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.

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.

However, if they are asked to stop work, 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, it is likely to be more expensive to do this than putting all staff on furlough.

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 7 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. What about employees on maternity or other family leave?

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, 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.

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.

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 is unclear.

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 or recorded 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 sensible approach is also to seek agreement in writing from the employee anyway recording the consent to the changes to their contractual terms.

2. Can employees put themselves on furlough?


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

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

Yes, 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.

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?

No. Whilst on furlough an employee cannot work for their employer.

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. 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.

3. 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.

4. 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.

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