17 November 2020

On 5 November, the Chancellor announced that the Coronavirus Job Retention Scheme (the “Scheme”) also known as “furlough”, would be extended following a second national lockdown. The Scheme was previously set to finish at the end of October. The Scheme restarted on 1 November 2020 and is expected to last until 31 March 2021. The Scheme will be reviewed in January to decide whether the economic climate is improving enough to ask employers to contribute more.

The Chancellor said his intention for the updates were “to give business security throughout the winter” and that “the security will protect millions of jobs”. This is of course a positive step in these unprecedented times, but it is vital that you understand the Scheme before taking any action.

The guidance sets out that the Scheme is available “if you cannot maintain your workforce because your operations have been affected by Coronavirus”. The guidance does not specifically state what a business would need to show to prove they have been affected by Coronavirus. It would seem the wording allows for some leeway. However, the introduction of this statement clearly discourages abuse to the Scheme and seeks to limit fraudulent claims which took place under the old scheme.

It seems the Government are further limiting any misuse of the Scheme as it is now a condition of making a claim that the employer accepts that HMRC will publish information for claims made in December 2020 or January 2021. The name of the employer, the company reference number and the amount claimed by the employer (or a reasonable indication of the amount claimed) will be published online. If claims are fraudulent or based on incorrect information, HMRC may withhold payments or require grants to be paid back.

Further details of the Scheme have now been released and we set out our understanding of the key points for both employers and employees to consider. The guidance governs the period up to January 2021 after which, it is expected that the guidance will be updated.


Main points of the Scheme for Employers:

  1. You do not need to have used the Scheme previously. As long as the employee was employed and on your payroll on 30 October 2020 and you made a PAYE Real Time Information Submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee, you can claim under the Scheme.
  1. The Scheme is open to all businesses across the UK whether they are open or closed during the current lockdown.
  1. You have flexibility to use the Scheme for your employees for any amount of time or shift pattern and you can furlough employees either on a full-time or a part-time basis.
  1. The Government will pay 80% of the employee’s wages in respect of the unworked hours. You are responsible for paying the National Insurance and employer pension contributions on the unworked hours. You are responsible for paying employee’s wages as normal for the hours worked.
  1. The Government contribution will be capped at £2,500 a month. You are entitled to top up employee wages at your own expense.
  1. There is no maximum number of employees you can claim for from 1 November 2020. But, if you are claiming for a period that ends on or before 31 October 2020, the amount you can claim for in any single claim period starting from 1 July 2020 cannot exceed the number of employees you claimed for under any claim ending 30 June 2020.
  1. Unless otherwise specified, the period claimed for must be for a minimum period of seven consecutive calendar days. 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.
  1. You can retrospectively furlough an employee with effect from 1 November 2020, provided the agreement occurred on or before 13 November 2020.
  1. Furlough agreements must be in place before the start of the relevant claim period but can be varied during the claim period.
  1. You cannot claim for employees working statutory or contractual notice periods from 1 December 2020. You can claim for employees serving statutory notice periods up to 30 November 2020, but the grants cannot be used to substitute redundancy payments.
  1. The Job Support Scheme has been withdrawn. The Job Retention Bonus will not be paid in February 2021 and a retention incentive will be deployed at the appropriate time.


Main points of the Scheme in relation to Employees:

  1. Employees can be furloughed where they are unable to work because (i) they are shielding in line with public health guidance; (ii) they live with someone who is shielding in line with public health guidance; or (iii) they have caring responsibilities resulting from Coronavirus including the need to look after children.
  1. Employees who were made redundant or stopped working can be re-employed and claimed for under the Scheme if they were employed and on payroll on 23 September 2020.
  1. Employees who are on sick leave or are self-isolating because of Coronavirus may be entitled to Statutory Sick Pay (SSP). The Scheme is not intended for short term absences.
  1. Employees who TUPE into a new business must have been employed by their prior employer on or before 30 October 2020 and transferred to their new employer on or after 1 September 2020.
  1. Employees returning from maternity leave need to give eight weeks’ notice to end their maternity leave in order to be furloughed. Employers cannot furlough an employee until the end of the eight weeks.
  1. Employees who are placed on furlough will continue to accrue holiday as per their employment contract. Employees are entitled to take holiday whilst on furlough and if an employee takes holiday, the employer should pay their usual holiday pay.
  1. If an employee is placed on furlough, they cannot do any work for their employer that makes money or provides services to their employer. Employees can however (i) take part in training; (ii) volunteer for another employer or organisation; or (iii) work for another employer if contractually allowed.
  1. Employees can be furloughed in one job and receive a furlough payment for that job, but also continue working for another employer and receive their normal wages from that employer.
  1. Employees on furlough still retain their rights at work. The normal rules for maternity, shared parental, adoption, paternity or parental bereavement and pay still apply.
  1. Employees will continue to pay taxes out of their wages.

As under the old scheme, employers should keep records of furlough agreements for five years and records of how many hours employees work and the number of hours they are furloughed for six years.


The Scheme Deadline Days

Claims for the relevant claim period must be made by the deadline days listed below:

  1. 14 December 2020 in relation to the November 2020 CJRS extension calendar month;
  2. 14 January 2021 in relation to the December 2020 CJRS extension calendar month; and
  3. 15 February 2021 in relation to the January 2021 CJRS extension calendar month.


Self-Employment Income Support

The Self-Employment Income Support Scheme (SEISS) has also been amended. The third grant covering the period from November 2020 to January 2021 will be calculated at 80% (instead of 55%) of average trading profits, which is capped at £7,500 for a single payment covering the three months. The Government has already announced that there will be a fourth SEISS grant covering February 2021 to April 2021. Further guidance will be released in due course.

Please note that the guidance is constantly changing and we therefore recommend that you check the position with us before taking any action.

For further information, please contact our Gill Brown or Jacqueline Kendal in our Employment team.

Call Gill on 01256 854605 or email [email protected]

Call Jacqueline on 01256 854626 or email [email protected]



This article is current at the date of publication set out above and is for reference purposes only. It does not constitute legal advice and should not be relied on as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.

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