This guidance was last updated on 15 June 2021.

If you are struggling to maintain your employees because your business has been adversely affected by COVID-19, you are able to furlough employees and make an application for a government grant to cover a proportion of their usual monthly wages if you record them to be on furlough.

Whilst this scheme was originally only expected to run until 31 October 2020 it has now been extended to run until 30 September 2021.

The scheme aims to support all those employed through the PAYE system regardless of their employment contract, including apprentices, directors, and those on agency or zero-hours contracts.  Fixed term contracts can be renewed to furlough workers.

Company directors, other office holders and other salaried members of LLPs can be furloughed. Decisions in relation to company directors should be formalised in writing in the company's records. During the period of the furlough, directors must limit their activities on behalf of the company to the minimum statutory duties.

All furloughed workers may undertake voluntary work or continue to be employed by other organisations.

From 1 July, employees who had been furloughed on a full-time basis for a minimum period of three weeks at any point prior to that date, are able to benefit from flexible furlough.  This requires an apportionment of pay for their ‘usual hours’ between those hours worked and those applicable to the furlough.  The rules for establishing ‘usual hours’ are like those applicable to the rate of pay for furlough.

What can I claim? New

  • Furlough periods up to and including June 2021 – 80% can be claimed, subject to the £2,500 cap
  • In July, you can claim back 70% of an employee’s reference pay (up to £2,187.50), with an employer contribution of 10%.
  • In August and September, this is reduced to 60% (up to £1,875), with an employer contribution of 20%.

The payments made to employees are subject to tax, NIC and pension deductions through the payroll in the normal way.  Holiday pay ‘accrues’ as normal during the period in which a worker is furloughed, although holiday can be taken during furlough if an employer funds a top-up to the usual rate of payment.  The Government also amended regulations to allow annual leave (up to four weeks) to be carried over into the next two years. 

Calculating reference pay (80% of wages):

For those without fixed regular salaries, the 80% grant is applied to the higher of: (1) the earnings in the same month in the previous year; or (2) the average earnings from the 2019/20 tax year (or average of monthly earnings since they started work if employed for less than a year).  A pro-rata calculation of earnings applies if they were taken on in February.  For all workers, regular contractual payments of overtime, fees. commissions and bonuses can be included in the calculation of the grant.

For employees who were either on your payroll on 19 March 2020, included in an RTI submission to HMRC on or before 19 March 2020, or any for whom you made a valid CJRS claim for a period ending on or before 31 October 2020.  For fixed pay and hours and variable pay and hours the calculation method has not changed:

  • Fixed pay and hours - pay and contracted hours in the last pay period ending on or before 19 March 2020
  • Variable pay and hours - the higher of average pay and hours for the 19/20 tax year or the corresponding calendar period in the 19/20 tax year

For all other employees:

  • Fixed pay and hours - the rate applicable in the last pay period ending on or before 30 October 2020
  • Variable pay and hours  - average wages payable and hours worked between 6 April 2020, or start of employment if later, and the day before they are furloughed on or after 1 November 2020

There are no restrictions on the maximum number of employees that you can claim for.

Claim amendments – Should you need to revisit and increase a previously submitted claim, in respect of periods from 1 November 2020, there is only a small window in which to do so eg 28 days after the end of the month to which it relates (if it falls on a weekend then the deadline will be next working day).

Termination/Redundancies – from 1 December 2020 it is not possible to claim a grant in respect of an employee who is serving a contractual or statutory notice period. This includes employees who have either been provided with notice of termination, are retiring or have chosen to leave.

TUPE transfers – for claim periods after 1 November 2020, a new employer is eligible to claim in respect of the transferred employees of a previous business if the employee has been employed by their prior employer on or before 30 October 2020 and transferred to the new employer on or after1 September 2020.

Maternity – if an employee ends maternity leave early to be furloughed, the employee will need to provide 8-weeks’ notice of their return to work.  The furlough period can only commence after the 8-week notice period.

Holiday pay - employees are able to take holiday whilst on furlough.  Working time regulations (WTR) say holiday pay must be paid at the employee's normal rate of pay.  If the rate of pay varies it should be calculated on the basis of the average pay received by the employee in the last 52 working weeks (12 weeks in Northern Ireland). 

For further information on calculating how much you can claim using the scheme can be found here.

Are there any restrictions?

You must have made a PAYE RTI submission to HMRC notifying a payment of earnings for the employee between 20 March 2020 and 30 October 2020 for any employee who was employed on 30 October 2020. 

The above may differ if you have rehired an employee who had previously been made redundant or had stopped working for you on or after 23 September 2020.

A new employer is eligible to claim in respect of employees of a previous business transferred if either the TUPE or PAYE business succession rules apply. 

For those who qualify and who returned to work from 1 July, it is possible to claim the grant in conjunction with part-time working, an arrangement that is not permitted before that date.

If you are a Director or Manager of a company, you are not disqualified from the JRS. Directors or Managers can continue undertaking their statutory duties while furloughed, such as filling out company accounts etc.

What do I need to make a claim?

  • UK bank account
  • UK PAYE scheme (started before 30 October 2020)
  • Enrolled for PAYE online

Can I claim if the employee has not been put on furlough prior to 31 October 2020?

Yes, you can claim for periods from 1 November 2020. For claims prior to 31 October 2020 the employee must have been furloughed for at least 3 consecutive weeks prior to 31 July 2020.

Is the scheme flexible?

Yes, you can claim for any hours not worked so the amount of time and work pattern is irrelevant eg.

  • fully furlough employees - employees must not complete any work for you while furloughed full time
  • flexibly furlough employees – employees can work for any amount of time, and any work pattern, but they must not do any work for you during hours that they are recorded as being furloughed.  Employees can enter into a flexible furlough agreement more than once.

Is there a deadline for claims?

Claims must be submitted within 14 days of your month end, or the following working day if that falls on a weekend. For example, claims for May 2021 must be submitted by 14 June 2021. HMRC will only accept a delayed submission where there is a reasonable excuse.

Key Deadlines: 

  • November 2020 claims must be submitted by 11:59pm on 14 December 2020
  • December 2020 claims must be submitted by 11:59pm on 14 January 2021
  • January 2021 claims must be submitted by 11:59pm on 15 February 2021
  • February 2021 claims must be submitted by 11:59pm on 15 March 2021
  • March 2021 claims must be submitted by 11:59pm on 14 April 2021
  • April 2021 claims must be submitted by 11:59pm on 14 May 2021
  • May 2021 claims must be submitted by 11.59pm on 14 June 2021
  • June 2021 claims must be submitted by 11:59pm on 14 July 2021
  • July 2021 claims must be submitted by 11:59pm on 16 August 2021
  • August 2021 claims must be submitted by 11:59pm on 14 September 2021
  • September 2021 claims must be submitted by 11:59pm on 14 October 2021

How do I claim?

You can use the online government claim portal here:

What is the claims process?

To claim, an employer needs information about their PAYE scheme, employees furloughed, claim period, amount of claim, bank account and contact details.  HMRC retains the right to retrospectively audit the claim.  A step by step guide to making a claim is here.

The minimum period for any claim is one week and payments of the grant are made by BACS.  Claims up to and including 30 June had to be submitted by 31 July 2020.  Claims after 30 June 2020 must not span more than one calendar month. 

Agents can make the claim for you if they are authorised with HMRC to act on your behalf.  If we are not authorised with HMRC, we can still check all the details of your claim. We are ready to help you and as your entitlement to claim the grant and the accuracy of your calculations will be subject to audit by HMRC, our support is led by our Employment Taxes Consultancy team.

There may be a time lag between making these payments and reclaiming the money from the Government.  In the meantime, support in obtaining short and medium term funding can be found here. 

Full guidance on the Government scheme is available here

How do I furlough an employee?

Sample Letter for Furloughing Workers 

If you want to use this scheme you must issue a letter to employees along the lines of the attached. Letters must be retained with business records for five years.

Employers cannot furlough those:

  • on unpaid leave prior to 1 March
  • on sick leave or self-isolating and paid SSP (although they can switch to furlough instead or be furloughed after that)

Employers can claim through the scheme for earnings related contractual pay for those who qualify for maternity, adoption, paternity, or shared parental pay.  Those who cannot work due to caring responsibilities can be furloughed.

Any training required during a period of furlough must be paid at the rate of at least National Minimum Wage and this may therefore require a top up of a grant-based furlough payment.

Salary sacrifice impacts the rate of pay applicable for calculation of the furlough payment and non-cash benefits must be excluded.

There is no requirement to bring a furloughed employee back to work after the period of furlough and employees can still be made redundant during furlough or subsequently subject to the usual redundancy rules, protections, and notice.  The grant will cease at the point of any redundancy.  More information on redundancy can be found at:


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