Extended Furlough FAQs

This document deals with extended Coronavirus Job Retention (furlough) Scheme (CJRS).

On 10 November 2020, the Government released details of the extended CJRS, which was originally due to run from 1 November until March 2021. On 13th November, the Treasury released a Treasury Direction which contained further information, although that only covers the period from 1st November 2020 to 31st January 2021, which suggested that the scheme may change in February 2021. However, on 17th December, the government announced that the scheme would be extended to 30th April 2021, with the government contribution remaining at 80% for that period.

PLEASE NOTE: THIS GUIDANCE DEALS ONLY WITH THE RULES FOR THE EXTENDED SCHEME.

The guidance updated on 10th November 2020 (with subsequent updates) can be found on the following pages of the GOV.UK website:

The Treasury Direction issued on 13th November 2020 can be found here.

As the guidance is spread over several different sections of the website, it is a little difficult to follow. This guidance note will summarise the main points, explain how the scheme works in practice and answer the most frequently asked questions.

Who can claim?

All employers with a UK bank account and UK PAYE scheme can claim the grant. There is no requirement for employers to have previously claimed the grant before 30th October 2020 for claim periods after 1st November 2020.

Employers can claim if they cannot maintain their workforce because their operations have been affected by coronavirus.

Q. What if I receive public funding?

For those employers who receive public funding which is used to cover staff costs, and that funding is continuing, employers are expected to use that money to continue to pay staff in the usual way. As such, they may not be eligible to furlough staff and claim under the scheme. If you are in receipt of public funding and this is used to pay all or part of staff salaries, we suggest that further advice is taken from HMRC or your public funding body before agreeing to furlough staff and making any claim under the scheme.

Who can I claim for?

You can claim for any employee who was employed on 30 October 2020 as long as you made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020 in respect of them.

Q. What sort of employees can I claim for?

For periods from 1 November 2020, the following categories of employees are eligible to be furloughed provided they are paid via PAYE:

Full-time employees;
Part-time employees;
Zero-hours employees or workers;
Employees on fixed-term contracts;
Apprentices (although they must be paid at least the Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. Any shortfall between the furlough grant and those amounts must be paid by the employer);
Supply teachers;
Office holders (including company directors);
Salaried members of Limited Liability Partnerships (LLPs);
Agency workers (including those employed by umbrella companies);
Limb (b) workers;
Contingent workers in the public sector; and
Contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35).

Q. Is there a maximum number of employees I can claim for?

No, not for any period from 1 November 2020.

Q. Can I furlough an employee who is shielding or clinically extremely vulnerable (CEV)?

Yes, an employee who is shielding in accordance with public health guidance can be furloughed.

It was announced on 4 January 2021 that England and Scotland would enter into new nationwide Lockdowns from 5 January 2021. During that period, individuals who are deemed CEV are being advised not to attend work (see Scottish guidance, here – English guidance had not been updated at the time of writing, but is highly likely to reflect the Tier 4 guidance issued previously). If it is that you can remain open but one of your employees falls into this category and it is not possible for them to work from home, they can be furloughed.

Wales is currently subject to slightly different restrictions. However, guidance issued by the Welsh government on 23 December 2020 states that CEV individuals should not attend the workplace. Similar provisions apply in Northern Ireland from 26 December 2020 – see here. Therefore, they can be furloughed also.

Q. Can I furlough someone who is vulnerable, but not CEV?

There are many other categories of workers who fall outside of CEV. They may be regarded as vulnerable due to a less severe health condition, being over 70 years of age or living with someone who is CEV. Guidance prior to 10 December 2020 suggested that these sorts of workers can only be furloughed if signed off on long-term sick leave – unless there are other reasons why they cannot work because your operations are affected by coronavirus. However, HMRC guidance was updated on 10 December to remove the reference to long-term sick employees being able to be furloughed. It is not clear what was intended by this change. In addition to CEV individuals, the guidance still also covers those at “highest risk of severe illness from coronavirus” – how these differ from CEV individuals is not clear. Employees on short-term sick leave still cannot be furloughed. If you have questions as to whether a particular employee can be furloughed, check with HMRC or relevant issuing authority.

Q. Can I furlough someone who cannot attend work because of caring responsibilities?

Yes.

Q. Can I furlough someone who is self-isolating or on sick leave?

No. They may be eligible for SSP, but the furlough scheme is not intended for short-term absences from work due to sickness.

Q. What if my employee becomes sick whilst furloughed?

It is up to employers to decide whether to move these employees onto SSP/contractual sick pay or leave them on furlough. If they are moved onto SSP, employers cannot claim for the furloughed salary.

Q. What about employees who have transferred under TUPE?

For claim periods from 1 November 2020, the new employer is eligible to claim in respect of any employee who transferred to them under the terms of TUPE provided that they were employed by the transferor or transferee on or before 30 October 2020 (and an RTI being submitted between 20 March and 30 October 2020) and transferred to the new employer on or after 1 September 2020.

Q. Can I re-employ someone I have dismissed and then furlough them?

Yes. If someone stopped working for you on or after 23 September, you can re-employ them and put them on furlough provided an RTI submission was made in respect of them between 20 March and 23 September 2020.

Generally speaking, we are advising employers not to re-engage such employees due to the uncertainty of what happens when the scheme ends, and the additional costs involved in re-employing them (holiday pay and employer NICs and pension contributions, for example).

Q. What about employees returning from family 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, the normal scheme rules apply. If the employee wants to return from leave early, they must give at least eight weeks’ notice of doing so, although a shorter period can be agreed between the parties.

Q. Can I furlough an employee who is on unpaid leave or sabbatical?

No. The Treasury Direction states that this is not possible. This does raise an issue as to whether someone who is off sick and has exhausted their right to SSP can be furloughed. The guidance suggests you can. If you have a situation where this arises, contact HMRC to enquire whether they can be furloughed.

What can I claim?

From 1 November 2020, employers can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month. The employer must pay employer NICs and minimum employer pension contributions. As mentioned above, this was due to be reviewed in January 2021; however, the government announced on 17 December that the scheme would continue to run at its current contribution levels until 30 April 2021.

If you have already claimed for an employee who was on furlough during October, and they are paid a fixed salary, you should follow the same usual wage calculation for claim periods after 31 October 2020.

Q. What should I include when calculating wages?

The amount you should use when calculating 80% of your employees’ wages for hours not worked is made up of the regular payments you are obliged to make, including:

Regular wages you paid to employees;
Non-discretionary payments for hours worked, including overtime;
Non-discretionary fees;
Non-discretionary commission payments; and
Piece rate payments.

You cannot include the following when calculating wages:

Payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
- Any tips, including those distributed through troncs;
- Discretionary bonuses; and
- Discretionary commission payments;
Non-cash payments; and
Non-monetary benefits like benefits in kind (such as a company car) and benefits received under salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay.

Q. Can I top up pay to 100% levels?

Yes, but this is entirely discretionary.

Q. Can I claim for holiday pay?

Furloughed employees continue to accrue holidays as per their contract and employees can take holiday whilst on furlough. Employers are required to top up pay to normal 100% levels for any day’s holiday taken during the furlough period. If you now wish to instruct employees to take annual leave, you can do so by giving notice twice the length of the holiday you require them to take (i.e. two weeks’ notice to take a one-week holiday).

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. Note, though, that employees should not be placed on furlough simply because they are on holiday.

Q. Can I claim for notice pay?

Until 30 November 2020, as with the previous scheme, you can claim for a furloughed employee who is serving a statutory notice period; however, grants cannot be used to substitute redundancy payments. The position of contractual notice is less clear cut. Previous guidance explicitly said that the furlough grant could be used to pay contractual notice, but this is absent from the new guidance. We are not sure if this is simply an oversight, so you may wish to check directly with HMRC to see whether using the grant to pay contractual notice is permitted. Also note that the guidance specifically refers to notice being served following a redundancy dismissal (although there is now reference to retirement and resignation) – this raises questions as to whether you can claim for notice being served for another reason – again, check with HMRC if you are considering this.

The Treasury Direction doesn’t really help clarify these issues – it simply states that a claim must not be made for an employee who is on notice of termination between 1 December 2020 and 31 January 2021.

For claim periods starting on or after 1 December 2020, you cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (which includes people serving notice of retirement or resignation). If an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, you will need to make an adjustment (details here).

The guidance states that employees for whom you can claim notice pay should receive their normal rates of pay for that period.

Agreement to furlough

To be eligible for the grant, you must have agreed with your employees (or reach collective agreement with a trade union) to furlough. This must:

Be made before the beginning of the period to which the CJRS claim relates (but may subsequently be varied to reflect any variation agreed between the employer and employee during the period to which the CJRS claim relates);
Be incorporated (expressly or impliedly) in the employee’s contract; and
Be made in writing or confirmed in writing by the employer (such agreement or confirmation may be in an electronic form such as an email).

In addition, you must:

Make sure the agreement is consistent with employment, equality and discrimination laws;
Keep a written record of the agreement for five years; and
Keep records of how many hours your employees work and the number of hours they are furloughed and not working.

It is not clear from the latest guidance whether a new agreement is required for any furlough periods (either full or flexible) beyond 1 November. Whether a new agreement is required may depend on the wording of any existing agreement and you may simply be able to either rely on that agreement or amend the same. Please note that any move from full furlough to flexible furlough will likely need a new agreement. We do not know how HMRC will view any deficiencies in the agreement, so it may be safest to enter into a new, compressive agreement under the extended scheme.

In order to record agreement, we have produced two extended furlough agreements (one for employees with fixed hours and one for employees with variable hours). Please contact Bira Legal on 0345 450 0937 or by email to bira@elliswhittam.com to obtain copies. The letters can be tailored to suit full or flexible furlough arrangements.

It is up to you whether you want to fully or flexibly furlough any of your employees. You can continue to “fully” furlough employees if you wish but note that the previous rules banning those employees from undertaking any work for you during the time they are on furlough will still apply. If you choose flexible furlough, employees can work for any amount of time and for any working pattern but are not allowed to work during hours you record them as being on furlough.

Q. Is there a minimum furlough?

No, employees can be furloughed for any amount of time but the minimum claim period you can apply for under the scheme is seven consecutive calendar days.

Q. Can employees work whilst furloughed?

No, you cannot ask them to do any work for you that:

Makes money for your organisation or any organisation linked or associated with your organisation; and/or
Provides services for your organisation or any organisation linked or associated with your organisation.

Your employees can work for another employer provided that is allowed in their contracts or you give them permission.

Q. Can employees undertake training whilst furloughed?

Yes, provided that does not generate money or provide services to you. Whilst undertaking training, employees are entitled to receive at least the appropriate National Minimum Wage. Where this is in excess of the furlough payment, employers are obliged to top this up.

Q. Can an employee volunteer whilst furloughed?

Yes, provided this is for another employer/organisation.

Q. Can a furloughed employee act as a union or non-union employee rep?

Yes.

Steps to take before calculating your claim

Full guidance on the steps to take before calculating your claim, including worked examples on how to determine an employee’s usual hours and furloughed hours, can be found on the government website here.

Decide the length of your claim period

As with claims starting on or after 1 July, the claim period must start and end in the same calendar month and must be for at least seven days, unless you are claiming for the first few days or the last few days in the month.

It is recommended that you match your claim period to the dates you process your payroll if you can. 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.

Details of how to claim can be found here, which includes details of what to do if you claim too much or too little.

Q. What about employees returning from family-related leave?

For employees on fixed pay, claims for full or part-time employees furloughed on return from family-related statutory leave should be calculated against their salary before their leave, not the pay they received whilst on family-related statutory leave. The same principles apply where the employee is returning from a period of unpaid statutory family-related leave.

Q. What about employees returning to work after being on sick pay?

For employees on fixed pay, claims for full or part-time employees furloughed on return to work after time off sick should be calculated against their salary before their leave, not the pay they received whilst off sick.

Q. What pay period do I use to calculate usual hours and furlough pay?

This will depend on whether or not the employee has worked fixed or variable hours and whether or not they have been furloughed already, or would have been eligible to be furloughed (i.e. on payroll and RTI submitted by 19 March 2020), prior to 31 October 2020.

Employees with fixed hours whose pay does not vary according to hours worked

If the employee has been furloughed prior to 31 October 2020 or was on your payroll on or before 19 March 2020, you calculate their usual hours and pay in accordance with existing rules, i.e. what they were paid in the last pay period ending on or before 19 March 2020.
If the employee has not been furloughed prior to 31 October 2020 or started employment after 19 March 2020, you calculate their usual hours and pay in accordance with what they were paid in the last pay period ending on or before 30 October 2020.

2. Employees with variable hours

If the employee has been furloughed prior to 31 October 2020 or was on your payroll on or before 19 March 2020, usual hours are calculated in accordance with existing rules, i.e. based on the higher of either:

The average number of hours worked in the tax year 2019 to 2020; or
The corresponding calendar period in the tax year 2019 to 2020.

If the employee has not been furloughed prior to 31 October 2020 or started employment after 19 March 2020, calculate the average number of hours worked from 6 April 2020 and up to the employee’s first day spent on furlough on or after 1 November 2020.

Calculating how much to claim

The government website contains detailed guidance on how to work out 80% of your employee’s usual wage, how to calculate employer NICs, how to calculate pension contributions and an online calculator which will do much of the hard work for you. That can be accessed here.

Claiming for wages through the Job Retention Scheme

Once you have worked out how much you are claiming for each fully or flexibly furloughed employee, you can make the claim online here. To make a claim, you will need:

To be registered for PAYE online;
Your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted);
The billing address on your bank account (this is the address on your bank statements);
Your employer PAYE scheme reference number;
The number of employees being furloughed;
Each employee’s National Insurance number (you will need to search for their number if you do not have it or contact HMRC if your employee does not have a number);
Each employee’s payroll or employee number (optional);
The start date and end date of the claim;
The full amounts you are claiming for, including:
- Employee wages;
- Employer National Insurance contributions (for claims up to 31 July); and
- Employer minimum pension contributions (for claims up to 31 July);
Your phone number; and
Contact name.

You also need to provide either:

Your name (or the employer’s name if you are an agent);
Your Corporation Tax unique taxpayer reference;
Your Self Assessment unique taxpayer reference; and
Your company registration number.

If you are claiming for employees who are flexibly furloughed, you will also need:

The number of usual hours your employee would work in the claim period;
The number of hours your employee has or will work in the claim period; and
You will also need to keep a record of the number of furloughed hours your employee has been furloughed in the claim period.

Time limits for furlough claims

Claims have to be submitted within two weeks of the end of the previous calendar month (unless there is a “reasonable excuse for failing to make a claim in time”.

Claim for furlough days in	Claim must be submitted by
November 2020	14 December 2020
December 2020	14 January 2021
January 2021	15 February 2021
February 2021	15 March 2021
March 2021	14 April 2021

A reasonable excuse if you miss these deadlines may include:

Your partner or another close relative died shortly before the claim deadline;
You had an unexpected stay in hospital that prevented you from dealing with your claim;
You had a serious or life-threatening illness, including coronavirus-related illnesses, which prevented you from making your claim (and no one else could claim for you);
A period of self-isolation prevented you from making your claim (and no one else could make the claim for you);
Your computer or software failed just before or while you were preparing your online claim / service issues with HMRC online services prevented you from making your claim;
A fire, flood or theft prevented you them from making your claim;
Postal delays that you could not have predicted prevented you from making your claim;
Delays related to a disability you have prevented you from making your claim; and/or
An HMRC error prevented you from making your claim.

HMRC will not consider reasonable excuses in advance of a claim deadline.

Publishing Employer Data

One other important addition is the fact that HMRC will publish data in respect of claims on the scheme. From December, they will publish the employer names and company registration numbers of those who have claimed under the scheme, along with an indication of the value of that claim. Employers can ask HMRC not to publish this information but said request will only be granted if the employer can show that publicising these would result in a serious risk of violence or intimidation to certain individuals, or any individual living with them. See here for further information.

Please note that the government and HMRC guidance on the scheme is being updated and expanded on a regular basis. The information in this document is correct at the time of writing (5 January 2021). No doubt further updates will be released in the forthcoming weeks and this document will be updated in line with that.

Please note that as further detail emerges, some of the advice provided may change in line with further guidance from the government and may vary from the above until this document is also updated. As a result, please ensure that you check the government’s website for the latest guidance on the CJRS.

For more advice, visit Bira Legal or our Coronavirus Support Hub

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