HM Insights

Coronavirus Job Retention Scheme - recent changes in relation to holiday pay

Correct as of 2 December 2020

We have provided various updates on the Coronavirus Job Retention Scheme (the Scheme) including when the scheme was first announced, when further guidance was issued on 26 March 2020on 6 April 2020, on 8 April 2020 as further details were announcedon 9 April 2020on 15 April 2020 as the scheme expanded in scope when the scheme went live on 20 April 2020when the scheme was extended until the end of October, when the Treasury Directions were updatedon 29 May 2020 when changes to the scheme were announced, when further details of the Flexible Furlough scheme were announced, when Flexible Furlough Scheme went live, when the Scheme was extended beyond October 31st. and when the extension was announced up to March 2021.

Following the announcement on 5 November 2020 that the Scheme was to be extended until the end of March 2021, several small (and mostly inconsequential) changes have been made to the sets of guidance made available to the public by the UK government.


Holiday pay change – furlough during the festive period

One of the most recent changes however (published on 1 December 2020), detailing the operation of holiday pay in connection with the Scheme, should be carefully considered by employers who are currently using, or looking to make use of the Scheme in the coming months – especially those employers looking to use the Scheme over the festive period.

This recent change to the guidance was made with the addition of the following extra wording;

"You can only place employees on furlough if coronavirus (COVID-19) is affecting your operations.

You should not place employees on furlough just because:

  • they are going to be on paid leave
  • you usually do less business over the festive period"

From this additional wording, it is evident that the UK government is attempting to dissuade employers from using the Scheme in a way that would not be in keeping with the overriding intent of the Scheme.

Firstly, the updated wording acts as a timely reminder that the Scheme can only be used to place employees on furlough where coronavirus (COVD-19) is affecting the operations of the employer.

Secondly, the new wording looks to tackle any potential "abuse" or misuse of the Scheme over the festive period in particular. It appears that this is an attempt to cover situations where businesses do have a normal shutdown period over Christmas, with the guidance now looking to avoid a situation whereby employers put everyone on furlough during this period and then claim back 80% of wages.

Given the overriding spirit/purpose of the Scheme being to safeguard as many jobs as possible as the country navigates the current pandemic, these changes may have been anticipated in the lead up to the festive period, and it is likely that HMRC would look closely at any claims for this period, particularly if there was an increase in the number of employees furloughed. Whilst taking furlough on holiday is generally permitted, putting employees on furlough because they are otherwise on annual leave is what this guidance appears designed to cover.

Details of employers using the furlough scheme

There has also been an update to indicate the banded ranges that will be used in the publication of details of those employers utilising the scheme. There are 14 bands of varying sizes, ranging from £1 - £10,000 up to £100,000,001 and above. The guidance indicates that employees will also be given more information from HMRC within their personal tax accounts about the claims that have been made in respect of them by their employers.

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