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Key changes to the Job Retention Scheme

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Recently, the Chancellor made a further Treasury Direction in relation to the Coronavirus Job Retention Scheme.

Furlough scheme extended

A summary of the key changes to the employment of staff on the Job Retention Scheme include:

Sick employees

1.  Previously, furlough could not commence for employees who could have claimed SSP but had not. Now, the employee must have been receiving (or due to receive SSP). The start date for furlough will be the end of the period for which SSP is payable or due to be paid. The Direction suggests there must be agreement between the employer and employee as to the end date of the period of incapacity – this should be recorded in writing if possible.

Unpaid leave

2. If employees have been on unpaid leave between 1 March 2020 and 30 June 2020, no CJRS claim can be made in respect of the unpaid leave; and furlough cannot commence during a period of unpaid leave. If unpaid leave commenced prior to 1 March 2020, and there was an agreement with an employee about the duration of the unpaid leave, furlough cannot begin until the expiry of that period. If the duration of the unpaid leave was uncertain or conditional (such as in relation to an event, time or circumstance), furlough can commence upon completion or ending of those factors. Reference must be given to when the variation was made (that can be an agreement or arrangement or a number of them).

Work by directors

3. There are further examples of work undertaken by a director that will be disregarded for the purposes of work which must cease. This includes making a CJRS claim and paying salaries/wages.

Agreement to cease work

4.  This can now be an agreement made collectively with trade unions. The agreement must specify i) the main terms and conditions which the employee will cease work in relation to, ii) be incorporated (expressly or impliedly) into the contract, iii) be made in writing or confirmed in writing by the employer (email is fine); and iv) the agreement (including any collective agreement) must be retained until at least June 2025.

Study or training whilst furloughed

5.  There are now criteria under which study or training will be excluded from what is “work”. Study or training will not be “work” if it is to improve the employee’s effectiveness in the business or the performance of the employer’s business (but in doing so, the study or training must not provide a service to the business or activities of the employer, continue business activities or generate a profit, or contribute to any significant degree to the production of goods an employer intends to supply or to the supply of services).

Trustee or managers of a scheme

6. Work undertaken by employees for the sole purpose of fulfilling their duties as a trustee or manager of a scheme is disregarded for the purposes of “work”. There are criteria under which an employee will not be undertaking work solely for the purpose of fulfilling their duties – this includes if they are an independent trustee, and the employer’s business activities include the provision of services as a manager of a scheme, or require the employee to undertake duties as an independent trustee of the scheme.


7. There is clarification on what is and is not included with reference to salary.

a. Benefits in kind, anything provided or made available in lieu of a cash payment (including salary sacrifice schemes) and anything which is not regular salary or wages is to be excluded.
b. What is “regular” means the amount of salary or wages that cannot vary according to a “relevant matter”, except where the variation arises from non-discretionary payments.
c. Relevant matters include business performance, the employee’s contribution, the employee’s performance of his or her duties, and any similar considerations; or otherwise payable at the discretion of the employer or any other person (such as a gratuity).
d. Variations arising from non-discretionary payments would include payments for overtime, fees, commissions, piece rates, a payment in recognition of the employee undertaking additional or exceptional responsibilities; and those payments arise under a legally enforceable agreement, understanding, scheme, transaction or series of transactions.
e. References to salary for fixed rate employees will include annual leave to which the employee would have been entitled to be paid pursuant to the Working Time Regulations 1998, statutory payment leave (which includes SSP, SMP, SAP, SPP, SSPP, SPBP), and reduced rate paid leave (which is a period of leave granted following a period of statutory payment leave) that is on different terms.

New employers with no PAYE Scheme

8. These provisions have been amended so that employees who were employed on or before 28 February 2020 and have transferred under TUPE between 1 March and 30 June (but no PAYE scheme was in place at the relevant time) could still be furloughed.


9. The Scheme operates in relation to earnings paid to furloughed employees in the period 1 March 2020 to 30 June 2020. The updated Direction does not deal with the extension of the scheme to October, nor the changes to the scheme that are due to take effect in August.

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