Job Retention Scheme - details for employees

Page last updated 1 June 2020

On 20 March 2020, the Government announced the Coronavirus Job Retention Scheme to provide support for employers to enable them to continue paying part of their employees’ salaries rather than lay them off. Workers who are placed within the scheme will be called 'furloughed' workers. The purpose of the scheme is to allow businesses to retain staff who will be needed in future to rebuild the business. The scheme provides a grant to employers to enable them to continue to pay some income to furloughed staff.

The scheme was initially intended to run for three months, backdated to 1 March 2020, so that it would close on 31 May 2020. Having previously announced that the scheme would be extended to 30 June 2020, the Chancellor has now confirmed that the scheme will run for eight months until the 31 October 2020

On 29 May 2020, further major changes to the scheme were announced. In effect there will be two schemes - the 'mark I' scheme which will run until 30 June 2020, and the 'mark II' scheme of 'flexible furlough' which will introduce more flexibility to help employees back into work from 1 July and under which employers will be asked to contribute towards the cost of their furloughed employees's salaries and replace part of the contribution currently made by the Government.

Furloughed employees will remain entitled to 80% of their wages (subject to the monthly cap of £2,500) throughout their furloughed time.

Government guidance on the scheme is being updated regularly.

If you have questions about the scheme HMRC are asking employees to contact their employer for advice and guidance in the first instance as HMRC helplines are under a lot of pressure at the current time.

The following provides some guidance for employees who are affected by this measure:

  • I have been furloughed - what does this mean?
  • When am I eligible for the scheme?
  • What will I get?
  • Will I still be entitled parental leave while on furlough?

  • How will flexible furlough work?

  • I have been furloughed - can I do other work?
  • I've been furloughed and my employer has asked me to work - what should I do?
  • What happens when the scheme ends?
  • Further guidance

I have been furloughed – what does this mean?

As an employee, you should be notified by your current employer in writing that you are being furloughed because they are unable to operate or have no work for you to do. This means you will be kept on your employer’s payroll, on a reduced wage, rather than be laid off.

Once you have been furloughed, until the 30 June 2020 you must not do any more work for your employer or anyone connected with your employer. You can though carry out training activities, provided that they do not generate revenue for your employer.

From 1 July 2020, the scheme rules will be amended to permit you to do some part time work for your employer. Regardless of whether or not you return to any form of work, your employer will be required to make a contribution towards the cost of your furlough salary from 1 August. More details on how the scheme will operate from this point will be available on 12 June.

Both you and your employer must agree to put you on furlough, or your trade union can reach a collective agreement with your employer. If you start to return to work part-time from 1 July 2020 then you and your employer must agree any new flexible furloughing arrangements in writing.

To be eligible for the scheme your employer must furlough you for a minimum of three continuous weeks.

If, instead of being placed on furlough between 1 March 2020 and 30 June 2020, you were asked (and agreed) to work reduced hours, then you will not be eligible for either mark I or mark II of the scheme as you were continuing to work for your employer. 

While you are on furlough you can continue to accrue holiday leave and take holiday leave. However, you should discuss with your employer in advance if you plan to take holiday leave as this will affect what they must pay you. Your employer can also ask you to take leave. It is unclear how the minimum three-week period that an employee must be furloughed interacts with holiday leave.

If you do take holiday leave while on furlough, you should be paid your usual holiday pay, not the reduced, 80% pay, due under furlough. For those on a variable rate of pay, this will be calculated on the average pay you received in the previous 52 weeks.

HMRC have noted that they will be keeping their policy on holiday pay under review during the furlough period.

It is the employer’s responsibility to claim through the scheme and pay what you are entitled to. If you have any concerns that you are not receiving what you are entitled to you should raise this with your employer in the first place. If you cannot resolve the issue you can seek support from ACAS.

When am I eligible for the scheme?

An employee on any type of contract, including full time, part time, zero-hours, temporary contract or fixed term contract can be furloughed. Agency workers, contractors within IR35 and directors and office holders can be furloughed.

However, the scheme is closing to new entrants on 30 June 2020. Since an employee must be furloughed for a minimum of three weeks to be eligible for the scheme, this means that the final date on which an employee can be furloughed for the first time is 10 June 2020.  From 1 July 2020, only employees who have previously been furloughed between 1 March 2020 and 30 June 2020 for the minimum three-week period can be included in the scheme.

For further details on self-furloughing as a director please see this article originally written for Accountancy Age.

You can also be furloughed by your employer if you are:

  • on sick leave, although further clarification is needed over whether you will stop receiving sick pay and will be treated as any other furloughed employee, or can only be furloughed when your period of sick leave is over
  • self-isolating because of COVID-19
  • shielding in line with public health guidance (or shielding with a family member) and unable to work from home
  • unable to work due to childcare responsibilities

To be eligible to be furloughed, you must have been employed at 19 March and on your employer's payroll on or before 19 March 2020. This means that your employer must have sent a report to HMRC including a payment of earnings to you in respect of the 2019-20 tax year on or before 19 March.

If you were employed as at 28 February (and a payment in respect of earnings had been made to you and reported to HMRC by that date) but then made redundant, your employer can agree to re-employ you and place you on furlough instead. It does not matter if you are re-employed before or after 19 March.

If you were made redundant on or after 19 March 2020, your employer can still re-employ you as long as a wages payment to you had been made and reported to HMRC on or before 19 March 2020.

Employees on a fixed term contract should look at HMRC's guidance to see if they can be re-employed and furloughed when their contract term ends.

The deadline of 19 March is relevant as it was the day before the scheme was announced. HMRC need to know that employees who are furloughed are genuine employees included on a payroll before the scheme announcement to make sure the scheme is not abused.

However, this requirement for a hard cut off does mean that some people who are genuinely in employment by 19 March but who changed jobs around this time may not be eligible to be furloughed. For example, an employee who joined on the 22 February 2020 but who was not included on their employer's February payroll on 25 February because there was insufficient time for the payroll department to process the new starter, and who then did not receive their first payment until the March payroll on 25 March, will miss out as no payroll submission would have been made in time.

What will I receive

Throughout the time you are furloughed and not working you will be entitled to 80% of your normal wages up to a cap of £2,500 per month. Your employer is not required to top up the remaining 20% of your pay, although they may choose to do so.

You will continue to pay income tax and National Insurance on any wages paid to you by your employer while you are on furlough. You will also continue to pay any pension contributions and student loan repayments that are deducted from your wages.

These rules will continue until the end of June. From the 1 July, furloughed workers will be permitted to return to work on a part-time basis while remaining within the scheme. Your employer must pay for any hours that you actually work at your normal rate of pay, while the furlough scheme can be used to provide a top up of your wages for hours which you would normally have worked but are not able to.

This element of pay - furlough pay- will be calculated as 80% of the pay you would have received for the unworked time - subject to an adjusted monthly cap. The monthly cap of £2,500 will be scaled so that it is proportionate to the amount of hours not worked. We presume (although are waiting for confirmation) this means that an employee working 50% of their usual hours from July 2020 will receive:

  • 50% of their usual pay for hours worked
  • 80% X 40% = 32% of their usual pay as a furlough payment, subject to a cap of 50% X £2,500 = £1,250

Further guidance is awaited to confirm this position.

If you are paid a regular wage or salary, then your furlough pay will be calculated based on this regular amount.

If your normal income varies from month to month then your furlough pay will be based on:

  • 80% of the amount you earned in the same month last year (up to a maximum of £2,500)
  • 80% of the average of your monthly earnings from the last year (up to a maximum of £2,500).

Although the amount of support provided to your employer will reduce from 1 August, your entitlement to 80% of your current pay (capped at £2,500 per month) will not be affected unless you return to work part time. If you return to work part time you should receive 100% pay for the hours actually worked and furlough pay for the hours not worked.

Discretionary bonuses, commissions, tips and fees will not be included as part of the calculation of your income. Piece-rate payments, and non-discretionary bonuses, fees or overtime can be included.

If you are asked to carry out training while on furlough, the payment you receive should be enough to ensure that you have received the NLW/NMW for the time you spent training.

If your salary is reduced, then you may be eligible for support through the welfare system.

Will I still be entitled parental leave while on furlough?

HMRC guidance says that the normal rules for parental leave including:

  • maternity pay
  • adoption pay
  • paternity pay
  • shared parental pay
  • parental bereavement pay

will apply while an employee is on furlough. However, the timing of when you were placed on furlough might affect how much you are paid because the amount payable can depend on earnings in previous weeks.

Regulations were introduced by the Government with the object of ensuring that individuals on furlough, who started parental leave on or after 25 April 2020, should not have the amount of these statutory payments received affected because they are on furlough. Furloughed individuals who started a period of parental leave prior to 25 April 2020, and whose employer was not topping their pay up to 100% of their usual wage, may have their entitlements affected because they are on furlough. This is because the period on which the statutory payments are based will include periods where they were only receiving 80% of their usual income.

If you are claiming Maternity Allowance (either because you are employed and do not qualify for Statutory Maternity Pay or are self-employed and have paid sufficient Class 2 National Insurance) you cannot claim both Maternity Allowance and furlough pay. If you have agreed to be put on furlough, you must contact Jobcentre Plus to stop your Maternity Allowance payments.

How will flexible furlough work?

We are expecting detailed guidance on the flexible furlough scheme which will take effect from 1 July 2020 to be published on 12 June 2020.

We understand that employees can be brought back, with their agreement, for any pattern of part-time working. The agreement must be confirmed in writing.

I’ve been furloughed – can I do other work?

Furloughed employees are specifically allowed to take work with another employer during their furlough period as the Government do not wish to restrict the availability of labour during this period. What you must not do until 30 June 2020, is any work that makes money for the employer (or anyone connected with them) who has put you on furlough.

From the 1 July 2020 you can return to work on a part-time basis for your employer and remain within the scheme. At this point more flexibility will be introduced into the scheme. Until 30 June, the existing rules must be applied. 

If you have more than one employer you can be furloughed by one and work for the other(s), or be furloughed by all your employers.

If you take on a new employment with another employer you will be asked to complete a new starter checklist and should complete Statement C on the checklist. 

HMRC has confirmed that employees can carry out union or non-union representative duties for the purpose of individual or collective representation of employees or other workers, provided that the work done does not result in the provision of services to, or generation of revenue for, their employer or anyone associated with their employer.

I’ve been furloughed and my employer has asked me to work – what should I do?

The purpose of the scheme is to protect jobs for workers who cannot continue to work for their employer because of the COVID-19 situation. In order to ensure that the system is not abused, HMRC are asking workers to report abuse by their employer. Fraudulent claims under the scheme will take money from the NHS and limit the ability of the Government to provide support to those who need it.

It has been made very clear by Government and HMRC that until 30 June 2020, any employees who have been furloughed must not undertake any work for their employer. From 1 July more flexibility will be introduced and employees will be permitted to do some work for their employer - for which they must be paid their usual wages - whilst still receiving support from the furlough scheme for the hours not worked.

In the meantime, employees who have been furloughed and still have access to work emails, texts or phone calls must ensure they do not answer these and take steps such as including an out-of-office message on emails and phones explaining they will not be carrying out any work until further notice. Even if your employer has not asked you to work, continuing to do so regardless  of when you are on furlough could be putting your employer at risk as they may be accused of abusing the scheme at a later date.

Employees must not do any work for their employer even if their employer is paying the additional 20% of their salary. However, employees can undertake training, voluntary work or, as noted above, work for another employer.

What happens when the scheme ends?

The scheme will run for eight months from 1 March to 31 October, with increased flexibility being introduced from 1 July.

When the scheme ends in October, employees should be aware that employers will need to decide whether to re-employ their furloughed workers, or consider termination at that point. Employees can also be made redundant during the furlough period. 

Further Guidance

If you need further support or guidance, employees are asked to contact their employer first. HMRC provides the following support routes in addition to their written guidance:

An HMRC helpline is available if you cannot get the support you need from your employer or online but please be aware that HMRC will be receiving a large number of calls and are asking people to seek guidance online first.

The ATT has written further guidance on the scheme from the employer perspective