Job retention scheme – new guidance

The government has updated its guidance on the Job Retention Scheme which we have summarised below.

Two additional requirements for employers are that they must have enrolled for PAYE online, which can take up to ten days, and have a UK bank account.

The employer must notify the employee in writing that they will be furloughed and these records must be kept for five years. It is likely that HMRC will be carrying out spot checks on these records in order to detect fraud. Employees can be furloughed more than once but each period must be a minimum of three consecutive weeks. This would allow an employer to rotate employees on furlough. There has been clarification of what can be claimed under the scheme, which essentially includes all payments an employer is required to pay the employee:

  • wages
  • past overtime
  • fees
  • compulsory commission payments

and what cannot be claimed: 

  • discretionary bonuses
  • tips
  • discretionary commission
  • benefits in kind (for example, car allowance, private medical insurance)

Eligible employees who are not employees

If the following are paid via PAYE they can be furloughed:

  • Office holders, including company directors
  • Salaried members of LLPs
  • Agency workers, including those employed by umbrella companies
  • Limb (b) workers

Company directors may still comply with statutory duties but must do no more than required to comply with those duties. This also applies to individuals who are directors of their own personal service companies.


The employer cannot claim for employees who are receiving SSP but once they return to work they can be furloughed. The reason for this is that small and medium sized employers are able to claim two weeks’ SSP for an employee self-isolating due to coronavirus and therefore allowing them to be furloughed at the same time would mean the employer could claim twice.


Apprentices can be furloughed but for any time they spend training they must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (as appropriate). The employer will not be able to claim for the additional amount and will therefore have to cover this cost.

Enhanced maternity, paternity, adoption or shared parental pay

Any additional amount above statutory pay in each of these cases may be claimed by the employer under the scheme.

Employers receiving public funding

Where an employer receives public funding for staff costs and that funding is continuing the employer is expected to use that money for staff costs in usual way and not furlough those employees.

Individual employers

Where an individual employs someone (such as a nanny, cleaner or gardener) the individual can claim under the scheme providing the employee is paid through PAYE.

Employees with more than one job

As well as being able to continue working for one employer while being furloughed by another, the government has now confirmed that an employee may be furloughed from one employer and get a new job for another. Employees should check their employment contracts for any restrictions on working for another employer or seek express permission from their current employer before doing so.

Where an employee ceased working for the employer after 28 February 2020 but was not made redundant

An employer can re-employ employees who ceased working after 28 February 2020 even if they were not made redundant (for example, if they resigned) and put them on furlough. Previously the guidance indicated that this was only the case where an employee had been made redundant. One consideration for an employer in this situation is whether cash flow will allow them to pay the employee until receiving reimbursement from HMRC.

Fixed term contracts

Employers can furlough employees who are on fixed term contracts and can extend or renew the contract during the furlough period and continue to claim.

Holiday pay

Holiday continues to accrue whilst an employee is furloughed and employers may therefore be keen to encourage or require employees to take holiday during that time, to avoid them ending up with large amounts of holiday to take once they begin work. The four weeks of holiday under the Working Time Directive may now be carried over for up to two years, if it cannot be taken due to coronavirus, which will go some way to avoiding that problem.

Unfortunately, it is not yet clear whether an employee may take holiday while furloughed, and if so, how much they should be paid. From the guidance as it stands, it seems likely that an employee may take holiday and therefore can be required to take holiday in the usual way (i.e. by giving twice the notice for the period of holiday required to be taken). In terms of how much they should be paid, there may be a difference between the 5.6 weeks of holiday an employee is entitled to under the Working Time Regulations (for which they should receive normal remuneration which would include commission, bonuses and allowances) and holiday in excess of this amount for which the employer and employee could agree would be paid at 80% of salary. We will issue a further update as soon as we have clarification on this point.

If you require any advice or guidance in connection with your contracts or contractual obligations, we strongly recommend seeking legal advice and acting as soon as possible.