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Coronavirus Job Retention Scheme – Third Version of Government Guidance


On 9 April 2020, the government published the third version of the Coronavirus Job Retention Scheme (the “Scheme”). This has provided further clarification on some issues, principally relating to sick leave and TUPE transfers.

In breaking news, the Chancellor has just made a Treasury Direction about the Scheme under Sections 71 and 76 of the Coronavirus Act 2020. We will be analysing this and will publish a newsletter on the Direction shortly.

Employees who are currently on sick leave

The guidance has been amended so that employers are now allowed to designate employees who are currently on sick leave as furloughed. It is important to note that this is not intended to be used by employers to cover short-term absences from work due to sickness.

Employers may not furlough employees solely because they have taken sick leave or are in self isolation; it has to be for business reasons. If an employee becomes furloughed they should not receive sick pay – they should receive their furlough rate of pay. A three week minimum furlough period applies.

It is possible to claim back pay from both the Scheme and the Statutory Sick Pay (“SSP”) rebate scheme for the same employee but not for the same period.

Employees who become sick while furloughed

If employees become ill while furloughed, it is for employers to decide whether to keep them on furlough or move them onto SSP. If the employees are kept on furlough, they have to be paid at their furlough rate of pay.

If an employee is moved onto the SSP rate the employer cannot claim for the furloughed salary.


The guidance now confirms that a new employer is eligible to claim under the Scheme in respect of the employees of a previous business transferred after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership. This will be a relief for businesses as there was uncertainty around this point.

Employees on work visas

The government has confirmed that foreign nationals and employees on all categories of visas are eligible to be furloughed. It has also clarified that grants under the scheme are not counted as ‘access to public funds’ and therefore employees on certain work visas will not be regarded as breaching their visa conditions if they receive funds under the Scheme.

National Insurance and Pensions

The government has clarified that employers can claim for National Insurance contributions on the furlough rate of pay (not the employee’s usual salary). The grant for employer pension contributions will be calculated on the furlough rate of pay (not the employee’s usual salary) and only up the level of the minimum automatic enrolment employer contribution of 3% on qualifying earnings.

Payroll Consolidation

Where companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28 February 2020, the new scheme will be eligible to furlough those employees and claim grants under the scheme.

Paying the grant

Finally, the government has emphasised in the guidance that the employer must pay the entire grant to the employee. The grant cannot be used to reduce the wages below the amount of the grant, for example, by deducting administration charges, fees or other costs in connection with the employment.

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