In December, the Coronavirus Job Retention Scheme (CJRS) was extended to the end of April 2021 in anticipation of lockdown measures ending by around March.

Due to the gradual lockdown lifting measures announced recently, it was announced at the spring Budget Day on 3 March that there will be a further extension of the CJRS. This means that furlough grants will continue until the end of September 2021, instead of ending on 30 April 2021.

Furloughed workers are employees whose employers cannot cover staff costs due to coronavirus and, as such, they have been asked to stop working but have not been made redundant. 

Such employers have been able to access support to continue paying part of their staff’s wages, in order to avoid redundancies and so they can retain their teams. 

To avoid fraud, there are expected to be cross-checks between the applications for grants against PAYE records for each employer. HMRC will publish details of claims made by employers from 1 December 2020 and employees will be able to see details of claims made on their behalf through their personal tax account.

Claims for any month must be made by the 14th of the following month.

What are the latest changes to the scheme?

In the latest round of extensions to the scheme, support will be gradually withdrawn, with employers expected to contribute more to wages with reduced furlough grants from the government.

Furlough grants will continue at the rate of 80% of employees’ wages capped at £2,500 per month until the end of June 2021. Thereafter, employers will be expected to contribute 10% in July 2021 and 20% in August 2021 and September 2021, with the furlough grants reducing proportionately.

As summarised in the table below, employees will continue to receive 80% of their salary for hours not worked until the scheme ends, with employers contributing more for the last three months. As before, employers can continue to choose to top up their employees’ wages above the 80% total and £2,500 cap for the hours not worked at their own expense. 

Monthly amounts May June July August September
Government contribution: wages for hours not worked 80% up to £2,500 80% up to £2,500 70% up to £2,187.50 60% up to £1,875 60% up to £1,875
Employer contribution: wages for hours not worked No No 10% up to £312.50 20% up to £625 20% up to £625
For hours not worked, employee receives 80% up to £2,500 80% up to £2,500 80% up to £2,500 80% up to £2,500 80% up to £2,500
Employer national insurance and pension contributions Yes Yes Yes Yes Yes

Employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The £2,500 cap is proportional to the hours not worked. 

Employers can top up employee wages above the maximum salary threshold at their own expense.

Employers will be contributing employers’ national insurance and pension contributions for the hours not worked. Employers will continue to pay the employee’s wages for the hours they work as normal, as well as employer national insurance and employer pension contributions.

Claims for periods ending on or before 30 April 2021

For periods ending on or before 30 April 2021, employers can claim for employees who were employed on 30 October 2020, as long as they have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

This may differ where employees were made redundant, or they stopped working on or after 23 September 2020 and were subsequently re-employed. An employer does not need to have previously claimed for an employee before the 30 October 2020.

Employers must have:

  • created and started a PAYE payroll scheme on or before 30 October 2020
  • enrolled for PAYE online
  • a UK, Isle of Man or Channel Island bank account

Claims for periods beginning 1 May 2021

Employers can claim for employees who were employed on 2 March 2021, as long as they have made a PAYE real time information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021, notifying a payment of earnings for that employee. 

They do not need to have previously claimed for an employee before 2 March 2021 to claim for periods starting on or after 1 May 2021.

Employers must have:

  • created and started a PAYE payroll scheme on or before 2 March for periods starting on or after 1 May 2021
  • enrolled for PAYE online
  • a UK, Isle of Man or Channel Island bank account

For employees who meet the eligibility criteria, and were previously furloughed, employers must use the same calculations for calculating reference pay and usual hours as they did when using the previous version of CJRS.

For an employee who meets the criteria of the extended scheme but was not previously eligible for CJRS, there are now alternative calculations of reference pay and usual hours, which must be used. 

This is calculated for employees:

  • on a fixed salary – 80% of the wages payable in the last pay period ending on or before 30 October 2020
  • whose pay varies – 80% of the average payable between (these dates are inclusive) the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough period begins.

Employees can be furloughed where they are unable to work due to caring responsibilities arising out of the coronavirus situation. These can include situations such as:

  • being unable to work (including from home)
  • working reduced hours

Examples of caring responsibilities include caring for:

  • children who are at home as a result of school or childcare facilities closing
  • a vulnerable individual in your household

The CJRS is not intended for short-term sick absences. 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.

Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP). As under the CJRS previously, it is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.

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Flexible furlough

Employers do not need to place all of their employees on furlough and they can fully furlough employees if they wish. As before, employees cannot undertake any work for their employer during the hours that the employer records them as being on furlough.

There is no minimum furlough period. Flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once. However, while flexible furlough agreements can last any length of time, unless otherwise specified, the period claimed for must be for a minimum claim period of seven consecutive calendar days. The claim period must also start and end within the same calendar month.

Claims relating to any month should be submitted by day 14 of the following month, to ensure prompt claims following the end of the month which is the subject of the claim. Grants should be paid to employers within six working days following submission of the claim, if no further checks are necessary by HMRC.

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Getting started

Prior steps required

Before you make a claim, please read all the available guidance on GOV.UK and also gather all the information and the precise calculations.

  • The client will need to have enrolled for PAYE online for employers (activation codes have now been temporarily suspended so this is instantaneous).   
  • The agent must also be enrolled for PAYE online services for agents. 
  • The agent needs to give their Agent Government Gateway ID to the client. 

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Steps for the client to authorise the agent

  • The client signs into HMRC online services (their business tax account).   
  • In the business tax account, select ‘Manage account' and select the 'Add, view or change tax agent' option under the heading 'Tax Agents'.   
  • Select 'PAYE for employers' and click continue. 
  • On the 'Manage who can access your taxes and schemes' page, click the 'Add an agent' link next to the service that you want to assign an agent for – for example, PAYE. 
  • Enter your agent's Government Gateway ID provided to you by your agent and click continue. 
  • Click on 'Add agent' to confirm you want to add the selected agent. 
  • You will receive confirmation that the agent has been added on the screen. 
  • Businesses, and agents who are authorised to act on behalf of clients for PAYE matters, will be able to claim. However, file-only agents, including payroll bureaus, will not be able to access the service due to data protection reasons. 
  • To make a claim, employers will need the following information: 
  • employer PAYE reference number 
  • number of employees 
  • employees' names, national insurance numbers and payroll/works numbers 
  • your self-assessment, corporation tax unique taxpayer reference or company registration number 
  • claim period and amount claimed  
  • employer's bank account number and sort code 
  • employer's address 
  • contact details of the person making the claim. 
  • You can claim for payments made and to be made within the next 14 days. 
  • It will take around six working days for claims to be paid into the employer’s bank account.

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CJRS engagement letter template

ACCA members are advised to supplement their existing ACCA approved letters of engagement for payroll services with the additional services being offered, if they have been asked to prepare and/or submit the furlough grant claims on behalf of their clients. A template of schedule of services to supplement the Engagement letters – Coronavirus Job Retention Scheme (CJRS) is available. The schedule should be used in conjunction with our engagement letter guidance. 

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How the extended scheme works

  • The employer should discuss the situation with affected employees and, following agreement, notify them in writing that they have become ‘furloughed workers’. A revised agreement should be put in place with the workers, ensuring that it is consistent with employment, equality and discrimination laws. A written record of the agreement should be retained for five years. 
  • Templates to start, extend or end an agreement with an employee or worker to stop work temporarily during the pandemic ('furlough') can be downloaded  from ACAS’s website
  • Employers will be able to claim a grant of the lower of 80% of an employee’s regular salary or £2,500 per month. 
  • The employer can choose to top up employees’ wages above the level covered by the government grant, but does not have to. They cannot claim for employer NICs or pension contributions on the topped-up amount.
  • The employees remain on the payroll deducting tax and national insurance under the pay as you earn (PAYE) system.
  • If an employee’s salary is reduced as a result of these changes, the employee may be eligible for support through the welfare system, including universal credit. 
  • If an employee is on sick leave or self-isolating as a result of coronavirus, they will be able to get statutory sick pay. 
  • Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP). As under the CJRS previously, it is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate.
  • Employers cannot claim through the CJRS for any days on or after 1 December 2020 when employees were furloughed and serving a contractual or statutory notice period. (This includes serving notice of retirement or resignation.)
  • For employees who are made redundant, employers should base their statutory redundancy and statutory notice pay on their normal wage rather than the reduced furlough wage. 
  • When claiming for 100 or more furloughed employees, you’ll need to upload a file in .xls, .xlsx, .csv or .ods formats. You’ll need to ensure that you provide only the employee information requested below as any more or less may risk delaying your payment. You could also be asked to provide the information again. You should ensure that your data file contains only one line per employee for the whole period, and does not break up the calculation into multiple periods within the claim or split data by contract type. HMRC will expect the following information for each employee:
  • Employers cannot claim through the Coronavirus Job Retention Scheme for any days on or after 1 December 2020 when employees were furloughed and serving a contractual or statutory notice period (this includes serving notice of retirement or resignation).
  • full name
    national insurance number
    payroll number (optional)
    furlough start date
    furlough end date (if known)
    full amount claimed.

If employees are being flexibly furloughed, additional information will be required for:

  • hours actually worked in the claim period
  • usual hours for the claim period

HMRC has provided a revised template for uploading data for more than 100 employees. 

  • The scheme is available to all employees including sole director/shareholder companies. However, only the regular salary element paid via payroll will be eligible for the scheme – dividends are not included.

  • A sole director of a limited company can be an employee for the purposes of the furlough, provided there is an employment relationship between the company and the individual. They may also need to evidence any distinction between the director’s role as an officeholder and that of the employee. 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 that they would carry out in normal circumstances 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). 

  • The basis for establishing the director’s employment status would be dependent on facts such as:
  • whether there is a genuine contract of employment between the director and the limited company
    whether a ‘statement of written particulars’ has been issued, providing a distinction between officeholder duties and those of an employee
    what the obligations of each party are in pursuance of the contract
    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.
  • After a claim has been submitted online, a claim reference number will be provided by HMRC, which will then check that the claim is correct. HMRC should pay the claim amount by BACs into the nominated bank account within six working days.
  • Employers must keep a copy of all records for six years, including the amount claimed, the claim period for each employee and the calculations for the claims.

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Example of how the part-time furlough scheme will work

A worker on a 40-hour contract receiving wages of £1,000 per month under the current furlough scheme is entitled to 80% of normal wages, ie £800. However, the employee is not allowed to carry out any work for the employer.

If the employee is going to work for two days a week (eg 16 hours), they would get: 

  • 16/40 x 1,000 = £400 wages for the hours worked and 
  • furlough payment for the rest (ie 80% x 24/40 x 1,000 = £480)
  • total amount received (for two days' work) is £880 compared with £800 on a full furlough.

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Apprentices can be furloughed in the same way as other employees and they can continue to train while furloughed. 

However, the employer must pay their apprentices at least the Apprenticeship Minimum Wage/National Living Wage/National Minimum Wage as appropriate for all the time they spend training. This means the employer must cover any shortfall between the furloughed amount claimed under CJRS and their appropriate minimum wage.

Guidance is available for changes in apprenticeship learning arrangements in England, Scotland, Wales and Northern Ireland

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Holiday entitlement and bank holidays

An explanation of how holiday entitlement and pay operate during the pandemic has been published by the Department for Business, Energy and Industrial Strategy. 

  • The legal minimum holiday entitlement is 5.6 weeks. Workers and employers can agree to alter the terms of the worker’s contract, provided it does not go below the statutory minimum of 5.6 weeks.
  • Holiday pay, whether the worker is on furlough or not, should be calculated in line with current legislation, based on a worker’s usual earnings.
  • Where this calculated rate is above the pay the worker receives while on furlough, the employer must pay the difference. However, as taking holiday does not break the furlough period, the employer can continue to claim the 80% grant to cover most of the cost of holiday pay.
  • New legislation has changed the rules regarding carrying annual leave into future leave years where the impact of coronavirus means that it has not been reasonably practicable to take it in the leave year to which it relates. Under the new legislation, the untaken amount may be carried forward into the following two leave years. When calculating how much holiday a worker can carry forwards, employers must give workers the opportunity to take any leave that they cannot carry forward before the end of the leave year.
  • Workers who are on furlough are unlikely to need to carry forward statutory annual leave, as they will be able to take it during the furlough period.
  • If the employer is unable to fund the difference, it is likely that this would make it not reasonably practicable for the worker to take their leave, enabling the worker to carry their annual leave forwards.
  • In this situation, the worker must still be given the opportunity to take their annual leave, at the correct holiday pay, before the carried annual leave is lost at the end of the next two leave years.
  • Generally, employers remain able to require workers to take annual leave to ensure that holiday is taken in the leave year to which it relates.
  • If an employee usually works bank holidays, then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave, then the employer would either have to top up their usual holiday pay or give the employee a day of holiday in lieu.

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A word about scams

Stay vigilant about scams, which may mimic government messages such as 'Stay at home' and 'Stay home, stay safe', as a way of appearing authentic and unthreatening.

Don’t give out private information or reply to text messages, and don’t download attachments or click on links in texts or emails you weren’t expecting.

You can forward suspicious emails claiming to be from HMRC to and texts to 60599.

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ACCA code of ethics and conduct and anti-money laundering regulations

ACCA members are reminded that:

  • They should not be associated with any information that they believe is false, inaccurate or misleading
  • They should act within the requirements of Professional Conduct in Relation to Taxation (PCRT) in handling the tripartite relationship between themselves, their clients (or employers in the case of in-house advisers) and HMRC. 
  • If they have a suspicion of financial crime (which would on the face of it include deliberately claiming furlough payments for employees who are then required to keep working) they should report this to their firm’s money laundering reporting officer (MLRO) or, in the case of sole practitioners, consider making a suspicious activity report (SAR).This obligation overrides client confidentiality.  

ACCA has a wide range of resources on anti-money laundering, data protection and cybersecurity. 

HMRC has stated that the employer must return any grants back to HMRC immediately if they are unwilling or unable to use it to pay their employee’s salary and the employer NICs and pension contributions.

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Furloughed employees and employment law

Is an employer required to fund the difference between the grant received and full salary? 

No, but the scheme is being designed with underlying reference to employment law.

The general principle for employees (not for casuals or agency workers) is that an employer cannot reduce unilaterally an employee's pay without their consent unless the employer has provided for reduced payment in the contract of employment (which is relatively rare). 

Thus, if an employer unilaterally imposes a pay cut on an employee that constitutes a breach of contract, that would entitle an employee to leave and claim constructive dismissal (less likely in the current circumstances) or remain with the employer under protest and make a claim for back wages on the basis of unlawful deduction.  

The key message is to talk to the employees, and probably the most sensible course of action is to make any changes to the employment contract in writing.

Is it mandatory for an employee to accept furlough?

An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead, using the usual employment law procedure. 

Can the employer decide which employees should be furloughed?

Identifying which workers to furlough will largely be a business decision, but employers should ensure they follow a fair, well-documented process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment. Employers are advised to treat such processes in the same way as redundancies to minimise the risk of tribunal claims.

Are furloughed employees treated as being made redundant?

No. This period is considered as continuous employment; they retain their seniority and all other continuous employment rights.

Can a furloughed employee take on another job with a different employer?

Because a furloughed employee remains on the payroll, they are treated as an employee, so they are subject to the terms of the contract of employment.

Most contracts would prevent an employee working for another firm while employed by their current employer. If an employee wants to take another job while furloughed, they will need to seek consent from their current employer. However, those employees who have more than one employment allowed under the terms of their contract can continue to work for another employer while being on furlough with one employer. 

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, their former employer/s should not re-employ them, put them on furlough and claim for their wages through the scheme.

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Pension contribution payments

The Pensions Regulator has advised that the employer’s duty to pay pension contributions has not changed. Contributions will be based on payments made to workers, and employers must meet the statutory minimum pension contributions. 

If the employer fails to pay the contribution on time, the pension provider is still required to report employers to The Pensions Regulator for failed payments. However, the regulator also understands that these are exceptionally challenging times, and for this exceptional period it requires pension providers to report employers for late payment when they are over 150 days late in paying, rather than the previous 90 days. This gives the employer a longer period to bring the payments up to date before being formally reported to the regulator.

The regulator has published the following statement:

'We know this is a challenging time for everyone and we recognise the strain this is putting on employers. We will take a proportionate and risk-based approach towards the enforcement of decisions, in light of these challenging times, with the aim of helping to get employers back on track and supporting both employers and savers.'

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Complaining about HMRC

The guidance has also been updated to include how claimants can use the HMRC complaints process where mistakes or unreasonable delays have been caused by HMRC. 

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More information

Find out more with the following resources:

Please also see ACCA’s suite of technical factsheets on employment law  and the article, What is the priority for employers?

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