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Emma O'Connor


The speed with which the Coronavirus has changed the way we live and work is unprecedented. There is, as a result much we do not know about the Job Retention Scheme (JRS) but it continues to be updated. The most recent government update came out late on 4 April 2020. It gives much needed guidance and fills in some of the gaps, but still leaves many questions unanswered. Here is a summary of the JRS:

JRS - What do we know now?

  • The scheme will cover 80% of monthly wage costs up to a maximum of £2,500 (Gross)
  • Monies are paid as a “grant”
  • The scheme will initially run from 1 March to 31 May 2020, but may be extended if necessary
  • Employers must confirm the furlough status of employees in writing
  • Those furloughed must be furloughed for a minimum of three weeks
  • Employees may be furloughed “multiple times”
  • The JRS is applicable to those employees who would otherwise have been laid-off or made redundant because of the Covid-19 crisis. The Government recognise the need to engage in collective consultation if sufficient numbers if employees (more than 20) are involved. Doing that is likely to be impossible for many employers given the impact of Covid-19 on business and cash flows. Employers failing to engage in Collective Consultation may face Protective Award claims from employees later. Our advice is that in any case, Form HR1 should be filed.

Which employers can claim under the JRS?

  • The scheme is open to all employers who had started a PAYE payroll scheme on or before 28 February 2020
  • Employers must have enrolled for PAYE online – this takes 10 days
  • Those with a UK bank account
  • Employers receiving public funds are not expected to furlough employees. However where an organisation is not primarily publicly funded and where staff cannot be redeployed it may be appropriate to furlough employees
  • Individuals can furlough employees such as nannies provided they are paid through PAYE and were on their payroll on 28 February
  • Administrators can access the scheme but it is anticipated that they will only do so if there is a reasonable likelihood of rehiring employees

Which employees are eligible?

  • Those on PAYE payroll on or before 28 February can be furloughed
  • “Employees” includes:-
    • full-time, part-time, zero hours, agency, flexible;
    • fixed-term employees can be furloughed and their contract renewed. If it is not renewed their period of furlough comes to an end;
    • “Foreign Nationals are eligible to be furloughed” (NB how this impacts those on Tier 2 visas is not discussed);
    • apprentices, although whilst training they must be paid the appropriate minimum wage rate with employers covering any shortfall in pay.
  • Employees who have been dismissed for any reason since 28 February 2020 can be rehired and placed on furlough - the original guidance stated that employees who had been made redundant since this date could be rehired and furloughed but was less clear on employees who had been dismissed for other reasons
  • Employees who began unpaid leave after 28 February 2020 can be furloughed
  • Employees who are shielding in line with PHE guidance, or need to stay at home with someone who is shielding, cannot work and can be furloughed
  • Employees unable to work because of caring responsibilities resulting from COVID-19 can also be furloughed
  • However:
    • Those on reduced pay or reduced hours;
    • Those who stated work from 1 March 2020;
    • Employees who are sick/self-isolating who are receiving SSP
  • Cannot be furloughed. (However, when well enough to return to work the employee could be furloughed if they meet the criteria.)
  • Those furloughed are subject to the usual tax and NIC deductions from their JRS pay
  • To be eligible those furloughed cannot undertake any work for or on behalf of the employer, this includes providing services or generating income

Non-employees who can also be furloughed

  • Office holders – including company directors
  • Limb(b) workers
  • Salaried members of LLPs
  • Agency workers
  • The Government has issued separate guidance in respect of contingent workers in the public sector. The guidance can be found here

Whilst on Furlough Leave

  • Employees who are furloughed are permitted find volunteer or new work with a different employer subject to compliance with PHE guidance (and their contract of employment – our addition)
  • Furloughed employees can undertake training for your organisation whilst on furlough; however, their reduced JRS pay must be at the appropriate minimum wage so employers may need to top up
  • The normal rules apply for those on maternity, adoption, paternity or shared parental leave; however, some will find that their SMP etc. is reduced if they have been furloughed during the 8 weeks before the relevant “qualifying week”
  • Employees on furlough are still entitled to receive SSP

What can employers claim?

  • 80% of wages (even if on NMW) up to £2500 – plus minimum automatic employer pension contributions and Employer National Insurance Contributions
  • Employers can choose whether to top up (our advice - if the employer is not topping up, the employee will need to agree to the reduced wage to avoid a breach of contract/unlawful deductions claim)
  • Employees should be furloughed from the date they cease working (not the date the decision is made or they date they agree unless they are one and the same date!)
  • If an employee’s pay varies and they have 12 months service they can be paid the higher of either (i) the earnings from the same month in the previous year or, (ii) average earning for the 2019/2020 tax year. If they have less than 12 months take an average of their monthly earnings since they started work began work in February, then apply the cap
  • Employers CAN claim for regular payments they are obliged to pay, including:
    • wages
    • past overtime
    • fees
    • compulsory commission payments
  • Employers can claim for enhanced contractual maternity etc. payments as a wage cost
  • Employers CANNOT include:
    • discretionary bonus
    • tips
    • commission payments
    • non-cash payments

Benefits in Kind and Salary Sacrifice Schemes

  • Benefits in kind do not count towards the reference salary. HMRC accepts that Covid-19 is a life event for the purposes of salary sacrifice schemes. Employees could therefore change their salary sacrifice arrangements by updating their contract (our advice – ask employees if they want to stop any items they are paying for out of their salary)

National Minimum Wage (NMW)

  • Whilst an employee is on furlough and not working they can be paid below the relevant NMW rate. However when they are training they must be paid the appropriate NMW so the employer will have to top up to cover any shortfall
  • The guidance recommends that if employees are paid close to NMW levels and will be undertaking substantial amounts of training that employers seek independent advice or contact ACAS

How do Employers make a Claim?

  • When making a claim employers will need:
    • their ePAYE reference number;
    • the number of employees being furloughed;
    • the claim period (start and end date);
    • amount claimed (per the minimum length of furloughing of 3 consecutive weeks);
    • the employer’s bank account number and sort code;
    • a contact name and phone number.
  • When making a claim employers should use the amounts in their payroll, shortly before or after running payroll
  • The Guidance suggests that “if appropriate” a worker’s wages should be reduced to 80% of their salary before they are paid

What happens when the Scheme ends?

Employers will have to decide whether they can take the furloughed worker back or if they have to be made redundant.


The further guidance is helpful but still leaves unanswered questions and conundrums. For example,

  • Holiday and holiday pay during furlough leave? Do employers have to top up to 100% for holiday pay? What impact does holiday have on furlough status?
  • What if an employee is sick during furlough leave? They are entitled to SSP during furlough leave but does sickness interrupt furlough and impact upon the employer’s ability to claim furlough?
  • Those returning after 12 months’ maternity/adoption leave who are furloughed; paying them based on the earnings in the same month in 2019 will mean they might receive 80% of SMP, particularly if what they received was not topped up.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.


Get in touch

If you have any questions relating to this article or have any employment issues you would like to discuss, please contact the Employment team on [email protected]

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