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Update to their Coronavirus Job Retention Scheme

The Government has published further updating to their Coronavirus Job Retention Scheme and the mechanics of the Scheme. Some more will probably come later to clarify some still obscure points.


What does it cover?

In particular it covers what would appear to be some key areas of interest from the questions I have been fielding this past week, including the furloughing of Directors and other Office Holders, furloughing of agency worker, some further clarification of furloughing where employees are absent from work for permissible reasons such as sickness absence, self-isolation and maternity leave, further guidance on calculation of wages and what should/should not be included, and furloughing where an employee is on National Minimum Wage.


I would take the opportunity to re-emphasise that where an employee is furloughed, then 3 weeks is the minimum period of furloughing to be in place for the wages for the whole period to be claimed for reimbursement. An employee can be brought back to work any time after the 3 weeks but can then be furloughed again at any point in time. Again, to be able to claim reimbursement, any further period of furloughing must be for a minimum of 3 weeks, though there is no minimum period that the employee must be back at work.



  • Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.
  • However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.



  • Where a company is being taken under the management of an Administrator, the administrator will be able to access the Job Retention Scheme.
  • However, we it is expected that an Administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For example, this could be as a result of an administration and pursuit of a sale of the business.


If your employee is on unpaid leave

  • You can only claim for employees that started unpaid leave after 28 February 2020


If your employee is self-isolating or on sick leave

  • If you’re employee is on sick leave or self-isolating, they’ll be able to get Statutory Sick Pay.
  • You cannot claim for employees while they’re getting Statutory Sick Pay, but they can be furloughed and claimed for once they are no longer receiving Statutory Sick Pay.


Shielding Employees

  • You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.


Employees with caring responsibilities

  • Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.


If your employee is on a fixed term contract

  • Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme.
  • Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.


Eligible individuals who are not employees

  • As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:

ü  office holders (including company directors);

ü  salaried members of Limited Liability Partnerships (LLPs);

ü  agency workers (including those employed by umbrella companies);

ü  limb (b) workers.

  • The guidance below sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily classed as employees in employment law. Unless explicitly set out below, all other guidance is applicable to these cases, and should be followed.


Office Holders

  • Office holders can be furloughed and receive support through this scheme.
  • The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office.
  • Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.


Company Directors

  • As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme.
  • Company directors owe duties to their company which are set out in the Companies Act 2006.
  • Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed.
  • Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
  • Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
  • This also applies to salaried individuals who are directors of their own personal service company (PSC).


Salaried Members of Limited Liability Partnerships (LLPs)

  • Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.
  • The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.
  • To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.


Agency Workers (including those employed by umbrella companies)

  • Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.
  • Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved.
  • As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.
  • Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.


Limb (b) Workers

  • Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.
  • Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.


If your employee undertakes training

  • Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation. Furloughed employees should be encouraged to undertake training.
  • Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section for more details).


If your employee is on maternity leave, adoption leave, paternity leave or shared parental leave


Agreeing to furlough employees

  • Employers should discuss with their staff and make any changes to the employment contract by agreement.
  • When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
  • To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.
  • You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.


National Minimum Wage

  • Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)/ Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under minimum wage rules.
  • This means that furloughed workers who are not working can be paid the lower of 80% of their salary or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage.
  • However, time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.
  • Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time, they should seek appropriate advice.

Past Overtime, Fees, Commission, Bonuses and non-cash payments

  • You can claim for any regular payments you are obliged to pay your employees, subject to the £2500 monthly cap. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments, and non-cash payments should be excluded.


Benefits in Kind and Salary Sacrifice Schemes

  • The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.
  • Where the employer provides benefits to furloughed employees, this 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.