COVID-19 Coronavirus Business Impact: UK Coronavirus Job Retention Scheme – qualification date changes to 19 March 2020 and further detail issued

April 16, 2020

This OnPoint reports on the further detail issued about the operation of the Coronavirus Job Retention Scheme on Wednesday, 15 April 2020.


On Wednesday, 15 April 2020, the UK Government confirmed – by way of updated versions of its guidance to employers and employees as well as the relevant Treasury Direction to HMRC (“the Direction”) - further detail about the operation of its Coronavirus Job Retention Scheme (“the Scheme”) which was originally announced on 20 March 2020 and about which further detail was announced on 26 March 2020, 4 April 2020 and 9 April 2020.


The main highlight of the updated guidance is that the scope of the Scheme is extended to those employees who were on the employer’s PAYE payroll as of 19 March 2020.

The Government has also indicated that the Scheme is due to be fully operational next week.

Despite indicating that it would do so this week, no guidance has yet been issued by the Government on the interaction of the Scheme with employees’ entitlements to holiday and holiday pay during periods of furlough.

Employers will wish to consider the updated guidance as well as the Direction – which are not always entirely consistent with each other - in order to ensure that their claims under the Scheme are correct and that their arrangements with furloughed employees remain appropriate.

Scope of the Scheme expanded

The qualification date determining the scope of the Scheme has changed from 28 February 2020 to 19 March 2020 i.e. the day before the Scheme was announced. The scope of the Scheme has therefore been extended since employers will be able to claim reimbursement of the relevant wage costs, subject to the other detailed rules of the Scheme, in respect of those employees who had been engaged by that later date. The Government’s view is that this change makes the Scheme more generous while keeping the substantial fraud risks under control and is expected to benefit over 200,000 employees.

Employers can therefore claim for furloughed employees who were employed and on the employer’s PAYE payroll on or before 19 March 2020 - the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before that qualifying date.

The provisions concerning TUPE transfers, PAYE business succession and payroll consolidation now reference 19 March 2020 as the qualification date. The updated guidance does not expressly address the position of those who TUPE transferred in the period between the original cut off point for the scheme of 28 February 2020 and the new cut off point of 19 March 2020.

Purpose of the Scheme

The Direction confirms that the purpose of the Scheme is to “provide for payments to be made to employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease.” There is no explicit reference to avoiding redundancy as being a condition of reimbursement under the Scheme in the latest versions of the guidance or the Direction.

Re-engaging employees

The updated guidance states that employees who were employed as of 28 February 2020, were on payroll on or before that date and were made redundant or stopped working for the employer after that date but prior to 19 March 2020 can qualify for the Scheme if the employer re-employs them and puts them on furlough. The position of employees employed as at 28 February 2020 but terminated after 19 March 2020 is less than clear.

The updated guidance also indicates that, if an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, the individual’s former employer(s) should not re-employ the individual, put them on furlough and make a claim under the Scheme.


The Direction makes clear that, for the purposes of the Scheme, an employee is a furloughed employee if:

  • the employee has been instructed by the employer to cease all work in relation to their employment 
  • the period for which the employee has ceased (or will have ceased) all work for the employer is 21 calendar days or more – this minimum period is described as three weeks in the guidance 
  • the instruction is given “by reason of circumstances arising as a result of coronavirus or coronavirus disease.”

The Direction is more explicit than the guidance in requiring that employees agree to furloughing but indicates that this agreement to perform no work may be given in an electronic form such as an email. 

Company directors

The guidance and the Direction are not entirely consistent in their description of what activities a Companies Act director may conduct during a period of furlough for the purposes of the Scheme. The Direction provides that the work which may be disregarded for the purposes of the Scheme – in effect permitted during furlough – is work to fulfil a duty or other obligation arising from an Act of Parliament “relating to the filing of company's accounts or provision of other information relating to the administration of the relevant company.” This can be seen as unhelpfully narrow given the nature of directors’ duties. In contrast, the guidance takes a broader approach and is not limited to accounts and information provision - it permits directors to perform duties to fulfil their statutory obligations “provided they do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.”

Unpaid leave

If an employee went on unpaid leave on or before 28 February 2020, the employee cannot be furloughed until the date on which it was agreed that the individual would return from unpaid leave whether by reference to a specified date or the completion of a particular purpose or occurrence of a specified event.

An unhelpfully unclear provision of the Direction suggests that a claim cannot be made under the Scheme in respect of an unpaid sabbatical or other period of unpaid leave beginning before or after 19 March 2020. This stands in contrast to the guidance which indicates that, if an employee started unpaid leave after 28 February 2020, the employee can put them on furlough instead and pay to the employee at least 80% of their regular wages up to the monthly cap of £2,500.

Fixed rate employees

The Direction confirms that the variable pay provisions of the Scheme do not apply to a “fixed rate employee” - defined as an individual who (contractually) is:

  • entitled to be paid an annual salary,
  • entitled to be paid that salary in respect of a number of hours in a year whether those hours are specified in or ascertained in accordance with their contract (“the basic hours”),
  • not entitled to a payment in respect of the basic hours other than an annual salary,
  • entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month, in equal weekly, multiple of weeks or monthly instalments (“the salary period”), and
  • and whose the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations.

Under the Scheme a claim can be made for 80% of a fixed rate employee’s salary in that individual’s last pay period prior to 19 March 2020 whereas previously the claim was to be based on the employee’s salary as at 28 February 2020.

Detailed provisions are set out in the Direction addressing the treatment of those on sabbatical or unpaid leave during the period by reference to which this reference salary is determined for the purposes of the Scheme.

The updated guidance also makes clear that, if the employer has, based on the previous guidance, calculated its claim based on the employee’s salary as at 28 February 2020, and this is different from the employee’s salary in the last pay period prior to 19 March 2020, the employer can use this calculation for its first claim under the Scheme.

Variable pay

The approach to those with variable pay remains broadly unchanged in that the “reference salary” - for 80% of which a claim can be made - is provided by the Direction to be “the higher of the average monthly (or daily or other appropriate pro-rata) amount paid to the employee for the period comprising the tax year 2019-20 (or, if less, the period of employment) before the period of furlough began and the actual amount paid to the employee in the corresponding calendar period in the previous year.”

The updated guidance notes that, if an employee has been employed for less than a month, the employer should work out a pro rata for their earnings so far and claim for 80%.

Regular salary or wages

The Direction provides that, in determining an employee’s “reference salary” for the purposes of the Scheme, “no account is to be taken of anything which is not regular salary or wages”. A detailed definition is provided of what is meant by salary or wages being “regular” which, to paraphrase, covers payments which cannot vary by reference to corporate performance, personal performance or contribution or similar considerations or are discretionary, are not conditional and are not a benefit in kind. 

The Direction also includes specific provisions concerning the pay of those deemed to be salaried members of LLPs.

Sick employees

As we reported in our earlier OnPoint, the guidance indicates that employees who are currently off sick can be furloughed for business reasons and that it is up to employers to decide whether to move these employees onto Statutory Sick Pay (SSP) or to keep them on furlough at their furloughed rate. However, the Direction indicates that, if an employee is in receipt of SSP at the start of what would otherwise be a period of furlough, the period in respect of which furlough pay can be reimbursed only commences when the employee ceases to be entitled to SSP, whether or not a claim for SSP is made. This casts doubt on whether an employee who is currently off sick and entitled to SSP can be furloughed (at least until the current period of SSP entitlement comes to an end). 

Statutory pay unrecoverable

The Direction indicates that a claim cannot be made under the Scheme to the extent that Statutory Sick Pay, Statutory Maternity Pay Statutory Adoption Pay, Statutory Paternity Pay, Statutory Shared Parental Pay or Statutory Parental Bereavement Pay is paid - or liable to be paid - in respect of an employee’s period of furlough and the gross amount of earnings to be reimbursed must be correspondingly reduced.

Claims process

An employer with fewer than 100 furloughed staff will be asked to enter details of each employee in respect of which a claim is made directly into the system being set up for the administration of the Scheme including the individual’s name, National Insurance number, claim period and claim amount, and payroll/employee number (the latter being optional). An employer with 100 or more furloughed staff will be asked to upload a file (xls .xlsx .csv .ods) with this information rather than input it directly into the system.

The guidance confirms that HMRC cannot provide an employer’s employees with details of the claims it makes on their behalf but requests that employers keep their employees informed, answer any questions that they might have, and ask employees not to contact HMRC.

If an employer has more than one qualifying PAYE scheme the employer must make a separate claim in relation to each scheme and the amount of any payment under the Scheme will be calculated separately in relation to each scheme.

The Direction confirms that HMRC must make arrangements to inform those making claims under the Scheme that payment is made only for the purpose of the Scheme and payment must be returned to HMRC immediately upon the person making the claim becoming unwilling or unable use the payment for the purpose of the Scheme.

The Direction also confirms that a claim may not be made in respect of an employee if it is “abusive” or “is otherwise contrary to the exceptional purpose of” the Scheme.

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