Job retention scheme: welcome clarifications as HMRC updates guidance again

5 mins

Posted on 14 Apr 2020

HMRC has updated its coronavirus job retention scheme guidance for employers again. The latest key changes include sections addressing whether employers can furlough sick employees, whether they can claim for employees who transferred to them under TUPE since 28 February and how to calculate claims for employees who have returned from maternity and other forms of statutory leave.  The updated guidance also clarifies some other issues.   

Sick/self-isolating employees 

The latest guidance confirms that an employer may furlough an employee for business reasons if they are currently off work sick (presumably this includes if they are self-isolating, although the guidance does not say this expressly).  However, short term illness/ self-isolation should not be a consideration in deciding whether to furlough an employee. If the employer furloughs a sick employee, they should no longer receive sick pay. Instead, they are classified as a furloughed employee.

Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees.

Employers can claim back from both the job retention scheme and the SSP rebate scheme (see below) for the same employee, but not for the same period of time. When an employee is on furlough, the employer can only reclaim expenditure through the job retention scheme.  

Employees who become sick while furloughed 

If an employee becomes sick while furloughed, employers can choose whether to keep them furloughed at their furloughed rate of pay or move them on to Statutory Sick Pay (SSP).  If they keep them on the furloughed rate, the employer remains eligible to claim for these costs under the scheme.

If the employer chooses to move them on to SSP, they cannot claim for the furloughed salary. Employers will have to pay SSP themselves, although may qualify for the rebate of up to 2 weeks of SSP.  Further information on the rebate is available here.


The guidance confirms that a new employer is eligible to claim in respect of employees who have TUPE transferred after 28th February 2020.  The new employer will be able to claim for these employees even though they were not on its payroll on the 28 February cut-off date.  

Similarly a new employer will be able to claim if the PAYE business succession rules apply to a  change in ownership of a business.

Payroll consolidation

Where a group of companies have multiple PAYE scheme and there is a transfer of all employees to a new consolidated PAYE scheme after 28 February, the new scheme will be able to furlough employees and claim under the scheme.   

Employees returning from maternity and other statutory leave

The guidance clarifies that for employees returning from maternity, paternity, shared parental, adoption, parental bereavement and sick leave after 28 February 2020, employers should use the employee’s salary as the basis for the claim (and the 80% calculation), not the pay they received while on leave.

Claims for those on variable pay, should be calculated using either the same month’s earnings from the previous year or average monthly earnings for the 2019-2020 tax year.

Pension contributions 

The guidance clarifies that employers can claim for employer pension contributions that are paid on the subsidised furlough pay, up to the level of the minimum automatic enrolment employer contribution (3%). 

Benefits in kind and salary sacrifice 

All 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.

Linked organisations

The employer guidance has now been brought into line with the employee guidance to make it clear that the ban on working for the employer includes working for a linked or associated organisation.  Similarly, a furloughed employee undertaking training or volunteer work must not provide services to or make money for a linked or associated organisation of the employer.  

Shielding employees 

The guidance confirms that employers can furlough employees who are unable to work because they are shielding in line with public health guidance (or need to stay at home with someone who is shielding).  There is no requirement that to be able to do this they would otherwise have made the employee redundant.  This was widely thought to be an error in the previous version of the guidance.  

Foreign nationals

Grants under the scheme are not counted as ‘access to public funds’ and employers can furlough employees on all categories of visa.

What employers will need in order to claim

Previous guidance indicated that to claim employers will need:

  • Their ePAYE reference number – this has been changed in the updated guidance to their employer PAYE reference number 
  • The number of employees being furloughed
  • The claim period (start and end date)
  • Amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • Their bank account number and sort code
  • A contact name
  • Their phone number

The updated guidance adds the following information:

  • National Insurance numbers for the employees they want to furlough
  • Names of the employees they want to furlough
  • Payroll/works number for the employees they want to furlough
  • Their Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number


Despite promising to include information about holiday for furloughed employees, the updated guidance still does not deal with this. Click here for further information on holidays, including holidays for furloughed employees.  

The articles published on this website, current at the date of publication, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your own circumstances should always be sought separately before taking any action.

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