Coronavirus Job Retention Scheme (‘CJRS’)

Video 3 – Annual Leave

In this episode, we’ll be looking at the very difficult topic of how annual leave interacts with the Coronavirus Job Retention Scheme (or furlough scheme for short) and answering some of the frequently asked questions on this topic.

The information in this video is provided as information and guidance and is not advice. For advice as to how to apply the CJRS in practice, we are happy to help by following the link below:

Links for our Covid-19 Updates here

UK Government CJRS updated guide here

Video 2 – Implementation of the Furlough scheme

In this episode, we’ll be looking at the nuts and bolts of implementation of the Coronavirus Job Retention Scheme (or furlough scheme for short) and answering some of the frequently asked questions on this topic.

The information in this video is provided as information and guidance and is not advice. For advice as to how to apply the CJRS in practice, we are happy to help by following the link below:

Covid-19 Updates here

UK Government CJRS updated guide here


Video 1 – Eligibility for the Furlough scheme

In this episode, we’ll be looking at the eligibility criteria for the Coronavirus Job Retention Scheme (or furlough scheme for short) and answering some of the frequently asked questions on this topic.

The information in this video is provided as information and guidance and is not advice. For advice as to how to apply the CJRS in practice, we are happy to help by following the link below:

Covid-19 Updates here

UK Government CJRS updated guide here


4 April 2020: HMRC has updated its guidance for employers on the Coronavirus Job Retention Scheme (CJRS).

15 April 2020: The Treasury issued a Direction to HMRC containing authority and instructions for making payments under the Coronavirus Job Retention Scheme.

17 April 2020: HMRC updated its guidance on annual leave.


The scheme enables employers to furlough employees (with their agreement) and claim back 80% of their wages up to £2,500 per month. The updated guidance, published on 4 April 2020, and the Treasury Direction published on 15 April 2020, both add clarifications and detail to the original HMRC guidance published on 26 March:

  • Employees who were employed on 19 March 2020 (previously 28 February 2020) are eligible for furlough, provided the employer had submitted real time information payroll data by that date. This means that new employees, recruited between 1 and 19 March 2020, can be furloughed and the 80% wages recovery can be claimed.
  • Employees who have been dismissed for any reason since 28 February 2020 can be rehired and placed on furlough (whereas the original guidance referred only to employees who had been made redundant since that date). This means that employees dismissed since 28 February  can qualify for furlough leave provided they are reinstated or notice is withdrawn with their agreement, and they are then placed on furlough leave with their  agreement and by reason of circumstances arising as a result of coronavirus or coronavirus disease;
  • Employees with two jobs can still work for one employer while on furlough from the other;
  • CJRS can also cover non-employees who satisfy the definition of ‘worker’ so long as they are paid through PAYE.
  • Directors can now be furloughed, provided the only work they do is to fulfil a statutory duty (meaning those directors’ duties which are imposed by an Act of Parliament, such as filing the company’s accounts). See below for more information,
  • To claim furlough, the employer and employee must have agreed in writing that the employee will cease all work. It is not enough for a company to simply notify its employees that they are being furloughed without obtaining their express consent. If consent is not obtained, the employees will continue to be entitled to receive full pay and no reimbursement can be claimed through the CJRS.
  • Employees can take annual leave whilst on furlough, but any period spent on annual leave must be topped up from 80% to 100%.

HMRC guidance:

Frequently Asked Questions


We are tracking the Government’s announcements about the CJRS on an hourly basis and we will keep this web page updated. We hope you will find these FAQs (and, where we can, answers!) helpful.

Full guidance released on 26th March 2020 can be found here:


These are the key extracts from the speech made by the Chancellor of the Exchequer, Rishi Sunak, on 20 March 2020 which are relevant to the CJRS:

Today I can announce that, for the first time in our history, the government is going to step in and help to pay people’s wages.

We’re setting up a new Coronavirus Job Retention Scheme.

Any employer in the country – small or large, charitable or non-profit – will be eligible for the scheme.

Employers will be able to contact HMRC for a grant to cover most of the wages of people who are not working but are furloughed and kept on payroll, rather than being laid off.

Government grants will cover 80% of the salary of retained workers up to a total cap of £2,500 a month – that’s above the median income.

And, of course, employers can top up salaries further if they choose to.

That means workers in any part of the UK can retain their job, even if their employer cannot afford to pay them, and be paid at least 80% of their salary.

The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and will be open initially for at least three months – and I will extend the scheme for longer if necessary.

I am placing no limit on the amount of funding available for the scheme. We will pay grants to support as many jobs as necessary.

I can assure you that HMRC are working night and day to get the scheme up and running and we expect the first grants to be paid within weeks – and we’re aiming to get it done before the end of April.

We in government are doing everything we can to support you.

We’re paying people’s wages up to 80% so someone can be furloughed rather than laid off to protect their jobs.

We’re launching in the coming days a major national advertising campaign to communicate the available support for businesses and people.

Please look very carefully at that support before making decisions to lay people off.


Questions and issues arising from Rishi Sunak’s announcement:

What is ‘furlough leave’?

Q: Is there a clear definition of when an employee is on ‘furlough leave’?

  • [Guidance for employers] “You will need to designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation.
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement.

[Guidance for employees] “If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.

To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.

You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary, but does not have to.”

It follows that employees who are furloughed cannot do any work for their employer. This is said to include providing services or generating income. An employer cannot use the scheme if employees are still working for reduced pay or on reduced hours. However, employees who have two jobs (working for separate employers) are able to continue working for one employer while furloughed by the other.

Q: Does the employee currently have to be on unpaid leave to be classified as furloughed?

A: No. It is clear that those who are currently still employed and being paid can be designated as furloughed with their agreement.

Employees who were already on unpaid leave on 28 February 2020 cannot be furloughed, unless they return to work after that date and following a period of statutory leave.  The updated guidance states that employees returning from statutory leave, including maternity, paternity, shared parental leave, adoption leave, sick leave and parental bereavement leave, can be furloughed. Therefore, some employees who started a period of unpaid statutory leave before 28 February 2020 can be furloughed. The guidance further confirms that the furlough pay for those employees should be calculated in accordance with their normal salary, not the pay they received while on statutory leave.

Q: The scheme is being back-dated to 1 March – does that mean staff made redundant or laid-off since then can now be reinstated and put on furlough?

A: Yes, the scheme extends to anyone who “stopped working” for an employer on or after 28 February 2020. Employees who were dismissed for any reason can be reinstated and furloughed if the reason for being furloughed is arising as a result of coronavirus or coronavirus disease. Any new hires since 19 March 2020 cannot be placed on furlough.

Q: If an employee on furlough leave decides to undertake work for another employer whilst on furlough leave (eg as a delivery driver/rider or courier) – can they still receive the grant or will it be reduced by earnings elsewhere? Who will be responsible for monitoring this?

A: To be eligible, an employee can not undertake work for on behalf of the organisation (unless they were previously employed by that organisation – e.g. where the employee has two jobs, they can be furloughed by one employer but able to continue working for the other). This includes providing any services and generating any revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

The Employee is however able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.

With regard to outside activities, it would be difficult (if not impossible) for employers to monitor their employees’ activities whilst furloughed (especially given the isolation guidance), so it seems unlikely that employers will have any responsibility to monitor this.

Q: What is the scope for fraud (eg an employer suddenly employing family members, or increasing the entire workforce’s salary for three months while the government is paying)?

A: The Government has announced that the scheme will only cover employees who were on the payroll on or before 19 March. The scheme and will be in place until 31 May 2020, unless extended by the Government.

Q: When will we receive the reimbursement under the scheme?

A: The online portal for the scheme will open on 20 April, with the first reimbursements made on or before 30 April. HMRC are promising that the reimbursement will be paid within 6 working days of submission of the claim.

Q: Can an employee who was subject to a TUPE transfer after 28 February be placed on furlough?

A: Whilst initially unclear, it has now been confirmed that an employee who was subject to a TUPE transfer after 28 February 2020 can still be eligible to be furloughed.

The transfer of a business or undertaking resulting in a change in the employee’s employer from the former employer to the new employer does not operate so as to terminate the contract of employment of the employee by virtue of the Transfer of Undertakings (Protection of Employment) Regulations 2006.

This means that the new employer will still be able to furlough transferred employees under the scheme, even if the TUPE transfer took place after 28 February 2020.

Q: Can administrators place employees on furlough leave?

A: Administrators who have been appointed because of a company’s insolvency are able to place employees on furlough and claim for their wages under the scheme. However, it is important that the employees’ consent to furlough is obtained so as to validly vary their contracts of employment. If they don’t obtain consent, but the employees are furloughed, Administrators will be taken to have “adopted” the contracts of furloughed employees 14 days after their appointment and will be liable for their full pay under insolvency law, which would result in their wages being owed by the company in priority to the administrators’ fees and expenses as a charge on the insolvent company’s property. If the employees are furloughed with their consent, the Administrator can apply for reimbursement of wages under the scheme which, when paid to the employees, will avoid them having priority for any claims (including the remaining 20% of their wages) over other creditors.

Taking furlough leave

Q: Can you force an employee to take furlough leave?

A: You will need to gain an employee’s consent in writing in order for them to take furlough leave as you will be amending their terms and conditions of employment. Confirmation in writing can be obtained by way of email. Failure to obtain agreement could result in employees claiming back pay at the full rate at a later date. Further, the Government may not allow furlough payments where written agreement has not been obtained.

There are other possible options to furlough leave, such as putting employees on unpaid leave or making redundancies. It is also possible to dismiss employees for ‘some other substantial reason’ (which could avoid redundancy payment costs) or even to claim that contracts of employment have been ‘frustrated’, but great care would be needed if either of these other options are being considered, as they could easily lead to unfair dismissal or even discrimination claims where furloughing staff was an option.

Q: Can an employer rotate furlough leave amongst staff, and can employees dip in and out of it?

A: An employer can rotate furlough leave if needed; however, in order to do so it will need to ensure that each time this occurs (and in the absence of agreement to the contrary) the previously furloughed employee must be reinstated to their normal terms and conditions. The employer should also ensure that there is a suitable non-discriminatory selection criteria for deciding who does and does not go on furlough leave. In addition, it will also need to consult and gain consent from each of the employees who is placed on furlough leave as it will require a change to their terms and conditions of employment.

Furlough payments for rotated staff can be reclaimed under the scheme, provided each period of furlough for each employee is at least three weeks.

Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.

Q: What if employees are (as a result of being asked to isolate by their employer) already home-working, either for part or whole of the time?

A: If an employee is undertaking any work for their employer, they cannot be on furlough leave. If the employer decides that the business would be better off by placing employees (or at least some employees) on furlough leave, those employees will not be able to carry out any work for the employer (as above).

Q: What rights do furloughed employees have in respect of holiday leave and pay?

There is now some updated ACAS guidance on holiday leave during furlough. The revised

The new ACAS guidance says this:

Bank holidays are usually part of the legal minimum 5.6 weeks’ paid holiday. Employees and workers must get their usual pay for bank holidays.

Employees and workers may still be required to use a day’s paid holiday for bank holidays, including when they’re furloughed. If bank holidays are given on top of the 5.6 week’s paid holiday, employees and workers should check their contract or talk to their employer about taking this holiday.

If employees and workers usually work on bank holidays but are currently furloughed, they should check with their employer to see if they have to take holiday on that day or if they can take the time off at a later date.

If employees and workers cannot take bank holidays off due to coronavirus, they should use the holiday at a later date in their leave year.

If this is not possible, bank holidays can be included in the 4 weeks’ paid holiday that can be carried over. This holiday can be taken at any time over a 2-year period.”

This is in line with the latest HMRC guidance, which confirms that annual leave can be taken during furlough and that pay must be topped up from 80% to 100%.

Q: If staff are furloughed and required to stay at home, will the grant still be available if those staff voluntarily undertake some other work (e.g. unpaid work)?

A: If a furloughed employee wishes to carry out voluntary or charitable work in the local community they are able to do so (so long as whoever the employee is volunteering for is not the same employer who has furloughed them).

Q: And what if those staff are later given a discretionary bonus payment for undertaking productive work while on furlough leave?

A: Furlough leave can only be used where the employee is not carrying out any work for the employer. Therefore, no productive work should be undertaken and no bonuses should be paid in this regard.

Q: Can employees on short- or long-term sick leave announce they want to return to work, to take advantage of the furlough leave scheme? For example, those who have contracted the Coronavirus?

A: An employee cannot be put on furlough while they are eligible for SSP. It appears that an employee can be furloughed after their entitlement to SSP has ended. This means that for short-term absences, statutory sick pay (SSP) should be paid, subject to the eligibility requirements being met.

For employees on long-term sick leave, an employer may only be able to recoup furlough pay for an employee once their entitlement to SSP has ended whether or not the employee is actually receiving SSP. However, as a result of paragraphs 6.4 and 6.5 of the Treasury Direction, an employee on long-term sick leave who was on unpaid sick leave on 28 February 2020 (their SSP and contractual sick pay entitlement having ended) cannot be furloughed until they are fit to return to work. This would mean that SSP expiring is not the condition upon which they can be furloughed, but becoming well enough to work again is.

Q: Can Company Directors be furloughed?

A: Yes, but the Company seeking to furlough a salaried director should ensure that the furloughed director undertakes no work for the company other than to fulfil their statutory duties as a director. If the director is not a statutory director, they cannot undertake any work for the Company during furlough. If a statutory director is furloughed, the board should formally adopt the decision (and ensure they have the director’s consent in writing), noting this in the Company’s records.

Directors owing statutory duties to the Company may continue to fulfil that part of their role if they do no more than is reasonably necessary for that purpose (HRMC state this would not include tasks generating revenue, or providing other services to or on behalf of the Company). Statutory duties include those relating to the filing of company’s accounts, or providing other information relating to the running of the  company.

Grant of 80% of salary/wages

Q: Does the 80% include payments in respect of bonus or commission?

A: the amount of salary for the employee must disregard anything which is not “regular salary or wages”.  That includes disregarding any performance-related bonus or discretionary payments (including tips), any conditional payments (eg where a threshold must be met) and any non-financial benefits.

Q: What about staff whose pay varies (i.e. zero hours or casual workers?

A: If the employee has been with the business for a full twelve months prior to the claim, you can claim for the higher of either:

a) the same month’s earning from the previous year

b) average monthly earnings from the 2019-20 tax year.

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 2020, use a pro-rata earnings so far to claim.

Q: Will employers be required to pay statutory guarantee payments on top of the 80% pay?

A: This is not clear. However, an employee who is furloughed will arguably not meet the requirements for statutory guarantee payments because they are entitled to remuneration even though their employer is not providing work for them. In any event, contractual remuneration (which will include furlough pay) can be set off against an employer’s liability to pay statutory guarantee payments. Therefore, regardless of whether or not employees are entitled to receive SGPs during furlough leave, it will not make any financial difference to them.

Q: Will the employer be required to top up the 80% pay?

A: No. The COVID-19: guidance for employees states that “your employer could choose to fund the differences between this payment and your salary, but does not have to”. Withholding 20% of an employee’s salary, will however, amount to breach of contract and unlawful deduction of wages unless the employee gives their consent. It is expected that the majority of employees will consent since furlough leave is a better alternative than unpaid leave, lay-off, or redundancy.


Q: Will the 80% grant be subject to income tax and NICs? If so, when will the tax be payable?

A: The employer will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. The reimbursement will cover employer national insurance contributions on the gross amount. “Employer national insurance contributions” are the secondary Class 1 contributions an employer is liable to pay as a secondary contributor in respect of an employee.

Pensions contributions

Q: How does furlough leave work with pension schemes? Will it be the pro-rated % of that which is normally contributed by the employer and the employee?

A: The £2,500 maximum grant will cover all employer pension contributions up to the minimum automatic enrolment employer contributions (3% of wages), as it refers to “up to 80% of your wage for all employment costs”. The amount refundable is 3% of the varied wages.

Obtaining the grant

Q: How will the grant money be claimed and how long will it take to receive it?

A: Employers can claim CJRS payments for furloughed staff from 20 April 2020. Only one claim can be submitted every 3 weeks. Once HMRC have received the claim, you will eligible for the grant. They will pay it via BAC payment to a UK bank account.

You should make the claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.

You must pay the employee all the grant you receive for their wages. No charges can be deducted from the money reimbursed. You can choose to top up the employee’s salary, but you do not have to.

Q: Are furlough grant payments repayable? If so, when, by whom and on what terms?

A: No.

Unfair dismissal, discrimination and other claims or disputes

Q: Should there be consultation to avoid risk of constructive dismissal (breach of T&C claims)?

A: Yes, when placing an employee on furlough leave the employer will be changing their terms and conditions of employment as most employment contracts will not permit an employer to reduce an employee’s pay, provide them with no work, and change their employment status, without agreement.

However, faced with the alternatives, which are likely to be unpaid leave, lay-off, redundancy, dismissal for ‘some other substantial reason’ or even automatic termination of the contract by frustration, we think that the majority of affected employees are likely to agree to be placed on furlough leave. It is worth noting that, in addition to consulting with the employees and gaining their consent, there will be other requirements such as confirming the leave in writing and setting out how long it is likely to last for.

Q: How should employers select staff for furlough, if some are to be kept on full-time?

A: Much like when dealing with a redundancy situation, the employer will need to devise a fair selection criteria which is non-discriminatory. The basis for any criteria will vary from workplace to workplace and will depend on the type of work undertaken and the work that is still needed to be done. This is of course an area in which we are able to provide further guidance and advice if required.

Q: How do you deal with employees who object to their non-working colleagues getting 80% of pay on furlough leave when they still have to work?

A: This is not an easy situation, but so long as a fair process was used then the employer will simply need to have discussions to explain the situation to the objecting employees. Employee’s objecting to continuing working in these circumstances are at risk of being dismissed for ‘some other substantial reason’. They are not redundant, so would not be entitled to redundancy pay. If they refuse to work during their notice period, they could also be summarily dismissed. Depending on the objecting employees’ continued actions and any disruption in the workplace, this may turn into a conduct issue which is dealt with using the usual disciplinary procedures.

Q: Will it be unfair if an employer makes someone redundant rather than placing them on furlough leave?

A: This has not been specifically set out in the Government guidance; however, it is our view, depending on the situation of the business, that it could be argued that it is an unfair dismissal to make someone redundant rather than place them on furlough leave, unless there is a workplace closure. Of course, for employees with longer service, they may prefer to take a redundancy payment rather than be placed on furlough leave. However, this issue may also present its own problems (fairness of selection for redundancy and potential discrimination issues).

Q: What about employees currently laid-off – would they have any claims if the employer refuses to reinstate them and then put them on furlough?

A: It is possible that an employee in this circumstance will have a claim for constructive unfair dismissal, if they are prepared to be furloughed on the terms of the CJRS.

It will depend on the particular circumstances of the case, including the size and resources of the employer. For example, where the employer makes the decision to lay employees off before the scheme commenced, the financial position of the employer is likely to be relevant. There will be cases where an employer cannot afford to furlough employees and pay 80% of salary until HMRC has set up the scheme and reimbursed it. However, if employees agree to defer payment until the employer is reimbursed by HMRC, in those circumstances it is likely to be unfair for the employer to furlough them. Some employees will be unwilling to agree to this, or not be in a financial position to do so. In those circumstances, it may be fair for an employer to lay employees off.

Q: If the employer does not top up the extra 20%, is it a breach of trust and confidence which could result in an unfair dismissal or unlawful deduction of wages claim?

A: No, as the employee must agree to the variation of their contract of employment. However, if the employer does not follow a proper consultation process and gain the employee’s consent to the variation in their  contract of employment, they should be wary of furloughing the employee without consent as withholding 20% of an employee’s salary will otherwise amount to breach of contract and unlawful deduction of wages.

Q: What about discrimination claims if part-time staff, or staff with protected characteristics, are selected for furlough ahead of other staff?

A: Employers will need to take care when applying any selection criteria to decide which employees will and won’t be selected for furlough leave. This is something we have plenty of experience in, as it is similar to undertaking fair redundancy selection processes. Therefore, please get in touch if you have any queries.

“Freelancers” and the “Self-Employed”

A proposed amendment to the Coronavirus Bill was announced on 23 March 2020, entitled Statutory Self-Employment Pay.

It will compel the Government to introduce regulations that provide the self-employed with:

a) 80% of their monthly net earnings (averaged over the last 3 years); or

b) £2,917 per month.

whichever is the lower.


The information in this Q&A is provided as information and guidance and is not advice. For advice as to how to apply the CJRS in practice, we are happy to help. Please contact Laurence Dunn or Claire Helling in the first instance on:



Copyright © DC Employment Solicitors Limited Updated 27th March 2020

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