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Furlough Scheme Extension Update 10th November 2020

As promised the government published the revised and updated guidance on the Job Retention Scheme, commonly known as the Furlough Scheme, late on Tuesday 10th November 2020.

The guidance clarifies some key points about how you calculate wages and hours this time around, and also answers some questions about holiday pay and claims for furlough during holiday.

Much of the guidance and scheme rules are as predicted and set out in the earlier short guidance. There are however a couple of notable points employers need to be aware of:

  1. Employees should not be placed on furlough for a period simply because they are on holiday for that period.
  2. The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.
  3. If you are claiming for an employee for the period from the 1st November retrospectively only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a claim. This means you must write to employees asap if you are claiming for the period from 1st November up until now! If you need a letter template to use you can download one for free HERE
  4. If your business is a registered Company or Limited Liability Partnership and you claim under the scheme after the 1st December 2020 your company or LLP name and registered number will be published by HMRC. This means it and will be publicly available that your company has claimed under the scheme.

Key information about the scheme:

  • From 1 November 2020 you can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.
  • You can claim for employees who were employed on 30 October 2020, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have re-employed an employee after 23 September 2020.
  • The government will review the scheme in January 2021.
  • You do not need to have previously claimed for an employee before the 30 October 2020 to claim for periods from 1 November 2020.
  • Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.
  • For periods from 1 November 2020, you will only need to pay for the cost of employer NICs and pension costs.
  • Claims under the new scheme can be made from the 11th November 2020.
  • There is no maximum number of employees you can claim for from 1 November 2020.
  • Employees cannot work for any period of time that you are claiming furloughed hours. Therefore if you have an employee who normally works 40 hours per week but is flexibly furloughed for 20 hours per week, they can only work in the 20 hours and must not work for the remaining 20 hours you are claiming for.
  • Employees who are furloughed or flexibly furloughed may still:
    • take part in training
    • volunteer for another employer or organisation
    • work for another employer (if contractually allowed)
  • There are now monthly deadlines for claims. Claims for periods starting on/after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday.
  • The Job Retention Bonus Scheme which was due to be paid in February (£1,000 for each retained previously furloughed employees) will no longer be paid. There may be an alternative incentive in the near future?

Notifying employees

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed. You must:

  • make sure that the agreement is consistent with employment, equality and discrimination laws
  • keep a written record of the agreement for five years
  • keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working)

The employee does not have to provide a written response and you do not need to place all your employees on furlough.

My advice however is to seek written confirmation from the employee that they have received the letter and agree to the content. This is important for employment law purposes in case any dispute arises in future about the agreement and what you should pay employees.

This can be done simply by asking employees to email a response to you.

Flexible Furlough

You can:

  • fully furlough employees – they cannot undertake any work for you while furloughed full time
  • flexibly furlough employees – they can work for any amount of time, and any work pattern but they cannot do any work for you during hours that you record them as being on furlough

My advice is that if you agree at the outset to just fully furlough and you subsequently go from full furlough to flexible furlough you should write to the employee again with a new agreement to that effect.

No minimum period for furlough

There is no minimum furlough period, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of seven calendar days.

Agreement for the period 1st November to 13th November – Retrospective claims

Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a Coronavirus Job Retention Scheme claim as long as it is made according to the conditions above.

Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a claim.

Holiday pay

Furloughed employees continue to accrue leave as per their employment contract.

Employees can take holiday whilst on furlough. If an employee is flexibly furloughed, then any hours taken as holiday during the claim period should be counted as furloughed hours rather than working hours.

Employees should not be placed on furlough for a period simply because they are on holiday for that period.

Working Time Regulations (WTR) require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the last 52 working weeks (twelve weeks in Northern Ireland). Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations.

This is particularly important as it highlights where there may be a disparity between the furlough grant and holiday pay as they are based on two different calculations. Where an employee’s pay or hours have changed significantly since March 2020 the calculation of 52 week average may create a different amount from what you are obliged to pay the employee and what you can recover under the scheme.

Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period.

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.

Your Company / LLP will be listed publicly if you claim

From December 2020 HMRC are going to publish a list of Companies and Limited Liability Partnerships (LLPs) of those businesses who make a claim under the scheme from December onwards.


For claim periods after 1 November 2020, a new employer is eligible to claim in respect of the employees of a previous business transferred if the TUPE or PAYE business succession rules apply to the change in ownership. The employees being claimed for should have:

  • been employed by their prior employer on or before 30 October 2020 and transferred from them to their new employer on or before 1 September 2020


You can continue to claim for a furloughed employee who is serving a statutory notice period, however grants cannot be used to substitute redundancy payments.

The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.

If you make an employee redundant, you should base statutory redundancy and statutory notice pay on their normal wage rather than the reduced furlough wage.

If you made employees redundant, or they stopped working for you on or after 23 September 2020 you can re-employ them and put them on furlough. This applies as long as the employee was employed and on your PAYE payroll on or before 23 September 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made between 20 March and 23 September 2020.

Maternity Leave

If your employee decides to end their maternity leave early to enable them to be furloughed (with your agreement), they will need to give you at least 8 weeks’ notice of their return to work and you will not be able to furlough them until the end of the 8 weeks.

Calculating wages

One of the most common questions asked about the new scheme was ‘how do we work out pay?’ The guidance deals with this here:

What to include when calculating wages

If you’ve already claimed for an employee who was on furlough during October, and they are paid a fixed salary, you will follow the same usual wage calculation for claim periods after 31 October 2020.

The amount you should use when calculating 80% of your employees’ wages for hours not worked, is made up of the regular payments you are obliged to make, including:

  • regular wages you paid to employees
  • non-discretionary payments for hours worked, including overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments

You cannot include the following when calculating wages:

  • payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
  • any tips, including those distributed through troncs
  • discretionary bonuses
  • discretionary commission payments
  • non-cash payments
  • non-monetary benefits like benefits in kind (such as a company car) and benefits received under salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay

The entirety of the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

Where the employer provides benefits to furloughed employees, including through a salary sacrifice scheme, these benefits 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 most salary sacrifice schemes unless there is a life event. HMRC agrees that coronavirus counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

Non-discretionary payments

When you’re working out if a payment is non-discretionary, only include payments which you have a contractual obligation to pay and to which your employee has an enforceable right.

When variable payments are specified in a contract and those payments are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of your employees’ wages.

Non-discretionary overtime payments

If your employee has been paid variable payments due to working overtime, you can include these payments when calculating 80% of their wages as long as the overtime payments were non-discretionary.

Payments for overtime worked are non-discretionary when you are contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked.

Apprenticeship Levy and Student Loans

You should continue to pay the Apprenticeship Levy as usual. Grants from the Job Retention Scheme do not cover the Apprenticeship Levy.

You should also continue to make Student Loan deductions from the wages you pay to employees.

National Minimum Wage

Individuals are entitled to the National Living Wage, National Minimum Wage or Apprentices Minimum Wage for the hours they are working or treated as working under minimum wage rules.

At least minimum wage rates must be paid for all hours worked. Furloughed workers who are not working can be paid the lower of 80% of their wages or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage.

However, time spent training whilst furloughed is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage rate. As such, employers will need to ensure that the wages and furlough payment provide sufficient monies to cover all working time including these training hours. Where the pay is less than the appropriate minimum wage entitlement, the employer will need to pay additional amounts to ensure at least the appropriate minimum wage is paid for both working time and 100% of the training time whilst furloughed.

Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time, employers are recommended to seek independent advice or contact Acas.

Employees returning from family-related statutory leave

Family-related statutory leave includes maternity leave, paternity leave, shared parental leave, adoption leave, parental bereavement leave and unpaid parental leave.

For employees on fixed pay, claims for full or part time employees furloughed on return from family-related statutory leave should be calculated against their salary, before tax, not the pay they received whilst on family-related statutory leave. The same principles apply where the employee is returning from a period of unpaid statutory family-related leave.

Employees returning to work after being on sick pay

For employees on fixed pay, claims for full or part time employees furloughed on return to work after time off sick should be calculated against their salary, before tax, not the pay they received whilst off sick.

Claims for those on variable pay, returning to work after time off sick, should be calculated using the normal rules for employees whose pay varies.

Unpaid sabbatical or unpaid leave

If your employee has been on unpaid sabbatical or unpaid leave, you’ll need to use the amount they would have been paid if they were on paid leave when calculating 80% of their wages.

If your employee has fixed pay

You will need to identify the reference period that you will use to work out your employee’s usual wages.

The reference period is the last pay period ending on or before 19 March 2020 for employees who either:

  1. were on your payroll on 19 March 2020, that is you made a payment of earnings to them in the tax year 2019 to 2020 which was reported to HMRC on a Real Time Information (RTI) Full Payment Submission (FPS) on or before 19 March 2020
  2. you made a valid CJRS claim for in a claim period ending any time on or before 31 October 2020

For all other employees, the reference period is the last pay period ending on or before 30 October 2020; this will only apply for periods starting after 1 November 2020.

Because of the Reference Period that you are required to use, some employees whose pay may have gone down since March 2020 will find that their furlough pay is more than their fixed pay now, and those who have had a pay rise in this time will find that their furlough pay is less than their fixed pay now.

This is something that you will need to keep in mind when you are agreeing with the employee that they will be furloughed and paid 80% based on the scheme calculations rather than 80% of their true salary as it is now.

If your fixed pay employee has worked overtime

If your fixed pay employee has worked enough overtime to have a significant effect on the amount you need to claim, you should calculate 80% of their usual wages using the method for employees whose pay varies. Examples of situations where overtime could have a significant effect on the claim amount include where the employee worked overtime:

  • in the reference period
  • in the corresponding calendar period to the pay period you are claiming for
  • a lot, or often, in the tax year up to the reference period

You do not need to amend any previous claims, however if these circumstances apply you should use the calculation for employees whose pay varies for any future claims (from August 2020).

Please note that for many parts of this summary I have cut and paste directly from the guidance so as to ensure you get the full information. The details have been taken from the website directly. You can read HERE

If you have any questions you can leave a comment below, or alternatively get in touch with us directly 01983 897003 or by email to

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6 Responses

  1. My son works in a school kitchen, he was on a 16 hour contract when he was furloughed last March 2020. He returned to work when the school reopened in September and was given a new full time contract. He was furloughed again when the school closed in December but his furlough payment is still only based on his 16 hour contract and not his newer 40 hour contract, his company say there is nothing they can do. He is only receiving 80% of 16 hours pay! Is this right? We can’t find any reference to this on the gov. website.

    1. Hi Sarah

      Thank you for your comment.

      The issue you raise is one that has come up fairly often, as the calculations for the amount of furlough pay the employer can recover from the government is based on the pay from pre March 2020, hence why they have said they can only pay your son based on 16 hours.

      The main point to note is that the employer is contractually required to pay your son at the new contract rate of 40 hours, and anything that is agreed otherwise needs to be agreed between them. Many employees are agreeing to be paid the reduced rate during lockdown, as the alternative is often redundancy, however if your son does not agree with being paid 80% of his old rate he should raise this with his employer in writing.

      If you would like to discuss further then we offer an initial free telephone call by contacting our head office on 01983 897003.

      Kind regards


  2. In September 2020, my daughter successfully applied for a new salaried job as Sales consultant at David Lloyd Newbury and started on the 2nd of October 2020. Up to end of September she was previously employed there as an assistant in the DL Kids Team on a hourly rate basis. She initially was paid for her new position on a pro-rated hourly rate before switching to salary pay on the 16th December 2020.

    They have calculated her furlough payment for Dec 20 onwards based on her 2019/2020 earnings which were significantly less than the salaried pay associated with her new job position. It doesn’t seem right that her income should be based on a previous job position but David Lloyd Newbury have said they are following the CJRS1 scheme guidelines since she was furloughed last year. Is this right ???

    Thanks in advance

    1. Hi Peter

      Thank you for your question.

      Your daughter’s employer are correct in that under the furlough scheme rules they can only claim back pay for your daughter at 80% of the rate pre-March 2020, despite her pay rise and change in role. The claim for funding from the scheme is between the employer and the UK government and is governed by the rules set out.

      Your daughter’s employer is however contractually obliged to pay her what has been agreed in her employment contract. Any variation from this is by agreement between the parties.

      Employees are entitled to be paid 100% of their pay from their employer (unless there is a specific clause in the contract to state otherwise) however of course most people are agreeing to receive less than contractual pay – 80% in most cases – due to the pandemic. But this is still by agreement.

      If your daughter objects to the reduction in her pay she should raise this formally in writing to her employer, and perhaps consider raising a formal grievance.

      If you or your daughter would like to discuss further then we offer an initial free telephone call by contacting our head office on 01983 897003.

      Kind regards


  3. Hi Alison, thank you so much for your reply. I will pass on your advise to my daughter.

The information contained in this blog post is provided for guidance and is a snapshot of the law at the time it is written. It is provided for your information only and should not be used as a substitute for obtaining legal advice that it specific to your particular circumstances.

The guidance should not be relied upon in any decision making process. It is strongly recommended that you seek advice before taking action.

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