Covid-19 Business Update 7 – Tuesday 7th April 2020

Following our previous update on 2nd April 2020, please find below notable changes that have been released via

Coronavirus Job Retention Scheme (JRS) – Clarification

Further clarification on this scheme has been released which answers many of the questions that have been raised and these are summarised below.

Please see Update 5 released on 31st March 2020 for the full detail of the scheme.


The following employees can be furloughed and their wages claimed for through the JRS scheme:

  1. Employees made redundant, or that stopped working for you on or after 28 February 2020 can be re-employed and then put on furlough.
  2. 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.
  3. Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19). For example, employees that need to look after children.
  4. Employees on fixed term contracts. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.

The guidance now sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily employees in employment law.

Salaried Company Directors

Company directors can now receive support through this scheme based on the salary that is paid through PAYE. It does not include dividends.

Note the following rules:

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,

No work of any kind should be carried out to generate commercial revenue or provide services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

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.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Payments to Employees

What CAN be claimed:

If your employee is on maternity leave, adoption leave, paternity leave or shared parental leave. The normal rules apply and you can claim through the scheme for enhanced (earnings related) contractual pay.

What CAN’T be claimed:

Additional National Insurance or pension contributions you make because you chose to top up your employee’s salary.

Any pension contributions you make that are above the mandatory employer contribution.

The cost of non-monetary benefits provided to employees, including taxable Benefits in Kind e.g. healthcare.

Benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

The Apprenticeship Levy and Student Loans should continue to be paid as usual. Grants from the Job Retention Scheme do not cover these.

Employee Rights

Employees still have the same rights at work, including Statutory Sick Pay; maternity and other parental rights; rights against unfair dismissal; redundancy payments.

Grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.

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.

General Clarifications

In order to claim you must have enrolled for PAYE online (if you are not already enrolled). This may take up to 10 days so you need to do this ASAP.

A record of all communications to employees in respect of furloughing must be kept for five years in line with all other business records.

Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they have written confirming their furloughed status.

Any employees on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

Where workers are required to undertake training whilst they are furloughed, then they must be paid at least the National Minimum Wages for the time spent training using the new rates at 1st April 2020.

When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

HMRC will process all claims made before the scheme ends.

Should you have any queries on any of the above, or wish us to submit the claim on your behalf (if we do not currently prepare your payroll) please do not hesitate to contact us.

Return to our Dedicated Page for Covid-19 Client Updates