1. What is furlough leave and the Job Retention Scheme?

This is a government scheme that enables employers to pay most of an employee’s wages while they are on furlough leave.

2. What exactly is a furloughed employee?

Normally, an employee on “furlough” takes a period of temporary unpaid leave. They stay on your books, and you can bring them back in when you need them.

The furlough leave originally introduced in 2020 by the government as one of a number of support measures for the economy. This scheme enables employers who furlough employees due to the COVID-19 crisis, to access a grant via HMRC to cover a portion of your employees’ wages up to £2,500 per employee per month (so in effect temporarily overriding the “no pay” element of furlough).

3. Why was the scheme extended?

The furlough scheme was ended on 31 October 2020, and immediately replaced on 1 November 2020 with a new scheme - the Job Support Scheme, in recognition of the impact of a new national lockdown being put in place in England the furlough scheme was extended. 

On the 3 March 2021, a further extension to this scheme was announced and is set to end on 30 September 2021. At present it is not known if further financial support will be offered to businesses beyond this date.

How does the extended scheme work?

As before, you can place employees on a period of ‘furlough’, meaning they do not work at all, or work less hours than usual, but are retained on your books.  This option is as an alternative to making employees redundant.

The government scheme will continue to cover 80% of their wages, up to a cap of £2,500 per employee per month.  Employers do not have to top up an employee’s wage, meaning that if an employee is placed on ‘full furlough’ and does no work for you, all you will need to pay is National Insurance and employer pension contributions.

However, on 1 July 2021 the government will reduce its cover to 70% with the employer now required to make up the additional 10%, so the furloughed employee will continue to receive up to 80% of their pay for hours not worked.

On 1 August 2021 the government will reduce its cover to 60% and employers will be required to pay 20%

The JRS is to support employers and employees. Employers can agree with their employees to work reduced hours whilst furloughed. This is known as flexi furlough. However, if an employer/employee entered into a flexi furlough arrangement, the employer will need to pay the employee in full for any hours worked (100% of the employees’ normal hourly rate of pay

5. How does an employer claim the grant?

When claiming the grant for furloughed hours, you will need to report and claim for a minimum period of 7 consecutive calendar days. As before, claims can be made through the government website.

6. Which companies are eligible to use the scheme?

All employers with a UK bank account and UK PAYE schemes can claim the grant. You will not need to have used the furlough scheme before.

7. Do employers need to have furloughed employees before?

No. From November 2020, employees can be furloughed for the first time provided they meet other eligibility criteria.



It is possible the government will introduce a restriction on putting new employees on furlough towards the end of the scheme. However, no details have been announced as yet.

8. Which employees can be furloughed?

To be eligible to claim for an employee they must have been on your PAYE payroll by 23:59 30 October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30 October 2020.

However, as a result of the new extension, from May 1 2021 you can furlough someone who was employed on 2 March 2021, as long as you have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021.

Furloughed workers can include agency workers, office holders (including company directors) and salaried members of Limited Liability Partnerships (LLPs).

Finally, from December 2020, anyone serving a notice period for any reason cannot have furlough grant claimed for them.

9. Do employees need to agree to be furloughed?

Yes. In all cases, employers should discuss the situation with employees and agree with them that they are being designated as a furloughed worker, either under full furlough or flexible furlough. This should be confirmed in writing to the employee every time a new or extended period of furlough is discussed and agreed.