On 15 April 2020, the Chancellor gave a Treasury Direction setting out the rules, detail and eligibility requirements of the scheme.  This Direction is the legal framework under which HMRC will operate the Scheme and will take precedence over the guidance, where the guidance differs from the Direction issued.

There are several inconsistencies between the Treasury Direction and HMRC’s guidance.  We understand that HMRC have indicated that it will treat applications under the CJRS in light of the guidance.  However, if they make payment where they are not entitled to do so, they could be acting unlawfully and beyond their powers granted to them by Government.

Some of those areas of discrepancy are below, together with links to our FAQs where there is more commentary on the issue:

  • Whether those employees whose employment ended before 19 March 2020 can be re-engaged and furloughed. (See Entitlement to the scheme section below)
  • Whether an employee who is entitled to SSP is entitled to be furloughed. (See Entitlement to the scheme section below)
  • Whether an employee needs to have given written consent agreeing to furlough. (See Implementing furlough leave section below)
  • What training an employee can undertake whilst on furlough. (See What can an employee do during furlough? section below)

It is hoped that HMRC will clarify its position on reimbursement for employers who have acted in reliance to the guidance to avoid further uncertainty for employers.

We are in unprecedented times and the situation is continually changing. The government is updating its advice and guidance as the situation develops and we will update these Q&As in light of any further developments.

This notification and our FAQs provide guidance only.  It is not intended as a substitute for legal advice.  Employers should seek legal advice on their particular circumstances.

Should an employer require assistance on the contents of this article or any other employment matter, please contact a member of our Employment Team.


Conditions for using the scheme

1. Does an employee have to be at risk of redundancy to be covered by the scheme?

The scheme was initially heralded by the government as an alternative to redundancy, lay-off or unemployment.

However, subsequently the language as to the purpose of the scheme has changed so that a redundancy situation is not a pre-requisite for access to the scheme. The Treasury Direction states that the purpose of CJRS is to provide payments to employers arising from the economic emergency resulting from coronavirus and that an employee is a furloughed employee if “the instruction is given by reason of circumstances arising as a result of coronavirus or the coronavirus disease”.  

The Direction suggests that the purpose of the scheme will be met if there is a connection between putting employees on furlough and the consequences of the coronavirus. 

The updated employers CJRS guidance here states that the scheme “is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees”.  Whilst it goes on to state that all employers are eligible to claim under the scheme, the guidance does suggest that the employer’s operations need to be affected by COVID-19 and the application to the CJRS is a consequence of that.

Ultimately, whilst employers have some discretion, they obviously should not be abusing the scheme.  It should be noted that under the Direction, HMRC can ask for such information that it “may require at any time (whether before or after payment of the claim) to establish entitlement to payment under CJRS.”  There is unlikely to be a forensic analysis of the circumstances of furlough leave, however the government have reserved the right to retrospectively audit employers, with the scope to claw back fraudulent or erroneous claims.

2. Is there a deadline to furlough employees?

The CJRS will close to new entrants on 30 June 2020.  From 1 July 2020, employers will only be able to furlough employees that have been furloughed for a minimum of three weeks before that date. 

This means employees must be furloughed by 10 June 2020 in order that they are furloughed for a minimum of three weeks.

For those employees who have been previously placed on furlough and have returned to work, given that from 1 July 2020 claim periods will need to be a minimum of a week, and  will no longer be able to overlap months (see question 3), it would seem that if an employer wishes to place those employees on furlough again they would need to do so by 10 June 2020 (a minimum of three weeks), or wait until 1 July 2020. 

3. How will the scheme change from 1 July 2020?

From 1 July 2020 employees will be able to return to work part-time.  Employers will pay in full for days work and can claim under the CJRS (subject to eligibility requirements) for days not worked.  Full guidance has yet to be published, however from the information we have so far, it appears that the following will apply under the new scheme:

  • Only employees who started furlough on or before 10 June 2020 will be eligible for the scheme.
  • There will not be any limit or restrictions on the working arrangements, although we await further detail.
  • Under the new scheme it will be necessary that the agreed new working arrangement is confirmed in writing (see questions 14 and 15).
  • There will be no minimum furlough period. However, any furlough arrangement must still cover a period of at least a week.
  • Claim periods will need to be a minimum of a week, and claim periods will no longer be able to overlap months.
  • Employers will need to report both hours worked and the usual hours an employee would be expected to work in a claim period.
  • The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim.

Entitlement to the scheme

1. Does someone need to be on the payroll on 19 March 2020?

Generally, yes.

An employee or worker must have been on the payroll on or before 19 March 2020 and provided that the employer has submitted an RTI submission to HMRC for that employee on or before 19 March 2020.

HMRC’s guidance indicates that employees who were employed and on their employer’s payroll as of 28 February 2020, but who were made redundant, or left employment for any reason (including resignation), after that date can qualify for furlough leave if they were re-engaged by their former employer. The re-engagement does not need to have happened by 19 March 2020. All that is required is that an RTI submission was made either on or before 28 February 2020 or at the latest by 19 March 2020.

This appears to be contrary to the purposes of the scheme. The Treasury Direction states that the purpose of CJRS is to provide payments to employers arising from the economic emergency resulting from coronavirus and that an employee is a furloughed employee if “the instruction is given by reason of circumstances arising as a result of coronavirus or the coronavirus disease”. No CJRS claim may be made if is contrary to this “exceptional purpose”.

Further, an employee is only a furloughed employee if the instruction to cease work is given by reason of circumstances arising from COVID-19.

If an employee is re-engaged solely to allow them access to the scheme, arguably this is not because of the effects of COVID-19, particularly if the original termination had nothing to do with the pandemic.

Thus, notwithstanding the Guidance, there is a risk that such a claim could be found to be invalid based on the parameters of the scheme set out in the Treasury Direction.

2. Can we move employees who are on reduced hours onto furlough?

No, if the employees are still working, although from 1 July 2020 there will be some changes (see question 3 on Conditions for using the scheme for further information).

There appears to be no reason in principle why an employer cannot move employees from reduced hours onto furlough, particularly if the employer’s financial circumstances change.

Although the scheme could financially disincentivise employers from keeping their business open. Keeping a business running with staff on reduced hours allows an employer to keep a revenue stream and retain customer loyalty. However, this is likely to be more expensive to do this than putting all staff on furlough.

From 1 July 2020, furloughed employees will be able to work part time. The scheme will close to new entrants on or before 10 June 2020 (see question 2 on Conditions for using the scheme for further information).

3. What about employees on unpaid leave?


If an employee went on unpaid leave on or before 28 February 2020, they cannot be furloughed until the date on which it was agreed that they would return from unpaid leave.

See question 5 below in respect of those of additional maternity leave and question 6 in respect of those who are on unpaid leave due to long-term sickness absence.

4. Can employees who elected to take unpaid leave to be able to look after their children at home be put on furlough leave instead?

Yes, unless they were on unpaid leave before 28 February 2020.

If they went on unpaid leave before this date, the guidance and the Treasury Direction states that the employee cannot be furloughed until their unpaid leave comes to an end on the date previously agreed. Although, given that schools and nurseries were open at this point, it is unlikely that employees would have been on unpaid leave to look after their children before this date.

5. Can employees on maternity or other family leave be furloughed?

Yes, the guidance and Treasury Direction make clear that an employee on statutory family leave can be on furlough at the same time.  An employer can claim any enhanced family leave pay through the CJRS.  However, this is subject to the following caveats:

  • The requirement to pay the employee at least 80% (capped at £2,500) still applies. This means, that where the contractual pay entitlement is less, an employer may not be able to claim from the CJRS. 
  • If a female employee started her additional maternity leave before 28 February, she will not be able to be furloughed until the date her maternity leave was due to end.
  • Only employees who have been furloughed by 30 June 2020 will be eligible for the scheme (see question 2). For those employees who are on statutory family leave and are in receipt of less than 80% pay (or £2,500 where lower), they will need to either agree to short notice to end their statutory family leave early so that they can be furloughed by 10 June 2020, or remain on statutory family leave with the risk that they are made redundant on their return to leave because there is no work for them and they cannot be furloughed as the scheme is closed to new entrants.  Of course, if they agree to cut their statutory family leave short in order to be furloughed they run the risk of their furlough being cut short earlier than their statutory family leave was due to end, and they are forced to return to work when they may not be ready.  Employer also run the risk that ending statutory family leave artificially early solely to gain access to the CJRS could be seen as an abuse of the scheme.
6. Can we put employees who are on sick leave on furlough?

In some circumstances.

The guidance states that the CJRS is not intended to cover short term absence, as there is a three-week minimum furlough period, and short-term illness or self-isolation should not therefore be a consideration in deciding whether to furlough. However, it goes on to say that employers are entitled to furlough employees who are on sick leave, provided their sick pay ceases. This also applies to those on long-term sickness absence. Thus, suggesting that an employer has a discretion whether to furlough.

The Treasury Direction provides otherwise. Where SSP is payable or liable to be payable (irrespective of whether a claim is made) when the furlough period commences, the period for which a claim under the CJRS can be made is once entitlement to SSP has ended. This is consistent with the previous guidance which stated that employees who are on sick leave or self-isolating can be furloughed once they were no longer receiving SSP.

Our understanding is that the Direction takes precedence over the guidance. Therefore, it would be safer for employers to follow the Direction, as an employer may not be able to validly recoup furlough pay for an employee until their entitlement to SSP has ended (whether or not the employee is actually receiving SSP).

Further, for those who were on unpaid leave due to sickness absence, on or before 28 February 2020, the Treasury Direction may mean that they cannot be furloughed until they are fit to return to work.

Where the duration of the unpaid leave at the time of commencement was uncertain because its duration is determinable by reference to a particular circumstance, completion of a particular purpose, or ending of a specified event, the end date of the unpaid leave is the ending of the circumstance, completion of the purpose or occurrence of the event. The ending of a circumstance in this case, would be the ending of the employee’s unfitness to work.

7. Can employees who are shielding be placed on furlough?

The same considerations apply as question 6 above and will depend on the date the employee was furloughed.

Those employees who are shielding in line with Public Health guidance are now entitled to SSP following amendments to the SSP Regulations. The amendments came into force on 16 April; they do not have retrospective effect.

The Treasury Direction provides that where SSP is payable to an employee at the time they were instructed to cease all work then furlough cannot begin until entitlement to SSP ends. Thus, those employees who have received notification to shield, could be placed on furlough prior to 16 April 2020, on the basis that they would not have been entitled to SSP.

Where there is still work

1. Can we rotate furlough between our employees?

Yes, subject to an employee being on furlough for the minimum three-week period. From 1 July 2020 there will be no minimum furlough period, although a furlough arrangement reported in a claim to HMRC must still cover a period of one week.

For employers who have rotated staff on furlough, they should note that from 1 July 202o, the number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for in any previous claim. This appears to mean that an employer will not be able to flexibly furlough all of its employees and have them return on a part time basis; it will only be able to continue to furlough the maximum number it has furloughed previously.

2. Is there a specific amount of time that an employee has to be back at work before being placed back on furlough?

There is not currently any guidance on this.

However, where an employer is rotating employees on furlough given that the minimum period of furlough is three-weeks, those returning are likely to be back at work for three weeks.

It should be remembered that there are anti-abuse provisions in place and HMRC has reserved the right to audit an employer.  If an employee returns to work for only a short period, it is possible that an employee is being furloughed for some reason unconnected with COVID-19 or is on reduced hours of work (see question 2 on Entitlement to the scheme section).

3. Is furlough unfair where we ask other employees to continue working?

No, provided the employer has used appropriate, non-discriminatory criteria to choose who is placed on furlough.

Implementing furlough leave

1. Do we need to need to get written agreement to place an employee on furlough?

This depends on which Treasury direction appliesis unclear.

Claims submitted before 22 May 2020 (first Treasury Direction)

To claim furlough the Treasury Direction requires that the employer and the employee must have agreed in writing that the employee will cease work. This could mean that employees who have not agreed in writing to be furloughed may fall outside of the scheme. The employee’s agreement can be given in written format, such as an email. It is not clear from the Direction whether agreement should have been reached before the employee was placed on furlough leave.

The guidance was amended on 20 April 2020, stating that the furlough leave needs to have been communicated in writing but there is no requirement for the employee to confirm agreement in writing. We understand that HMRC are of the view that this does not contradict the Direction. However, it is a stretch to say that the employer can unilaterally write to an employee changing terms and this amounts to an agreement.

It should be noted that the High Court in the administration of the restaurant chain Carluccio’s, decided in relation to events before the Treasury Direction, held that no inference could be drawn from an employee’s failure to respond to an employer’s request for consent.

If an employer has not communicated the furlough leave in writing, this should be done as a matter of priority to help mitigate risks of non-recovery under the Scheme. The cautious approach is also to seek agreement in writing from the employee.

Claims submitted on or after 22 May 2020 (second Treasury Direction)

The employer must obtain the employee’s consent to be placed on furlough, however there is no requirement for consent to be in writing, but it does require a valid contractual variation to be be recorded in writing by the employer. Presumably, this can be retrospective.

Claims submitted from 1 July 2020

It is not yet clear what steps an employer will be required to take in order to take advantage of the scheme. The Factsheet states the new scheme will reflect the second Treasury Direction in terms of consent.

2. Will we need to enter into fresh furlough agreements for employees whose furlough continues after 30 June 2020?

Currently, employees are prohibited from working for their employer. A well drafted furlough agreement would have reflected this. However, from 1 July 2020, an employee can begin to work part-time if required by the employer. It will be necessary for the furlough agreement to be amended, permitting the employee to work part-time and dealing with the circumstances in which the employee can be required to work. From the Coronavirus Job Retention Scheme Factsheet published on 29 May 2020, it appears that any flexible furloughing arrangement will need to be recorded in writing.

The difficulty for employers is that we do have any detail of the changes to the scheme that will take effect from 1 July 2020. It is expected that a further Treasury direction setting out the details will be issued and HMRC will update its guidance.

3. How can an employee’s period of furlough be extended?

An employer should agree with the employee to extend the furlough beyond the initial period.  Best practice is to obtain the employee’s written consent.

4. Can employees put themselves on furlough?


An employee can request to be placed on furlough, but an employer does not have to agree.

5. Can an employee be furloughed for a multiple that is not three weeks?

Yes, until the 1 July 2020, provided they are on furlough for a minimum of three weeks.  Each period of furlough can be extended by any amount of time.

It would be prudent for an employer to commit a nominal end date so that employees understand how long there are likely to be furloughed.  The furlough date can be extended if required.  Failing that an employer should keep the matter under review and keep its employees updated.

From 1 July 2020, there will be no minimum furlough period. However any furlough arrangement reported in a claim to HMRC must cover a period of at least one week.

Holiday during furlough

1. Will employees continue to accrue holiday during furlough?


In respect of any holiday contractual holiday above the Working Time minimum, an employer could attempt to negotiate a change in contractual terms such that this does not accrue during furlough.  Although, this may make furlough less attractive to employees.

2. Can annual leave be taken during furlough?

Yes, this has been clarified by the updated guidance.

3. Can we require employees to take their annual leave during furlough?


  • If an employer does not have contractual authority to require employees to take holiday on request, an employer would need to give sufficient notice as required under the Working Time Regulations 1998, which is double the period of any holiday that an employer is requesting is taken. For example, where an employee requires an employee to take one week’s holiday, it will need to give two weeks’ notice.
  • Under case law, a period during which an employee is unable to enjoy rest and relaxation could not be designated as annual leave by the employer, and a worker would be entitled to reschedule pre-arranged annual leave during such a period. Although the case law deals with circumstances where an employee is ill.   Can it be argued that an employee is effectively in the same position during the lockdown.  We consider that such an argument is tenuous, as the public is entitled to leave their homes for certain identified reasons such as exercise.
  • The Working Time Regulations 1998 have been amended to enable employees to carry forward by two years any accrued untaken holiday, where it is not reasonably practicable to take it in the leave year “as a result of the effects of the coronavirus”.  Whether a worker can assert it is not reasonably practicable to take the leave. For example, where they are caring for a close relative who is shielding and they are also socially distancing to protect that relative such that they would not enjoy their holiday.   This is questionable as generally workers do not have a right to reject an employer’s working time notice.  Further, the question of reasonable practicability is unlikely to be a question of enjoyment of holiday, rather it is whether it is feasible for the employee to take time off for rest and relaxation.  

What can an employee do during furlough?

1. Can we ask an employee to do a small amount of work every once and awhile during furlough?

Not at present. Whilst on furlough an employee cannot work for their employer.

From 1 July 2020, the furloughed employee can return to work part time.  On the basis of current information there will be no minimum or maximum limits on the work that an employee can carry out.

2. Can an employee work for another employer?

Yes, provided that employer is not linked or associated with the employer that is seeking reimbursement under the CJRS.  Any contractual restrictions on working elsewhere during employment will continue to apply.  Although, employers may consider relaxing any such restrictions, subject to the employee obtaining the employer’s consent and the role is not with a competing business.

3. Can employees do volunteer work?

Yes, provided that it is not work for the employee’s employer.

4. Can we ask employees to do training whilst on furlough?

Yes. Although there is uncertainty in respect of the scope of the training.

The guidance provides that training can take place provided it does not create revenue for the employer.

The Treasury Direction is considerably more limited. The training activities need to be “directly relevant” to the employee’s employment.

Given the uncertainty employers might want to be cautious about offering training during furlough, and only offer training which is relevant to the employee’s role. Otherwise there is a risk that training outside of this category will bring furlough to an end.

If the employer requires an employee to undertake training, the Treasury Direction requires agreement between both parties.

5. What happens if an employee falls sick whilst on furlough?

This is not entirely clear.

The guidance states that it is up to employers to decide whether to move employees who become sick during furlough onto SSP or whether to keep them on furlough, at their furloughed rate.

Arguably, this is reflected in the latter part of the Treasury Direction, which provides that whilst an employee cannot be furloughed while eligible for SSP “any subsequent entitlement to statutory sick pay by virtue of the employee becoming unfit for work again after the original SSP has ended must be disregarded”. It is not entirely clear what this means.

It is clear that someone who has been furloughed after a period of sickness has come to an end and then falls sick again during furlough can remain on furlough and reimbursement is not affected. However, the use of “again” means that this explicit confirmation that keeping an employee on furlough only applies where there has been a previous period of SSP entitlement. It is possible that the Direction is silent on other circumstances because it was only felt necessary to clarify the position on subsequent sickness. If that is the case, then any sickness which occurs during furlough may be disregarded for the purposes of eligibility for the CJRS. This would be consistent with the guidance.

Of course, if an employee on furlough is only entitled to SSP, there would be no incentive for them to report their sickness.

Bringing furlough to an end

1. Can we call employees back from furlough?

Yes, if an employer put in place terms which provided for when furlough can be ended. It would be sensible to give employees a reasonable amount of notice of a return to work, given that employees may have childcare or additional caring responsibilities.

If there are no contractual terms in place, a return to work may not be an issue, particularly where an employee is in receipt of less pay whilst they are on furlough leave. However, if an employee refuses to return to work ordinarily they are unlikely to be entitled to wages, and they may be subject to disciplinary action for unauthorised absence. Although, an employer must consider the reason why an employee is not keen to return to work. If an employee is reluctant to return to work for, say, health and safety reasons an employer will need to tread carefully.

2. How much notice should we give employees requesting they return to work?

As specified in the furlough agreement.  If this has not been specified, am employer should aim to give reasonable notice.  For information on implementing a part-time return to work from 1 July 2020 see question 2 on Implementing furlough leave.

3. What information should we provide to employees when giving them notice to return to work?

Employees should consider whether the following information should be provided:

  • Health and safety measures that are being taken to ensure that it is safe for employees to return.
  • Any temporary or permanent contractual changes, e.g. reduced hours or different working hours to staff arrival and departure times. Any contractual changes will need to be agreed.
  • Any policy changes, e.g. the taking of annual leave.
  • Any amendments to a bonus or commission scheme.
4. Can we make employees redundant?

Yes, an employee can be made redundant whilst on furlough or afterwards. An employer cannot, however, claim reimbursement of redundancy payments under the scheme.

An employee’s employment rights continue to apply. Therefore, an employer will need to ensure that any redundancy dismissal is fair, which will include undertaking redundancy consultation. An employer will need to consider whether redundancy consultation meetings should be undertaken by telephone or by letter, where an employee does not have the facility to participate in video conferencing.

5. If some employees are furloughed and others are not, should we select only furloughed employees if we need to make redundancies?

No, as this may be regarded as unfair as the selection process for who to place on furlough may not have been as robust as is required where dismissal is contemplated.   An employer should consider the type of work, which is ceasing or diminishing, and which employees carry out their work (irrespective of whether they are furloughed).  An objective, fair and measurable selection matrix should be drawn up.

6. Is statutory redundancy pay calculated on the basis of furlough pay or normal pay?

This will depend on whether the employee has normal working hours, whether pay varies and when the calculation date for calculating a week’s pay falls.

  • Normal working hours and fixed pay – As arguably the normal working hours for an employee who is on furlough have not changed, there is a good argument that a statutory redundancy payment should be calculated at the rate of a normal week’s pay, and not the reduced furlough rate.
  • Normal working hours where pay varies with the work done, or where hours vary (i.e. shift workers) – A week’s pay is calculated based on average remuneration earned over a 12-week reference period. Whole weeks of absence are left out of the calculation.  This means that whole weeks of furlough will likely not be taken into account, and the week’s pay would be based on the reference period prior to furlough starting.
  • No normal working hours – A week’s pay is based on all remuneration payable in the previous 12-weeks. Non-working weeks are taken into account where remuneration was payable; weeks where no remuneration was earned are not.  Whilst there is no precedent for this, it is likely that furlough pay is remuneration for these purposes, thus would be taken into account.

We will update you on our dedicated website pages as and when the Guidance is updated and we know more, but for further advice or assistance on these issues in the meantime please contact any member of the Employment Team.

This article is accurate as at 4 May 2020. Please check our COVID-19 Business Support  for up to date developments.