Updated Job Retention Scheme Guidance and Treasury Direction

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Further guidance on the Coronavirus Job Retention Scheme has been released by the Government, and the Treasury have issued a Direction setting out the legal basis for the scheme.

On 9 April, the Government issued further guidance on the Coronavirus Job Retention Scheme (CJRS). On 15 April, the Treasury issued a Direction which sets out the legal basis for the scheme. On the same day, further updates were made to the guidance to reflect much (but not all) of the detail in the Direction.

We have summarised what appear to be the key issues below. However, it is important to note that the Direction, in particular, contains a lot of detail that will take time to digest. It should also be noted that the Direction is not consistent with some elements of the updated guidance – see the comment section below.

9 April Guidance Update

  • It is possible to furlough staff on work visas, without undermining the conditions of the visa.
  • The furlough scheme should not be used for short periods of sickness absence, but staff who are on long term sick or shielding can otherwise be furloughed.
  • Staff who were TUPE transferred can be placed on furlough.

Treasury Direction

To recover a furloughed employee’s wage costs under the CJRS that employee:

  • Must have been on your PAYE payroll on or before 19 March (the date had previously been 28 February).
  • Must have been registered on HMRC’s real time information system for PAYE as at 19 March.

An employee is a furloughed employee if:

  • They have been instructed to cease all work in relation to their employment. This instruction must be agreed in writing (which may be in an electronic form such as email). This is not consistent with the guidance – see our comments below.
  • The instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease. This is now very broad and there is no longer any requirement for there to be an underlying risk of redundancy.

Where Statutory Sick Pay is payable or liable to be payable in respect of an employee (whether or not a claim for SSP has been made) when an instruction to cease work is given, the furlough period cannot start until the ‘original SSP’ period has ended. Again, this is not consistent with the guidance – see our comments below.

During furlough, company directors are only entitled to carry out legal obligations that relate to the filing of company accounts or the provision of other information relating to the administration of the company.


The Treasury Direction is important, as it is the legal basis of the CJRS and (from a purely legal perspective) takes precedence over the previously issued guidance.

This makes any variation between the guidance and the Direction very difficult for employers to manage. What happens if an employer has furloughed staff relying on the guidance available at the time, only to find that the Direction calls into question whether those staff will qualify for reimbursement? There is no obvious answer to this, but it would seem highly undesirable for the Government to withhold reimbursement from employers who have made reasonable efforts to act in accordance with the guidance available to them, and who have taken steps to rectify matters where reasonably possible after the goalposts have moved.

Two Key Points

  1. Instruction to cease work must be in writing

    Where employees continue to be paid 100% of their salary and benefits, the guidance only required employers to notify employees that they were being furloughed. The requirement to gain agreement in writing in these circumstances is new and could call into question the ability to reclaim reimbursement under the CJRS if there has only been notification. It is not clear how this will play out – for example, will deemed acceptance be sufficient?

    The good news is that there is no requirement for the written agreement to be obtained before the start of the furlough period.

    As a result, if employers did not obtain agreement in writing to stop work from each furloughed employee they should consider whether it is appropriate to act now to obtain such written agreement.

  2. Eployees eligible for SSP

    The guidance states that whilst the CJRS cannot be used in cases of short term sickness, those on long term sick and those shielding can be furloughed at the employer’s discretion (as long as the other conditions around furloughing have been met). This is not replicated in the Direction.

    The Direction is difficult to understand, but it does suggest that people who are shielding or eligible for SSP at the time they are instructed to cease work will only be eligible for reimbursement under the CJRS when the original period of eligibility to SSP ends. This is even if no SSP has been claimed.

It is difficult to see why the Direction takes a different approach to the guidance on this point. Whilst there are no clear answers, employers will need to take a view on whether to change their approach or submit claims for reimbursement and challenge any attempt by HMRC to withhold payment on the grounds that the guidance has been complied with.

The HR consultants at Narrow Quay HR are available to chat through any queries you may have related to new work arrangements under COVID-19. Please contact our HR specialists Caitlin Anniss on 07909 683 938, Sarah Martin on 07799 136 091 or Micaela Calcutt on 0117 314 5619 at Narrow Quay HR Consultancy.

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