We believe that the wording in the furlough agreements we’ve provided should be sufficient – they set out that employees are not required to work (it says it in two places in fact) and requires signed agreement although we also advised that an email response to confirm agreement to the furlough agreement issued should suffice (which the Gov guidance has now confirmed).  If you didn’t use a furlough agreement that explicitly refers to not working we suggest you go back & confirm this with staff. 

What the F..F..F…Furlough Pay Calculations!

You are responsible for calculating your claim – the HMRC do not do that for you.   You should keep records of how you calculated what you claimed for.  You are responsible for keeping your employees informed – the HMRC will not be answering queries from employees.

You cannot make more than one claim during a claim period – you should make your claim shortly before or during running payroll.  You must claim for all employees in each period at one time – you cannot make changes to your claim. You can make your claim in anticipation of an imminent payroll run, at the point you run your payroll or after you have run your payroll .

Payment is expected within 6 WORKING DAYS OF MAKING A CLAIM

This pdf Step By Step Guide To Claiming Wages Through CJRS can be downloaded and is published by HM Government

The Gov have also published this page of guidance on Friday evening (link sent to you already Friday) that sets out very similar info about how to calculate your claim – I am not going to try to summarise most of it in this email as it is better to read through the detail and worked examples that match your situation. 

Treasury Direction issued last week also sets out what can be included in calculating the claim – it uses somewhat different words particularly at 7.4 and 7.5 relating to variable pay – on first reading it says at 7.4(b) regular pay cannot be anything that is “conditional on any matter” which would seem to mean no commission payments could be included (which goes against the Gov Guidance that says non-discretionary commission can be included) but 7.4(d) then refers to a “legally enforceable agreement, understanding, scheme or transaction” which we believe means that commission under a contractual agreement (and see point about contractual by custom & practice) is covered which is then in accordance with the Gov Guidance to Employers. It also indicates that car allowances or similar would be covered if you pay that as part of the contractual terms of employment.

In terms of what to include there are some decisions for you to make.  You need to decide what you consider to be contractual (or non-discretionary) – remember that things can become contractual through custom and practice without being written down if they are paid sufficiently regularly but there are no hard and fast rules about how you decide if that is the case or not.  Note that if you need to include any such items then you may need to treat those employees as being on variable pay which means you will need to do more calculations than simply working out 80% of their pay as of 28 February 2020 (or 19 March 2020).  Interestingly (and annoyingly if you had already made some assumptions & started doing some calculations!) any variable pay calculations are being based on calendar days in the year/ each month not working days.

Employer Gov Guidance states the following about what to include:

The amount you should use when calculating 80% of your employees’ wages is regular payments you are obliged to make, including:

  • regular wages you pay to employees
  • non-discretionary overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments

You cannot include the following when calculating wages:

  • payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
  • tips
  • discretionary bonuses
  • discretionary commission payments
  • non-cash payments
  • non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

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.

We previously sent out the Gov Guidance on the information you will need to have ready before you access the portal.  NOTE that we are advised you cannot save part-way through so you must have all info ready and complete your application in one go.  So before you start make sure you check with the latest set of Gov Guidance for CJRS Claims (they may of course update it again on 20 April!) or any instructions that come with the link to the portal (we are assuming this will be sent to anyone who submits RTI or has a PAYE number?) before you start.

We ‘re not payroll experts so cannot advise on salary sacrifice schemes or the payroll technicalities of your claim – please discuss with your accountant or payroll provider. If you do not have one we can help with a useful introduction. 

It does seem there is some latitude within the pay calculations as the Employer Gov Guidance States  “Choose the calculation you think best fits the way your employee is paid. For example, if you pay your employee a 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 of approach is made.”

Also it seems that for this first claim period you are going to be able to make one claim for any furlough period since March through to end of April as the Employer Gov Guidance states: “Where a claim covers multiple pay periods, this calculation should be done for each and then added together.”

Remember you can also claim for employers NI contributions unless you have zero NI to pay if you are benefitting from your Employment Allowance (this may apply more to claims in April when the new Employers NI Allowance starts again and is £4k from April 2020 for those eligible businesses).

You can also claim for the mandatory Employer Pension Contribution.

On me jolly ‘olidays!

So it seems we may sort of nearly just about have an answer on this!  The Govt guidance, ACAS & the CIPD, IOD & FSB as well numerous lawyers and tax advisors have all gone back & forth on this point – the HMRC refuses to be drawn on it and the Treasury Direction acts as if holiday is not even a thing….

We know for sure that holiday continues to accrue during furlough.

Also that employers are entitled to treat the Bank Holidays as normal and deduct them from holiday entitlement balance as holiday taken even if employees were furloughed – as long as that would have been a normal working day for the employee, they are paid at 100% of pay for the BH days and as long as they were already booked off or notice was given as per info further below in this mail.

The Employee and Employer Gov Guidance now clearly states that employees are entitled to take holiday during furlough.  This has never really been the issue however – why would an employee want to use holiday when they are sat at home not working but with nothing to do and nowhere to go?!  The question has been if an employer can require employees to take holiday during furlough.

We are clearly told that Employment Law continues to apply during furlough so what does that mean for holiday?  It seems furlough and holiday can exist at the same time if this latest Gov guidance remains as stated on Friday 17 April.  Standard employment law provisions state that employers can require workers to take holiday as long as they give twice as many days’ notice as the period of leave the worker is required to take. For example, if the employer requires the worker to take two week’s annual leave at a certain time, it must give the worker at least four weeks’ advance notice (or whatever is outlined in the employment contract). So, given that furlough and holiday can happen at the same time it seems an employer could furlough the employee and require a proportion of that to be annual holiday as long as the requisite notice is given. 

There are still some lawyers who think this may not be the case however and the Gov guidance concludes this section by saying: “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.” In our opinion – the portal is not going to ask any questions about holiday and it won’t stop you getting that first furlough payment – if you “get it wrong” (or more accurately if they “further clarify”) we THINK the worst that could happen is you’ll be told to recredit the staff with the days you treated as holiday in which case you’ll be no worse off than you are now (other than having topped up pay unnecessarily perhaps).  It seems unlikely that the HMRC will consider you have breached furlough rules (are they really going to delve into whether staff requested holiday or already had holiday booked that you didn’t let them cancel or if you told them to take it & are they going to trawl through to see if they were BH days or other holiday days?) and require any kind of repayment and even if they did there seems to be enough evidence to suggest that you would be able to request a judicial review based on their vague guidance – oh and it will be a long time before they get to doing any such kind of reviews let’s face it!  So it is of course up to you but it seems pretty low risk right now.

What is clear is that any holiday taken during furlough must be topped up by the employee to 100% (i.e. normal amount) pay.  Actually it is a bit more complex than that as technically it is possible that only the first four weeks of holiday need to be topped up we think (holiday legislation is a complex beast!) but we suspect that there are already far too many calculations to worry about and that at this point in the year most employees taking any holiday will be using time within the first four weeks of their allowance.

What Else?

There are all sorts of other considerations in the latest iterations of the CJRS that I have not gone into detail about here – they may only apply to a few of you so ask if you need any help on that – for example maternity leave and furlough / shielding & furlough / sick pay or furlough / new starters caught in this 28 Feb to 19 March time trap / bringing back staff you previously terminated the employment of. 

I haven’t repeated guidance on things that haven’t changed from previous email (3 weeks minimum / rotating staff on furlough / SSP from day one etc) but if you are not sure on anything  please either check the Gov guidance or drop us a mail. 

Also if you think you are going to need to terminate employment either due to redundancy or any other reason then we would be happy to advise on how that works in furlough.

Useful links:

Employee General Guidance –

Employee Guidance to Furlough –

Employer Guidance to Furlough –

Employer Guidance to calculating Furlough Pay Claim –

Good luck to anyone trying to access the portal this week – please let us know how you get on!

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