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COVID-19: HMRC updates guidance on Coronavirus Job Retention Scheme

  • Legal Development 14 April 2020 14 April 2020
  • UK & Europe

  • Employment, Pensions & Immigration

The Job Retention Scheme guidance has been updated for the third time since it was announced on 20 March 2020. This update provides a summary of the key new information for employers in the revised guidance on furloughing employees under the Scheme.

COVID-19: HMRC updates guidance on Coronavirus Job Retention Scheme

The revised guidance covers sick pay, work visas, TUPE and shielding, as well as other issues. This is unlikely to be the end of the matter though as further guidance is expected again this week.  Hopefully, that guidance will give more clarity on the vexed question of holiday entitlement during furlough leave. For our current views on this issue, read our recent client update.

The key issues covered in the new guidance are as follows:

Sick pay

The previous guidance said that employees in receipt of Statutory Sick Pay (SSP) can only be furloughed once they are no longer in receipt of SSP.  This indicated that employees on sick leave could not be furloughed until they were fit enough to return to work. The revised guidance provides that if for business reasons an employer wants to furlough an individual currently on sick leave, they may do so.  In these cases, the individual should no longer receive sick pay but would receive furlough pay instead.

The revised guidance also provides that employers are entitled to furlough employees who are shielding or on long term sick leave.  When furloughed, the employer may only claim from the Job Retention Scheme and not the SSP Rebate Scheme. 

More clarification has been given on the status of sick leave during furlough and the question of SSP.  The new guidance provides that furloughed employees retain their right to SSP so that if they become ill during furlough leave, they must be paid at least SSP. It is up to the employer to decide whether to move the employee onto SSP or to keep them on furlough at their furloughed rate.  If the employee is moved onto SSP the employer can no longer claim their furloughed pay under the Scheme.  Employers are required to pay SSP themselves, although they may qualify for a rebate for up to two weeks of SSP.


Grants under the Scheme are not counted as "access to public funds". This means employers can furlough employees on all categories of visa.


The previous guidance indicated that shielding employees (or an employee who needs to stay at home with someone who is shielding) may only be furloughed if they were at risk of redundancy. This restriction did not apply to any other employee which seemed odd.  Clearly this must have been a mistake in the guidance as this condition has now  been taken out so that these employees can be furloughed in the same way as any other employee (subject to the SSP guidance described above).


The revised guidance clarifies that employers who have acquired employees after 28 February 2020, can furlough those employees if either the TUPE or PAYE business succession rules apply to the change in ownership.

Payroll Consolidation

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 Scheme.

Linked and associated organisations

Furloughed employees may not provide services to, or generate revenue for or on behalf of their organisation or a linked or associated organisation. There is no definition of "linked or associated organisation", and whilst it is not clear what is meant by this, we think it would be very likely to cover group companies but whether it goes beyond that is uncertain.

Maternity returners

Any employees returning from maternity leave or other forms of family friendly leave could have been disadvantaged by the Scheme as it previously stood.  The guidance has been revised to alleviate, although not completely solve this issue.  For those returning from statutory leave after 28 February, employers will be able to claim against their salary, before tax - not the pay they received while on statutory leave.  For those on variable pay, this will be calculated using either the same month’s earnings from the previous year or average monthly earnings for the 2019-2020 tax year.

Payment to the employee

All of the grant received from the Scheme must be used to pay employees in money. In other words, no part of the grant should be siphoned off to pay for the provision of benefits or a salary sacrifice scheme.

More information on what you'll need to make a claim

Further details employers will need has been set out in the guidance and includes names, payroll/works numbers, NI numbers and unique tax pay reference numbers of furloughed employees.  More guidance is expected later this week on how to apply under the Scheme, which is widely expected to open for claims on 20 April 2020.

If you have any questions or would like advice on these issues, please get in touch with your usual Clyde & Co contact.

For more Coronavirus (Covid-19) information please see our Coronavirus hub here.


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