Intelligence Report 4: The Coronavirus Crisis: Updated Furlough Guidance dated 9th April, Holidays, The Self Employed. Practical Examples.

The Government produced its third update of the Furlough Guidance on the Evening of 9th April.

In this report we take into account the changes. We also consider the ACAS Guide on holiday. We use a practical example to consider issues thrown up by the Scheme.


Intelligence Report 4: The Coronavirus Crisis: Updated Furlough Guidance dated 9th April, Holidays, The Self Employed. Practical Examples.


See also Duggan QC on Contracts of Employment (4th Edition).



The Third Version of the Guidance contains the following clarifications:

1. Most importantly, the Guidance applies to employees who were subject to a TUPE transfer after 28th February 2020.

2.  Employees can be switched from sick pay to furlough provided that this is not abused - it is not intended that furlough covers short terms  sickness - given that  a person must be furloughed for 3 weeks this is clear. However, the long term sick may be furloughed:

  • "Short term illness/ self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees".
  • Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees.

3.  Those on work visas may be furloughed as "Grants under the scheme are not counted as ‘access to public funds’,

4.  Employees may work for another employer whilst furloughed provided that the organisation is not linked to the employer.

5.  The entire grant must be paid to the employee without deduction.

6. Where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28 February 2020, the new scheme will be eligible to furlough those employees and claim the grants available under the CJRS.

7. Employer National Insurance contributions that are paid on the subsidised furlough pay can be claimed

8. Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance Contributions on their wages as normal. 

9. HOLIDAY - ACAS has backtracked from its position that holiday cannot be instructed to be taken whilst an employee is on furlough.


The Second Guidance - points that arose

(1)          Apprentices

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed. However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage. Guidance is available for changes in apprenticeship learning arrangements because of COVID-19.

 (2)         Administrators

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. However, we would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.

 (3)         If your employee is self-isolating or on sick leave

If you’re employee is on sick leave or self-isolating, they’ll be able to get Statutory Sick Pay. You cannot claim for employees while they’re getting Statutory Sick Pay, but they can be furloughed and claimed for once they are no longer receiving Statutory Sick Pay.

 (4)         Shielding Employees

You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.

(5)         Employees with caring responsibilities

Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.

(6)         Eligible individuals who are not employees

As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE: * office holders (including company directors) * salaried members of Limited Liability Partnerships (LLPs) * agency workers (including those employed by umbrella companies) * limb (b) workers

(7)        Office Holders

Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

 (8)         Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned. Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, 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.

 (9)         Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

  (10)         Agency Workers (including those employed by umbrella companies)

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies. Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme. Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020. Read more information on the Self-Employed Income Support Scheme, including eligibility criteria and how to claim.

 (11)        The normal rules for maternity and other forms of parental leave and pay apply. You can claim through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either: maternity pay; adoption pay; paternity pay; shared parental pay

 (12)      Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.


IMPORTANT - To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.

 You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

(13)      Past Overtime, Fees, Commission, Bonuses and non-cash payments

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.

 We expressed concern that this was  likely to hugely disadvantage some employees, who receive a very small salary and whose earnings are primarily based on commission.  The Guidance makes it clear now that commission can be claimed provided that it was already earned before the 28th February 2020. It will be based upon the calculation set out in the next paragraph. Fees can also be claimed – the Guidance has changed the position.  Non monetary benefits such as a car or health insurance are not included.

(14)      Benefits in Kind and Salary Sacrifice Schemes

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.

(15)        Working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough. For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.


Michael Duggan QC                              10th April 2020

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