LGA workforce: cornonavirus job retention scheme

Below is the latest workforce update regarding the coronavirus job retention scheme (furloughing).

The Government has published guidance on its Job Retention Scheme and HM Treasury Directions which set out the legal framework for the SchemeThe original Direction was made on 15 April 2020 but on 22 May 2020 a further Direction was made, which is the one people should now refer to. This webpage is regularly updated and was last updated on 22 May 2020. However, at the time of updating, the Government guidance had not been amended to reflect the further Direction so there is likely to be further information made available so please check the link above for the latest guidance.

HMRC has also produced a checker for employees which allows people to see if they may be eligible for this scheme and a calculator to assist employers with their applications.

DfE guidance on the use of the scheme also provides specific provisions on the use of the scheme by employers in the education sector. 

The guidance refers to central government provisions to continue to pay contingent workers . Local Authorities may do likewise but no explicit funding has been identified for this.

Further information on furloughing and other related questions can be found on the LGA website in the employment law FAQ section and the House of Commons library also have a briefing paper on the scheme.

HMRC can be contacted via webchat, we would recommend keeping a record of the advice provided as we are aware of conflicting advice being given to authorities, we have raised this with HMRC and MHCLG.

The scheme

The Job Retention Scheme provides that employers can furlough (temporarily lay-off) employees and apply for a grant that covers 80 per cent of their usual monthly wage costs, up to £2,500 per month, plus the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions (3 per cent on earnings above £520 per month) on that wage.

Employers can apply for the scheme and there is a step by step guide on what information employers will need to claim. Coverage will be backdated to the 1 March 2020 but is restricted to those on the payroll on 19 March 2020 (subject to an exception for those returning in certain circumstances – see eligibility section below). It is a temporary scheme initially in place until 30 June, but has now been extended until 31 October 2020 but with different provisions from 1 August. 

From the start of August changes will be made to the scheme with furloughed workers being able to return to work part-time, with the employer paying a percentage towards the salaries of their furloughed workers. Until 31 July the existing rules apply, we expect Government to publish more information on the terms of the scheme beyond that date later this month.


Employees and others

The scheme is available for any employees employed as at 19 March: those paid through PAYE with UK bank accounts on that date. It can include casuals, zero hours staff and apprentices so long as they are paid through PAYE. The scheme is also available to:

  • those TUPE transferred in after 19 March, even though they will not therefore have been on their new employer’s PAYE as of that date
  • those made redundant or who stopped working for their employer on or after 28 February who are then re-employed, even if that is after 19 March.

The scheme is voluntary and employers will need the agreement of employees in order to furlough them.

In certain cases it may also be possible to furlough contractors in scope of the IR35 rules. Further details on that are available in the Government guidance


Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.”

Local Authorities can use the scheme. However, it should be noted that public sector organisations are not expected to use it except in certain specific situations:

In a small number of cases, for example where organisations are not primarily funded by the Government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.”

Organisations receiving public money to assist with the response to COVID-19 are not expected to furlough staff.

The Government conveyed the following view to the LGA on 2 April:

"The Government has given local authorities £1.6bn of additional funding to support them in responding to the Covid-19 pandemic. This funding is un-ringfenced and is intended to help local authorities address any pressures they are facing in response the Covid-19 pandemic, across all service areas.

Where employers receive public grant funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public grant funding for staff costs.

Where staff are not able to carry out their usual work, all employers in the public sector should make every effort to redeploy employees to assist with the Government’s response. This could include redeployment within the current organisation, or to other areas of the public sector.

In exceptional cases where Local Authorities need to close venues and furlough staff, it may be appropriate for them to claim funding through the Coronavirus Job Retention Scheme.

The Government will always work with local authorities that are experiencing financial difficulties."

On 13 May 2020, Government updated their position for local authorities in response to a series of queries and issues we raised with them in relation to the scheme following concerns raised with the LGA by local authorities. The text is set out below, it does not, unfortunately, address the concerns raised but does provide an update on the 2 April position set out above.

In response to a number of queries about the Government’s Coronavirus Job Retention Scheme this note is intended to provide Local Authorities with support in their interpretation of the Government guidance in determining the appropriateness of the scheme to their local circumstances.

As set out in the guidance, the Government expects that the scheme will not be used by many public sector organisations, as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.

As such the Government expects that LAs will continue to pay their staff as usual. Where staff are not able to carry out their usual work, the Government expects Local Authorities and all other public sector employers to make every effort to redeploy employees to assist with the coronavirus response. This could include redeployment within the existing organisation, or to support another part of the public sector. However, as the guidance sets out there may be a small number of cases where the scheme may be appropriate.

Whilst these judgements are for Local Authorities to make, the Government expects that these circumstances would be limited to where the employee:

  1. Works in an area of the business where services are temporarily not required, and their salary is not covered by public funding
  2. Cannot be redeployed elsewhere in the organisation to support the coronavirus response
  3. Would otherwise be made redundant or laid off

It is also essential that any grant from the Coronavirus Job Retention Scheme is not duplicative of other public funding local authorities, or associated organisations, receive. In the spirit of this intention, Local Authorities should take account of the additional financial support the Government has provided to councils to support their continued efforts to address the impacts of the coronavirus pandemic; support that is intended to cover both increases in expenditure and budgetary pressures arising from falls in income. Where staff costs for those on furlough would ordinarily have been met through a mixture of public funding and other income, funding from the CJRS should only cover the costs not previously met through public funding.

In applying the guidance, Local Authorities should also follow Cabinet Office guidance on supplier relief (PPN02/20). Where other employers receive public funding for staff costs from Local Authorities, and that funding continues uninterrupted, we expect employers to pay staff as usual and not furlough them. Local Authorities should ensure that their suppliers are aware of this guidance and take all reasonable steps to ensure compliance with this guidance. Furloughing through the CJRS whilst continuing to receive other public funding would constitute double funding and misuse of public money.

Local Authorities are expected to use their best judgement in applying the Government guidance.”

Councils should be aware that the wording in relation to the Cabinet Office guidance on supplier relief here goes further than that set out in the guidance itself which says “ Other public sector contracting authorities are encouraged to apply the approach set out in this guidance note.” MHCLG have confirmed to us that there is no intention to change the policy on local authorities’ approach to that guidance through this note so councils need not read anything into the replacement of the phrase ‘encouraged to’ to ‘should’ in the Government text above.

LGA view

Councils (and schools) are not expected to furlough their directly employed workforce, this includes casuals, zero hours staff and apprentices all of whom should continue to be paid as normal (see the LGA’s Employment Law FAQs for information on how to define ‘normal pay’).

In the first instance staff whose work is no longer possible should be considered for redeployment, if that is not possible, some employees will remain on normal pay during this period even if there is no work they can do.

However, where authorities have more ‘arms-length’ organisations or arrangements funded without public money (eg tourism or leisure companies); where staff are not redeployable to support the COVID-19 response or other roles affected by staff shortages during this period; where the alternative would be redundancy or lay off; or where prolonged sickness absence may lead to an individual receiving zero pay – then furloughing may be the best available option. This may also apply to IR35 contractors.

In schools, where roles are parent funded and are not redeployable and where the alternative would be lay off or redundancy, then again furloughing may be the best available option. However, if an employee is furloughed they are technically not able to carry out any other work for, or on behalf of, the employer or any linked or associated organisation. We are seeking clarity on this point, particularly in relation to those on multiple contracts with the same employer, as unfortunately we have had conflicting information on this from DfE and HMT and we continue to pursue the matter.

This is not an exhaustive list but key questions to consider include: 

  • does the organisation employing these staff receive public money for staff costs and is that money continuing? If so, they should continue as normal and not furlough those staff.
  • where there is a mix of funding, and the non-public funding element has ceased, a partial application to the scheme may be appropriate for that element of the employee’s pay. However, if furloughed the employee is technically not allowed to work for the employer (although we are seeking clarity on that point) and so the employer would need to consider toping up the employee’s pay, using the public funds it is still receiving .
  • is furloughing demonstrably the best option for employer and employee ie. is the alternative lay off, redundancy or zero pay? For example, where an employee is reaching the end of sick pay and alternatives such as a temporary return to full pay or an ill health retirement are not available due to the current situation. If so, then it may be appropriate to consider the job retention scheme.
  • is there any duplication of public money? Furloughing should not be used to secure funds from HMRC that are forthcoming from other public sources.
  • are the staff potentially in scope definitely not redeployable and will their services remain unrequired? Furloughed staff cannot provide any services for or on behalf of the employer and are often contractually prohibited from working for another employer (although authorities may want to exercise their discretion to allow a furloughed employee to work elsewhere while furloughed, especially if that work would be in an essential service). The minimum period of furloughing is 3 weeks although employees can be furloughed multiple times if they return to work but each furloughed period must be for at least three weeks.

Where furloughing is pursued, the LGA encourages employers to ‘top up’ employees’ wages by the 20 per cent not reclaimable through the scheme.

Education sector employers

In addition to the HMRC guidance, DfE have published guidance targeted at those employers. They have been more explicit in setting out when and if employers in education should use the scheme:

“We would encourage organisations to first consider how they would be able to redeploy their existing workforce to help support the COVID-19 response. Educational settings that are in receipt of some public funding should only furlough employees, and therefore seek support through the Coronavirus Job Retention Scheme, if they meet the following conditions:

  • the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • the employee would otherwise be made redundant or laid off
  • the employee is not involved in delivering provision that has already been funded
  • (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
  • the grant from the Coronavirus Job Retention Scheme would not lead to financial reserves being created”.

There remains a lack of clarity over the eligibility of employees with multiple contracts of employment with the same employer, as on the face of the HMRC Guidance and Treasury Direction, an employee is not able to do any work for their employer while furloughed. However, the DfE guidance discusses partial funding from the job retention scheme for employers with mixed funding, and some local authorities have been told by the HMRC helpdesk that it is possible to furlough an employee from one contract with their employer, while they continue to work in the other. We await, however, formal confirmation on this issue and other outstanding points from HMRC / HM Treasury, but in the meantime employers may want to contact the HMRC helpdesk to see if they can get confirmation for their situation.

Details of the scheme

Colleagues are encouraged to read the full details of the scheme through the links above. Some key points are highlighted here.

Employees and others who can’t be furloughed

  • Those without a PAYE number on 19 March (subject to the exception set out below).
  • Employees made redundant or who stopped working on or after 28 February (though they could be re-employed and then furloughed, even if you do not re-employ them until after 19 March).
  • Those working on reduced pay or reduced hours.
  • Those on unpaid leave at 28 February (though you can furlough them from the date it was agreed they would return from the leave).

Employees and others who can be considered

  • Those who are shielding.
  • Those who need to stay at home with someone who is shielding.
  • Employees unable to work due to having caring responsibilities.
  • If an employee has more than one employer they can be furloughed for each job.
  • Those with fixed term contracts that are ‘live’, renewed or extended.
  • Those on maternity, adoption, paternity or shared parental leave.
  • In particular situations, office holders (including company directors), salaried members of Limited Liability Partnerships (LLPs), agency workers (including those employed by umbrella companies), limb (b) workers and contractors within scope of IR35, who are paid through PAYE.
  • Those on sick leave, although the guidance is clear that short term illness should not be a consideration in deciding to furlough an employee.
  • Those who started unpaid leave after 28 February 2020.
  • Employees engaging in training, however, if the training provides a direct service to or contributes to the business activities of the employer or anything generating income or profit for the employer they are excluded. If the employer requests that an employee undertakes training while furloughed they must ensure at least the national minimum wage is being paid.

Furlough selection

  • Equality and discrimination rules apply to furlough selection as do other facets of employment law.
  • Furloughing involves changing employees’ contracts and should be agreed with them, and with recognised trade unions where appropriate.
  • If an individual refuses, they cannot be required to accept furloughing (though this may lead to lay off or redundancy).

Financial benefit

The scheme enables employers to claim for 80 per cent of the employee’s gross salary as in their last pay period prior to 19 March 2020 and the mandatory minimum pension contributions of three per cent on salary over £520 per month. If based on previous Government guidance an employer has calculated their claim based on the employee’s salary as at 28 February 2020 they can still choose to use that calculation for the first claim.

The employer must continue to pay employer national insurance and the remaining pension contributions – current employer contributions to the LGPS are, on average, 20 per cent of all pensionable salary

Other considerations

Some employees may prefer to be made redundant than be furloughed and redundancy could trigger notable up front costs to the employer.

Discrimination and equality laws apply and employers should not only be very careful when considering who to approach / not approach for furloughing, but also when deciding on any policy regarding ‘topping up’ the 20 per cent.

Legal advice is advisable when undertaking a furloughing process particularly if numbers are such that collective consultation would have been triggered had redundancies been proposed.

While furloughed, employees retain all their employment rights and relevant collective agreements remain applicable.

While furloughed, trade union representatives (or others involved in individual or collective representation) may continue to undertake trade union activities or duties. Further, trustees and managers of occupational pension scheme can carry out their trustee/manager duties.

Individuals furloughed by other organisations can be employed by local authorities if their employment contract does not prevent that, their furloughed status will be logged on the starter checklist

How to claim

The employer and employee must have agreed in writing that the employee will cease all work in relation to their employment, and specified the main terms and conditions upon which the employee will cease all work. Such agreement must also be incorporated into the employee’s contract (expressly or impliedly) and be made in or confirmed in writing by the employer (which can be in electronic form such as an email).. A collective agreement reached between an employer and relevant trade union/s is also appropriate evidence for the purposes of scheme eligibility. The agreement must then be kept by the employer until at least 30 June 2025.

Employers should apply online and they will have to provide the following information:

  • their employer PAYE reference number
  • the number of employees being furloughed
  • National Insurance numbers for the employees the employer wants to furlough
  • names of the employees the employer wants to furlough and their payroll/works numbers
  • the employer’s Corporation Tax Unique Taxpayer Reference or Company Registration Number or Self Assessment Unique Taxpayer Reference 
  • the claim period (start and end date)
  • the full amount claimed including employer National Insurance contributions and employer minimum pension contributions (per the minimum length of furloughing of three consecutive weeks)
  • bank account number and sort code
  • contact name and phone number.

Please note - HMRC retain the right to retrospectively audit all aspects of the claim and this may include considering relevant public funds available to the employer.