HM Government has now published the Policy Paper and Treasury Direction on the extended Coronavirus Job Retention Scheme.

The Treasury Direction is 31 pages in length. It is highly complex, and shall win no awards for ‘plain English’. The Treasury Direction is accompanied by the much more user friendly, and easier to read, HMRC Policy Paper

The purpose of the Treasury Direction is to set out how the furlough scheme is going to operate, until 31 January 2021. 

At a later date, there shall be a further publication covering how the scheme shall operate in February and March 2021. The rules shall then, no doubt, change once again!

The ‘take home’ message from these latest changes is that the rules are tightening and are less employer friendly. There is now an increased administrative burden. Not only must employers keep a written copy of the furlough agreement for 5 years, but they must now record how many hours the employee works, and is on furlough. This record must be kept for 6 years.

Another key tightening on the rules relates to notice pay. In a redundancy situation, a benevolent employer may in the past have decided to furlough the employee as an alternative. If redundancy situation arises now, and the decision taken to dismiss, it is a more expensive exercise. A claim can no longer be made on the scheme for an employee serving their notice, between 1 December 2020 to 31 January 2021.

Publicity is now an issue. HMRC is now obliged to publish the details of an employer who makes a claim.  Larger employers, known to be ‘cash rich’, may take the view that a claim on the scheme may gain unwelcome attention on social media.

It is impossible to predict how the scheme shall operate in February and March, or if there are going to be any change before then. That having been said, it is unlikely the rules shall be relaxed. It is probable that the scheme shall be tightened further.

Other points of note from the Policy Paper to consider are:

  • Employers do not need to have used the scheme previously
  • Employers across the UK can claim, whether their businesses are open or closed
  • Employers can claim for employees who were employed, and on their PAYE payroll, on 30 October 2020
  • Employees can be furloughed on either a full-time, or part-time basis, and the employee and employer may agree to vary the hours worked
  • Employer contributions until January will be the same as those in August 2020. This means employers will only be asked to cover National Insurance and employer pension contributions for hours not worked. This policy shall be reviewed in January
  • Employers will have to pay the employee’s wages for the hours they work as normal, as well as employer National Insurance and employer pension contributions
  • Employees can be furloughed where they are unable to work because:
    – they are shielding, or need to stay at home with someone who is shielding; or
    – have caring responsibilities resulting from coronavirus, including employees that need to look after children
  • Whilst on furlough, employees cannot do work that makes money or provides services for their employer, or any linked or associated organisation. Employees may take part in training, volunteer for another employer or organisation, and work for another employer

The employment team at TSP works closely with the corporate and commercial teams and delivers sensible advice designed to help your business do what is necessary.  If you have any concerns about managing your staff at this difficult time, please do not hesitate contact Jolyon Berry at or 07771 542740. Jolyon leads the TSP Employment Law team and is a Legal 500 “Leading Individual”.