On 12 June, HM Revenue & Customs (HMRC) kept its promise and published updated guidance on the Coronavirus Job Retention Scheme. Although the guidance on the scheme is now extensive, there are still gaps that need to be filled and, in the words of novelist James Stephens, there are definitely lumps in it. The main gap is that the guidance does not set out in any detail what happens from 1 August when employers have to start contributing to the cost of the scheme. This lack of technical detail around how to calculate what to pay is a major concern. This could lead to two possible outcomes: a state of flux over an employee's furlough and some returning to work earlier than planned or more worryingly, possible redundancies.

HMRC has updated four of its existing pieces of guidance, deleted one and published four new documents. This means there are now 13 different pieces of guidance on the furlough scheme. The key points are set out below, together with a summary of what employers need to do now.

Submitting claims

The deadline for submitting claims for periods ending on or before 30 June is 31 July, and the first time an employer can make a claim for days in July will be 1 July. From that date, the minimum claim period will be seven calendar days and claims cannot cross calendar months. For example, if the pay period is 20 July to 16 August the employer will have to make two claims: one for 20 to 31 July and one for 1 to 16 August.

Making a claim is about to become a lot more complicated. Future claims will have to include details of the number of usual hours the employee would work in the claim period and the number of hours the employee has worked or will work in the claim period if they are flexibly furloughed (i.e. if they work part-time and are furloughed part-time). The employer must keep a record of the number of usual hours, the number of hours worked and the number of furloughed hours for six years, together with any calculations.

Employers will be relieved that there is now a mechanism for correcting mistakes. If an employer makes an error and overclaims, they need to tell HMRC in their next claim and their grant will be reduced. If they underclaim, they need to contact HMRC.

Employees you can claim for from 1 July

An employer will be able to claim for anyone who has been furloughed for at least three consecutive weeks between 1 March and 30 June. In a recent change to the rules of the scheme, an employer will be able to furlough an employee returning from statutory parental leave (i.e. maternity, adoption, paternity, shared parental or parental bereavement leave) after 10 June for the first time if they started parental leave before 10 June and were included in an RTI submission on/before 19 March, provided the employer has already claimed for another employee.

As expected, the number of employees an employer can claim for in a single claim period starting from 1 July cannot exceed the maximum number of employees claimed for in any claim ending by 30 June (although returners from parental leave can be added to this number). For example, an employer submitted three claims between 1 March -30 June in which the total number of furloughed employees was 30, 20 and 50. The maximum number of employees that the employer could furlough in a claim starting on or after 1 July will be 50 plus any employees being furloughed for the first time due to them returning from parental leave.

Flexible furloughing

From 1 July, an employer can bring employees back to work for any amount of time and on any work pattern. They will be able to claim under the scheme for the normal hours that the employee does not work and the wage cap will be proportional to the hours the employee is furloughed. For example, if the employee is on furlough for 60% of their usual hours, the cap will be 60% of £2,500.

The employer will need to reach agreement with the employee (or a collective agreement with the trade union), record it in writing and keep it for five years.

The employer will need to calculate the employee's usual hours before claiming. Where the employee works fixed hours, this will be the hours they were contracted to work in the last pay period before 19 March. Where the employee's hours are variable, usual hours will be the higher of the average hours worked in the tax year 2019/20 and hours worked in the corresponding calendar period in the tax year 2019/20.

Employees can continue to take part in volunteer work or training, or work for another employer, during the hours recorded as being on furlough.

Minimum furlough period

From 1 July there will be no minimum furlough period. However, if a new furlough period starts before 1 July it has to last for at least three consecutive weeks.

Employees who have stopped working for you

If employees stopped working for the employer on/after 28 February (or 19 March), the employer could have re-employed them and put them on furlough as long as they did this by 10 June. HMRC did not mention this before 10 June so it is now too late for employers to re-employ someone (or renew a fixed term contract). However, if they were going to take an employee back they would probably have done it before then so this will probably not have much effect in practice.


An employer can claim for employees who transferred to it after 10 June if the previous employer claimed for them in relation to at least three weeks between 1 March and 30 June. The maximum number of employees the new employer can claim for is linked to the number of employees the old employer claimed for and the effect of this provision is unclear.

What employers need to do now

  • Employers need to decide which employees to keep on full-time furlough and which employees should come back to work on a part-time or full-time basis
  • Flexible furlough arrangements need to be agreed with the employees or the trade union and confirmed in writing
  • If you bring furloughed employees back to work part-time, keep records of employees' usual hours, hours worked and furloughed hours
  • Diarise the dates for submitting claims and ensure that you do not exceed the maximum number of employees you can claim for
  • If you have any employees returning from parental leave before the end of October, consider whether you need to furlough them
  • The guidance also states that when the scheme closes at the end of October, employers will need to decide if employees should return to normal hours, work on reduced hours or be made redundant. In reality, employers will need to make this decision long before the end of October, particularly if 20+ redundancies are proposed. This is because they will have to carry out collective consultation for a minimum of 30 or 45 days depending on the numbers affected.

Further changes

A new Treasury Direction is required in order to give legal basis to these changes and I expect that HMRC will continue to update the guidance documents, particularly because they do not currently set out in any detail what happens when employers have to start contributing to the costs of the scheme from 1 August. The furlough scheme was fairly straightforward when it started but every time HMRC updates its guidance an extra layer of complexity is added. Employers are likely to have questions as to the effect of the new guidance on their own situation. For more information, see our FAQs or get in touch with your usual WBD contact.