All you need to know about the government’s extended furlough scheme

The Coronavirus Job Retention Scheme (CJRS), otherwise known as furlough scheme, has been extended and will now remain open until 31 March 2020. The scheme will be reviewed in January 2021 – date to be confirmed.

The government has now published detailed guidance, which is expected to apply until at least the review date in January 2021. The full guidance is available here:

We have summarised what we believe are the key points below. Please keep in mind that it is possible that, following the review in January 2021, the following rules and guidance will change. We anticipate that any changes will take effect from 1 February 2021 onwards.

What are the principles of extended furlough?

For the period from 1 November 2020 to the review date in January 2021, the furlough scheme will run along similar lines to those we saw in August 2020, which means that:

  • You can use flexible furlough to require your employees to either work reduced hours or stop working altogether.
  • You must inform your employees of the furlough arrangements that you wish to apply to them and secure the employee’s agreement, and you must keep a written record of the employee’s agreement for at least five years. You don’t need to have a written response from the employee (and so it is not necessary for them to sign an agreement or send you an email confirming their agreement), but it is likely to be helpful if you do have something of this nature on record. Please let us know if you need assistance with this.

Who is eligible for extended furlough?

Employees (general):

  • Do not need to have been furloughed before.
  • You must have made a Real Time Information (RTI) submission for them between 20 March 2020 and 30October 2020 inclusive.

 Employees (shielding):

  • You can furlough employees if they cannot work because they are clinically extremely vulnerable.
  • The definition of clinically extremely vulnerable includes (but is not limited to) people who have had organ transplants, people with specific cancers, people with severe respiratory conditions, heart disease or immunodeficiency conditions.
  • The guidance for these individuals is that, if they cannot work from home, they must not attend work.
  • The full definition of clinically extremely vulnerable and the guidance relating to them is here:

 Employees (caring for dependents)

  • Employees can be furloughed if they have caring responsibilities resulting from Coronavirus, including employees that need to look after children.

Employees (sick)

  • Employees can be furloughed if they are off sick and the employer wants to furlough them anyway for business reasons (see below). 


  • Employers do not need to have used furlough before.
  • Must have a UK bank account and a UK pay as you earn (PAYE) scheme.
  • If you receive public funding for staff costs, then you should not furlough your staff. If you’re not fully funded by public grants, you should contact the funding administrator for more guidance on whether you can furlough.

What happens if furloughed employees work some hours?

You will continue to be responsible for paying your employees for any hours that they work and will not be able to claim any proportion of this back under the furlough scheme.

How are furloughed employees paid?

You will be required to make a minimum payment to your employees for any portion of their normal hours that they do not work due to furlough.

The minimum payment is (as before), 80% of the employee’s normal pay, up to the cap of £2,500 per month. If the employee has worked some hours, the cap is reduced pro-rata to the proportion of their normal hours not worked.

You will be able to claim this minimum payment back from HMRC through the furlough scheme.

You may choose to top up your employees’ pay for any portion of their normal hours not worked, but will not be able to claim this top up payment back from HMRC.

You may have to top up your employees’ pay if you do not have a contractual lay off/ short time working clause and/or the employee objects to going on to furlough. If you believe this applies to you, please let us know.

You will have to cover the full amount of employer’s NI and pension contributions and will not be able to claim any proportion of this back.

What can employees do on furlough?

  • Employees cannot work for you during hours that they are on furlough. This means that they cannot do anything that will make money for your business or provide services to your business.
  • They can take part in training provided they get at least National Minimum Wage during hours of training.
  • Employees can volunteer for another organisation or work for another employer during hours that they are on furlough (if their contract with you allows this).

What happens if furloughed workers are sick?

  • Furlough is not intended to cover short term absences from work due to sickness and so the issue of whether an employee is on short term sick leave or self-isolating should not be a factor in deciding whether to furlough them.
  • However, if they are off sick and you want to furlough them for business reasons, then you can do so. In this situation, they will come off sick pay (and so, when they come off furlough they will still have their remaining sick pay entitlement).
  • If an employee on furlough becomes sick, you may choose to take them off furlough and put them on sick pay (this may be appropriate if you needed them to remain available for work during furlough and they cannot be).

What happens with holiday on furlough?

  • You must not place an employee on furlough simply because they are on holiday for that period.
  • But, employees can take holiday during furlough leave. (The guidance does not prohibit employers from requiring employees to use some holiday during furlough leave and so it appears that you can continue to do this. If you would like assistance with this, please let us know).
  • Holiday should be counted as furloughed hours rather than working hours and can be claimed for.
  • You must top up the furlough pay to full pay for any period of holiday, and you cannot claim for the top up.

What happens when employees leave while on furlough?

Fixed Contracts:

  • If you have an employee on a fixed term contract, which has not already expired you can extend or renew the contract and put the employee on to furlough leave (provided they meet the general eligibility criteria above).

 Employees who are leaving:

  • If an employee starts their notice period on or before 30 November 2020, you will be able to furlough them during their notice period and claim for this. In most cases, you will need to top up their notice pay to full pay and will not be able to claim for the top up.
  • It is likely that, if an employee starts their notice period on or after 1 December 2020, you will not be able to furlough them during their notice period. The government is reviewing this and will make a decision in late November 2020.

 Employees who have left:

  • If an employee was on your payroll on 23 September 2020 and has subsequently left because their fixed term contract ended, they were made redundant or they stopped working for you, you can re-employ them and furlough them if you made an RTI submission to HMRC for them between 20 March 2020 and 23September 2020. (If you bring an employee back, you must make sure you reach clear agreement with them about whether they’re in a notice period and start that notice period before 30 November 2020).

How do I make a claim for the furlough scheme?

  • For claims under the old scheme (ending 31October 2020), you have until 30November 2020 to submit your claim to HMRC.
  • For claims under the extended scheme (starting 1November 2020), you will have to make your claim by the 14th of the month after the month you’re claiming for.
  • If the employee has been furloughed before, or is an employee you have not furloughed before but for who you made an RTI submission to HMRC on/ before 19 March 2020, you can use the calculations of “average/ reference pay” and “normal/ usual hours” that you used in August 2020.
  • For new starters, i.e. employees who you first made an RTI submission to HMRC on/after 20March 2020:
    • If they’re on fixed salary, then you can use their last pay period before 30October 2020; and
    • If they’re on variable pay, you can use average pay for the tax year 2020-2021 up to the date furlough started.

As always, if you have any queries, please let us know and we will be happy to help.