Latest on the Coronavirus Job Retention Scheme – Treasury Direction 15 April 2020

Mon, 20 Apr 2020

On Wednesday 15 April 2020, the Chancellor, Rishi Sunak, gave a Direction to HMRC in order to implement the Coronavirus Job Retention Scheme (“CJRS”).  There have been numerous versions and updates to the Guidance (both for employers and employees) received on the CJRS, however this Direction makes some changes to the guidance so far received – it therefore makes for vital reading.  The full Direction can be found here.

Here, we set out an overview of 10 questions facing employers and employees in the current climate:


Q1: What is the purpose of the CJRS Scheme?

A1: The CJRS will allow all UK employers to claim for payments in respect of employers incurring costs of employment regarding furloughed employees at the time of this pandemic – para 2.1. 

Q2: How much will the Government pay out under the CJRS?

A2: The CJRS will reimburse employers up to 80% of the wages of each furloughed worker, up to a maximum of £2,500 per month – para 7.1.  This appears to be the gross figure, looking at paras 8.1 & 8.2 of the Direction.

Q3: From when does an employee need to have been employed by the employer in order to be eligible for furlough?

A3: Any employee who was employed by their employer on 19 March 2020 – para 3.2.

Q4: What if there has been a TUPE transfer?

A4: Employees will be able to be furloughed even if they transferred to a new employer under the TUPE Regulations after 19 March 2020 – para 9.3 & 10.

Q5: Do employees have to be at risk of redundancy in order to be furloughed?

A5: No – para 6.1 provides that employees can be furloughed when they have received an instruction to cease all work due to the coronavirus, and the period of cessation is at least 21 calendar days (i.e. 3 weeks).

Q6: Can an employee do any work whilst furloughed?

A6: No, nor can they do any work for a person connected with their employer – para 6.2. NOTE: the Direction makes it clear that the cessation of all work regarding an employee’s employment must be agreed in writing – para 6.7.  This is a change from the earlier guidance, which just required employees be notified of the cessation of work.

Q7: What about directors – what are they able to do?

A7: The short answer is “not much”.  They are only permitted to undertake work to fulfil a duty or other obligation that is required of them under an Act of Parliament, regarding the filing of company accounts or provision of other information relating to the administration of the director’s company – para 6.6

Q8: What will the CJRS cover in terms of wages?

A8: The short answer is, anything that is “regular salary or wages” – para 7.3.  At first blush this is not particularly helpful.  Fortunately, this is expanded upon in paras 7.4 & 7.5, which clarify that the CJRS will not cover conditional/discretionary payments (such as performance related bonuses or tips) or benefits of a non-monetary kind.

Q9: What happens if an employee is furloughed and becomes ill?

A9: Employers can switch between SSP and furlough pay, but SSP will be at 100% rather than 80%.  This means that employers cannot recover furlough pay from the Government for a period during which an employee is sick.  HMRC has updated its statutory payments manual to make it clear that employees do not qualify for SSP if they are on furlough.  From the latest  Statutory Sick Pay (General) (Coronavirus Amendment) (No. 3) Regulations 2020, it appears that shielding employees will now be classified as “incapable of work” if they have received correspondence from the NHS to shield.

Q10: Can employees be furloughed more than once?

A10: Yes, as long as each furlough period lasts for a minimum of 3 weeks.  It is important to ensure that employers obtain consent from employees for each separate period of furlough.

The Direction provided that the CJRS has effect for amounts of earnings paid or payable by employers to furloughed employees from 1 March 2020 to 31 May 2020 (and related national insurance and pension payments).  This has already been extended to the end of June.

The HMRC portal opened today (20 April 2020).  It appears that some employers have been able to gain access and run through the process smoothly, whereas others have not.  Let us see how it copes over the next few days.  The first payments are supposedly going to be released at the end of the month.

These FAQs are not bespoke advice, and should not be relied upon as such. No5’s Employment Group are perfectly placed to provide advice specifically tailored for you.  Please get in touch with our Employment clerks HERE.



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