shaw gibbs - accountants and business advisers
accountants & business advisers

Have a question? Like to know more? - Contact us or Call +44-1865 292200 or +44-20 7436 4773, Mon-Fri 8:15am - 5:15pm

*Initial meeting is free of charge

To latest news
COVID-19 Advice for business  - Furlough leave update - news article image

COVID-19 Advice for business - Furlough leave update

9 Apr 2020

4 minute read

On the 26th March 2020, the Government released guidance on the Coronavirus Job Retention Scheme (‘CJRS’). This temporary scheme is designed to support employers whose operations have been severely affected by coronavirus (COVID-19). See my article published on Furlough leave on the 30 March here and my colleague Katie’s article published earlier regarding payroll considerations here.

Since then, there have been a number of developments around Furlough Leave and as a result, we have received a high number of recurring questions from clients on this topic. Therefore, here is an update on the changes to the original guidance plus some clarification on FAQ’s.

Can employees who left the company after 28 February 2020 be furloughed?

Yes, the Scheme allows employers to re-hire employees who have been made redundant since 28 February and put them on furlough. The guidance now also says any employee who has left an employer since 28 February could be re-hired and then put on furlough. We would advise clients to exercise caution before rehiring a former employee who did not leave due to redundancy. The purpose of the scheme is to avoid employers making redundancies due to the economic impact of Covid-19 on their business. Re-hiring someone who didn’t leave because of redundancy/Covid-19 is therefore not exactly following the spirit of the Scheme and whilst we are aware that some employers are acting on the new guidance, I do wonder whether HMRC might in time change their stance on this point.

 Can those hired after 28 February 2020 be furloughed?

No. Employees hired after 28 February 2020 cannot be furloughed nor can employers claim a grant for their salaries via the CJRS.

Can individuals employed by umbrella companies be furloughed?

Individuals who are employed by their own umbrella company can be furloughed by their umbrella company.

Can an employee start a new job whilst on furlough?

Yes, provided they are contractually allowed to work for another employer whilst they have been placed on furlough. The employee must still be able to return to their original job should their employer end their period of furlough.

What can I claim for employees with fluctuating monthly pay?

If the employee has been employed for 12 months or more, you can claim the highest of either the:

  • Same month’s earning from the previous year
  • Average monthly earnings for the 2019-2020 tax year

If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work. If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.

Can I claim for commission, bonus or overtime?

Previously, the guidance expressly stated that fees, commission and bonuses should not be included in the calculation of wages. However, the new guidance states that regular payments employers are obliged to pay can be included such as:

  • Past overtime
  • Fees and compulsory commission payments

 The following should be excluded:

  • Discretionary bonuses,
  • Tips
  • Discretionary commission payments
  • Non-cash payments (such as the value of benefits in kind).

Wage costs will still be subject to the 80 per cent / £2,500 cap.

 Do employees accrue holiday whilst on furlough?

Yes, we believe employees will continue to accrue statutory holiday during furlough leave. Some employers offer higher holiday allowances than statutory holiday and for the time being, I would recommend you allow furloughed employees to accrued contractual holiday. If the CJRS is extended, you may wish to review this situation. 

 What rate of holiday pay should furloughed employees get?

The Government has not been clear on what rate of pay employees should get for holiday whilst on furlough leave. I expect clarity on this in the forthcoming weeks. In the meantime, before the CJRS is set to end (currently end of May), we have four Bank Holidays – Easter Friday, Easter Monday, 8th May & 25th May. 

For employers paying 100% pay during furlough, the answer is simple. Just pay as usual. For employers who have reduced wages to 80% (up to a maximum of £2,500 per month) for those on furlough leave, your options are to:

  1. Pay full normal pay for Bank Holidays (and pay the rest of the month at 80%
  2. Flag the issue to employees on furlough and say that you are awaiting clarification. Any rectification will be, of course, made at a later date. This would be my preferred route for the time being.

 What clarification is there on who can be furloughed?

The following is a selection of people can be furloughed:

  • Apprentices
  • Domestic staff (as long as they are on the payroll)
  • Employees who are shielding
  • Employees with childcare/other caring duties
  • Those on fixed-term contracts
  • Company Directors
  • Agency workers
  • Members of LLPs

 How to I put furlough into place?

Shaw Gibbs can provide a Furlough Agreement template tailored to your business along with a meeting script to use with employees and we can advise you on who is eligible and how the scheme will work

Contact me for more information. 

COVID-19 Advice for business  - Furlough leave update - news article image


Kerry Whitfield

For more info contact us:

01865 292200

© 2020 Shaw Gibbs Ltd

Your registration