Coronavirus Job Retention Scheme FAQ’s (provided by Menzies LLP) 03/04/2020

We do not have enough work to keep all employees occupied – should we put the employees on short hours, make some redundancies or use the Coronavirus job retention scheme to furlough some?

This will depend on the specific business circumstances, but commercially the starting point is likely to be utilising the Coronavirus Job Retention Scheme in preference to either reducing hours or making employees redundant because this is the only option that currently secures financial support from the Government.  Therefore in many cases, furloughing some workers and retaining others on a full-time basis is the best commercial choice.  However, this may not be practical, for example where each employee has unique skills and taking any of them out of the workforce puts the business in a position where it is unable to operate.  In these circumstances, short term working may be the only option, but this will not secure Government financial support and you should ensure the employment contracts allow for this and you have employee agreement to reduce the risks of being taken to an employment tribunal.

How do I determine whether the business is entitled to be classed as “unable to pay” and therefore qualifies for the Government support under the Scheme?

The Government appear to have stopped using the phrase “businesses that are unable to pay” with the inference being that all businesses, etc. are able to claim in situations where the alternative is making employees redundant.  The Government have however provided details of the situations where they would not expect businesses to be taking advantage of the scheme.  Put simply, if there is not reduction in trading then a claim is inappropriate


As a general point, you should determine what you need to do as a business in order to survive during this period, separate to any consideration of the Scheme.  If staff lay-offs or redundancies are financially unavoidable, we would expect you to be covered given the aims of the Scheme.

Do I need to agree this with my employee(s) or can I simply tell them it is happening?

You are likely to be in breach of their employment contract if you simply impose this on them.  It needs to be agreed – and ideally signed – so you reduce the risks of a claim from the employee later.  Where you have multiple employees and only some are to be furloughed, you need to demonstrate that decisions have been taken on a fair, logical and non-discriminatory basis (see below).

The scheme is not up and running yet – what should I do in the meantime?

You should take the action that is necessary for your business, bearing in mind that the Job Retention scheme is available and can apply retroactively.  So, consult with your staff and seek the agreements you need to implement the layoffs, indicating where appropriate that you are seeking to ‘furlough’ them under the government scheme.  If you were considering full redundancies rather than layoffs, consider using the furlough option instead.

Can I pay some furloughed employees more favourably than others?

You should be consistent to ensure that you are not at risk of behaving in a discriminatory way.  If you plan to top up the earnings of some employees to 100%, then we recommend you do this evenly across your employees.  You are not required to top up to receive the grant.

Can I decide which employees are to be furloughed and which will continue working?

Yes; this will depend on the circumstances so can for example retain the staff whose roles or skills are  required for the remaining work while furloughing those whose jobs or skills are not needed due to the downturn in work.  If you need to furlough just a few out of a group that all do the same work, you should consult with the staff and approach it in a similar way to a redundancy decision.  You may find that they provide a solution e.g. because some may prefer to be furloughed because they will have difficulty working remotely, whereas others may wish to remain working.


The minimum period of furlough for an employee is 3 weeks.  Other than this you can bring people back from furlough or furlough more employees as work levels vary.  The same employee could be furloughed more than once providing each furlough period is at least 3 weeks long.

What can I do if I am in the process of making employees redundant – can I change my mind and opt for the job-retention scheme instead?

The job retention scheme is intended to cover the situation where an employee would lose their job because of the Coronavirus.  The purpose of the scheme is to ensure the business can resume activities immediately the issues are overcome.  We await the actual legislation, but it is not expected that the job retention scheme will be available in circumstances where the employee was going to be dismissed anyway and there is no intention to retain them in the business moving forwards.  However, if the intention is to retain the employee within the business once the crisis has been overcome then it is possible to switch to the job retention scheme.  This would also therefore include a situation in which you have already laid off – or are contemplating laying off – your employees providing they were employed on 28 February 2020.

Can directors be furloughed?

In theory directors can be furloughed in the same way as other employees.  However, a condition of furloughing is that the individual must not undertake work of any kind for the company during this time.  This is harder for a director to justify, particularly if they are the sole director.  It may be necessary for a sole director to notify all suppliers, customers and other business contacts that the business has been suspended pending the end of the Coronavirus crisis.  In many cases this is impractical and undesirable because the director may wish to use this time working on improving the business so that when trading recommences the business performs well quickly.  In these circumstances, furloughing is not permitted.  Remember also that this only relates to PAYE income, not dividends.

Should I continue to pay 100% of salary even though the Government are only subsidising 80%?

You need to consider the circumstances as well as the ability of the business to continue to pay the salary.  For example, if you have two employees and only furlough one, the remaining employee may be disgruntled if they are working full time for the same pay as the one having time off.  The situation may be different if all employees are being furloughed.

Is it possible to alternate the staff members furloughed so they do one month on and one month off?

This will not be permitted because the furloughed employee must not undertake any work in the business.  Therefore, an agreement signed at the start to say you will work this week, but not that week is ineffective.  It is possible to bring employees back from furlough as demand changes, but a pre-agreed rota is not within the scope of the scheme.

How is payment assessed for zero hours workers or those on variable hours contracts?

Their pay is to be based on the higher of the pay for the corresponding week or month last year, or their average earnings over a period.  The period of averaging is the average pay for the 2019-20 tax year, or the period of employment if the employment started later than April 2019.

When will the money arrive and how do I manage cash flow until then?

It appears that a new online portal will be set up to apply for relief.  Alternatively, some kind of ‘reverse payroll’, could be established.  HMRC are working on this, but early indications are that this will not be available until late April.  The claims will then need to be reviewed and approved before payments can be made.  It is therefore likely to be several weeks before the funds are provided. In the meantime, you could assess the potential of other government initiatives to ease your cashflow.

Can I start by paying full pay to furloughed workers and then reduce this later as funds decline?

The furlough must be agreed between employer and employee and must not be imposed.  This agreement will set out the terms and these must be satisfied.  If you agree a furlough based on full pay then you will need to revisit the agreement to vary the payment entitlement later.  Word your agreement carefully from the outset if you think this is going to be likely.  At the very least the variation would need to be agreed with the employee.

Are furloughed employees allowed to work for good causes while not working for me?

There appear to be no restrictions preventing furloughed employees from undertaking charitable work during this period unless you build such restrictions into the agreement.  For example, you will not want them putting themselves at risk.  You will however require them to be able to return to work immediately when you need them.

As always, all of us at CAI wish you, your families, staff and suppliers good health.  Stay safe and wash your hands.