LGA workforce: coronavirus job retention scheme

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

Government guidance is available on its Job Retention Scheme alongside HM Treasury Directions which set out the legal framework for the Scheme.

The scheme was due to end on 31 October, was initially extended  to 31 March 2021, but has now been extended until 30 April 2021. As a consequence, the Job Support Scheme, which had originally been planned to replace the Job Retention Scheme from 1 November has been put on hold, as has the Job Retention Bonus.

This web page is regularly updated and was last updated on 22 December 2020.

Provisions and eligibility from 1 November until 30 April 2021

The specific provisions and eligibility applying to the scheme from 1 November to 30 April 2021 are set out below. In all other respects the terms of the scheme are as set out later on this webpage.

Initially it was announced that for claims up to 31 January 2021 the amount of support would mirror that available in August 2020 meaning that employers can claim for 80 per cent of the pay for the hours that an employee does not work. That is capped at £2,500 per month and employers have to pay the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that 80 per cent. LGPS employers need to continue to pay the relevant pension contributions, not the automatic enrolment minimum. Employers can top up the employee’s pay should they wish.

The Chancellor said he would review the employer contribution element of the CJRS in January, to decide whether employers would be asked to contribute more but he brought this review forward to allow businesses to plan ahead for the remainder of the winter and the New Year. As a result, the Government has now confirmed that it will continue to pay 80 per cent of the salary of employees for hours not worked until the end of April and employers’ obligations relating to National Insurance Contributions and pensions also remain the same.

To be eligible for the scheme the employee must have been on the employer’s payroll by 23.59 on 30 October 2020 or if they were on the payroll on 23 September 2020 but were made redundant or stopped working for their employer after that date they can now be re-employed and furloughed.  This differs from the provisions which applied prior to 1 November, under which the normal rule was that an employee had to be on the employer’s payroll as of 19 March 2020, and for claims from 1 July, employees also had to have been furloughed for a full three-week period prior to that date.

As from 1 July, furloughing is on a flexible basis, meaning employers are able to agree to furlough employees on a part-time or full-time basis.

As has been the case throughout the scheme, publicly funded organisations are not expected to use the scheme, but they may be able to access it where any private revenues have been disrupted. Employers should be aware though that for claims periods starting on or after 1 December HMRC will publish the names of employers claiming, as well as an indication of the amount claimed.

The Government has published a policy paper which sets out details of the extension, and its guidance was updated on 10 November to reflect the terms of the scheme applying from 1 November.

Government and other guidance

HMRC has 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. This guidance expired on 30 June 2020 and has been updated. However the situation remains that local authorities, schools and other public sector bodies are encouraged to support suppliers where appropriate but explicit funding to do so is not identified.

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 web chat, 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.

Note: the rate of pay that a furlough claim is based on for the period up to 31 October 2020 is (generally speaking) for fixed rate employees the actual pay received by the employee in the last pay period on or before 19 March 2020. For non-fixed rate employees, for example those working lots of overtime, the claim can be based on the corresponding month’s earnings from the previous year, or the average monthly earnings from the 2019-20 tax year (which ended on 5 April 2020). Therefore, for fixed rate employees the employer cannot claim for backdated pay awards not actually paid by 19 March 2020, and for non-fixed rate workers, those not paid by 5 April 2020 or in the corresponding month’s earnings from the previous year.

The scheme

The Job Retention Scheme provides that employers can furlough (temporarily lay-off) employees and for the period up to 31 July 2020, apply for a grant that covered 80 per cent of their usual monthly wage costs, (capped at up to £2,500 per month), plus the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions (three per cent on earnings above £520 per month) on that wage. From 1 August employers can still furlough eligible employees but they have had to contribute to the costs of the scheme as set out later in this section.

Employers can apply for the scheme and there is a step by step guide on what information employers will need to claim. Coverage is backdated to 1 March 2020, but for the period up to 31 October 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 that was initially in place until 30 June, but it was then extended until 31 October 2020 but with different provisions applying from 1 July. On 5 November if was further extended to run until March 2021 (see above for eligibility requirements during that period).

For claims up to 31 October, the scheme was closed to new entrants from 30 June. From this point onwards, employers were only able to furlough employees that were furloughed for a full three-week period prior to 30 June. This means that the final date by which an employer could furlough an employee for the first time was 10 June, in order for the three-week furlough period to have been completed by 30 June (the cut off does not apply to those returning from statutory family related leave, e.g. maternity leave, or armed forces reservist duties after that date, providing the employer had furloughed other employees by then). 

From the start of July furloughed workers have been able to return to work part-time and the process for calculating and making claims changed. Employers are able to agree the hours and shift patterns employees will work on their return with those employees and will be responsible for paying their wages while in work. Further the original three-week minimum furlough period no longer applies. 

In addition, from August until the end of October, employers have had to contribute to the cost as follows:

  • In August, the Government continued to pay 80 per cent of the wage costs, up to £2,500 per month, but employers had to pay the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that 80 per cent. LGPS employers needed to continue to pay the relevant pension contributions not the automatic enrolment minimum.
  • During September the Government covered up to 70 per cent of wages, capped at £2,187.50 per month, but employers have had to pay 10 per cent of the wages, as well as the employer National Insurance contributions and employer pension contributions on the full 80 per cent of wages.
  • During October, the Government’s contribution is 60 per cent of wages, capped at £1,875 per month, with employers having to pay 20 per cent of wages as well as the employer National Insurance contribution and employer pension contributions on the full 80 per cent of wages.

See above for the terms applying from 1 November 2020.


Employees and others

The scheme is available for any employees employed as at 19 March (see above for the revised eligibility requirements from 1 November 2020): 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.

For claims up to 31 October, no new employees could be added to an employer’s application after 30 June. This means that the final date by when an employer could furlough an employee for the first time was 10 June, in order for the three-week furlough period to have been completed by 30 June. This requirement does not apply for claims made for periods from 1 November.

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 those 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, prior to 1 July if an employee was furloughed they were technically not able to carry out any other work for, or on behalf of, the employer or any linked or associated organisation. That complicated decisions around furloughing where a person carried out both a parent funded and a public funded role. After 1 July though employees may be flexibly furloughed, providing they had previously been fully furloughed on or before 10 June, meaning they can be furloughed from one role but not the other.

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, up until 1 July if furloughed the employee was technically not allowed to work for the employer and so the employer had to consider topping up the employee’s pay, using the public funds it was still receiving. However, that issue has now been resolved as from 1 July employees can be flexibly furloughed on a part-time/individual role basis.
  • 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? 
  • 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”.

Employees given notice and redundancy pay

If an employer is not able to retain an employee the Government guidance provides that for up to 1 December it is legitimate to use the scheme for the period of time that someone may be working their notice, whether that be statutory or contractual notice. However, from 1 December employers cannot claim for employees serving their notice period (this includes people serving notice of retirement or resignation).

In all cases the grant received should not be used to pay someone’s redundancy payment.

Details of the scheme

Colleagues are encouraged to read the full details of the scheme through the links above. From 1 July the rules of the scheme have changed each month so please remember to check before making claims. Some key general points are highlighted below:

Employees and others who can’t be furloughed

  • Up until 31 October, those without a PAYE number on 19 March (subject to the exception set out below).
  • Up until 31 October, 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).
  • From 1 November, those without a PAYE number on 30 October 2020
  • Up until 30 June, those working on reduced pay or reduced hours. After that date flexible furloughing allows part time working.
  • Up until 31 October, those on unpaid leave at 28 February (though you can furlough them from the date it was agreed they would return from the leave)
  • Up until 31 October, employees who were not furloughed for the first time on or before 10 June (with some exceptions for those returning from parental leave and reservists who have returned from active service).

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, prior to 1 July 2020 if the training provided a direct service to or contributed to the business activities of the employer or anything generating income or profit for the employer they were 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).

Flexible furloughing

  • From 1 July employees have been able to be ‘flexibly furloughed’ enabling part time working for the employer (for which the employer pays the employee as normal) and claiming from the job retention scheme for non-working time. Further the minimum three-week furlough period no longer applies. 
  • From 1 July, the scheme rules have changed each month. This means that claim periods starting on or after 1 July must start and end within the same calendar month.
  • Claim periods starting on or after 1 July must start and end within the same calendar month and must last at least 7 days unless claiming for the first few days or the last few days in a month.
  • Only one claim can be made for any period so all furloughed or flexibly furloughed employees must be included in one claim even if they are paid at different times.
  • The flexibly furloughed employee’s actual hours need to be recorded as well as their furloughed hours for each claim period.

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 schemes 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/be flexibly furloughed and have specified the main terms and conditions upon which the employee will cease all work/be flexibly furloughed. 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 for at least five years.

Employers should apply online and they will have to provide a range of information as part of the claim. 

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.