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Update to Coronavirus Job Retention Scheme and legislative scheme

15 April 2020

HMRC has published an updated version of its guidance on the furlough scheme.

HMRC has published an updated version of its guidance on the furlough scheme and the Government's Direction setting out the underlying legislative scheme has also been published.

Please see our answers to Frequently Asked Questions and articles on this subject here.

Key changes and clarifications in the guidance and direction are as follows.



Employers who started a PAYE payroll scheme on or before 19 March 2020 and enrolled for PAYE online can now claim for furloughed employees who were on their PAYE payroll on or before 19 March 2020 but only where an RTI submission to HMRC relating to the employee was made on or before 19 March 2020.

While this will include some new starters who were previously excluded from the scheme, its impact could be limited as many employees starting in March will not have been notified to HMRC through RTI until later in the month.


The guidance makes clear that employers can if they wish rehire employees whose employment terminated on or after 28 February 2020, put them on furlough and claim for their wages through the scheme. This applies only if the employee was on the PAYE payroll on 28 February and had been notified to HMRC on an RTI submission on or before 28 February 2020. For clarity, the guidance states that this applies to employees whose employment was terminated after 28 February even where employers do not rehire them until after 19 March.


Where an employee has had a series of different employers, working for one employer at a time in the past year, former employers should check whether the employee is being furloughed by a current employer before agreeing to re-employ them and make a furlough claim. If the employee is being furloughed by a current employer, the former employer should not agree to rehire and furlough them.

If an employee has more than one employer at once, they can however be furloughed by each employer.


Because of the latest change in the guidance, employers can choose to use the reference salary for furloughed employees as at 28 February or in the last pay period before 19 March. This means that, where employers have already agreed with employees to furlough them based on salary at the end of February, this arrangement can remain in place. This latest change may be more relevant where employees are paid weekly or fortnightly.


The update clarifies that furlough claims for employees who return from maternity leave, paternity leave, shared parental leave, adoption leave, sick leave and parental bereavement leave should be based on their normal salary or earnings rather than on amounts paid during statutory leave.


The Direction states that an employee will be furloughed if they have "been instructed by the employer to cease all work in relation to their employment" for 21 days or more "by reason of circumstances arising as a result of coronavirus or coronavirus disease". (There is no stipulation that the employee would otherwise have been made redundant.) However, this does not mean that an employer can unilaterally impose furlough as the Direction also states that the employer and employee must have "agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment". This goes further than the guidance which states that employers must "confirm in writing to their employee" that they have been furloughed.

As we have set out in a previous article, employers should carefully document the agreement to furlough staff and ensure that employees indicate their agreement in writing. Where employers do not yet have written evidence of the furlough agreement, this can be put in place now and a retrospective furlough claim made subject to eligibility. Evidence of this agreement should be kept for five years as it may be subject to HMRC audit.

The agreement to furlough will be a temporary change to the employment contract and thought should be given to what will happen when the employer's circumstances change and/or the scheme comes to an end. As it is so fundamental to the eligibility criteria we recommend that employers seek legal advice on the drafting of the furlough agreement.


The Direction states that training activities which are "directly relevant to an employee’s employment" and which are agreed between the employer and the employee before being undertaken will not be counted as work for the employer. Such training can therefore take place without breaking the furlough period.

Employers should note that training should only be undertaken where it is directly relevant to the work the employee carries out under the contract and should be agreed in advance with the employee. Employers should document such an agreement via an email exchange or similar. It is possible that evidence of such an agreement will be requested by HMRC in a future audit of claims.


The guidance suggests that employees who are off sick can be moved off sick leave and onto furlough leave. It does not provide detail on how or when this should be done but makes clear that employers will not be able to claim for the Statutory Sick Pay (SSP) rebate and make a furlough claim for the same period of time.

This might have led employers to consider retrospectively designating a period of sick leave as a period of furlough leave. The Direction appears not to allow this however. It states that where an employee is off sick, that is where "SSP is payable or liable to be payable in respect of an employee, whether or not a claim to SSP is made", the furlough period will not begin until the sick leave period has ended.


Unfortunately, the guidance does not provide any clarity on how holiday will interact with furlough. Nor is this referred to in the Direction.

We still do not have official confirmation that annual leave will not break the period of furlough, although we have seen HMRC Customer Support tweets which suggest that it will not. The same twitter feed suggests that pay for any period of annual leave during furlough should be topped up to 100%.

It is possible that we will not now have HMRC guidance on this point and that these questions might eventually fall to be considered by the employment tribunal or courts. The safest position for employers is to assume that leave will accrue during furlough and to ensure that pay is topped up to 100% for any annual leave during furlough.

Employers should also be aware of the risk that an employee may be entitled to take all accrued leave (including that accrued during furlough) on their return to work and that any annual leave purportedly taken during furlough will not count as taken. Following the recent change in the rules on carrying over holiday, some employees will be entitled to take accrued leave which they could not take because of coronavirus during the next two holiday years. Environment Secretary George Eustice said "the change is aimed at allowing businesses under particular pressure from the impacts of COVID-19 the flexibility to better manage their workforce, while protecting workers’ right to paid holiday". This does not suggest the new carry over rule relates specifically to employees who are furloughed; although they may qualify if it is decided at a later date that leave taken on furlough does not count towards the statutory annual leave allowance and it is re-instated.


If you would like to discuss any aspect of this article further, please contact Alacoque Marvin or any of the employment team on 0113 243 6100.

You can also keep up to date by following Wrigleys employment team on Twitter

The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors. 


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