Global menu

Our global pages


Education briefing - Coronavirus - Flexible Furlough: Further Treasury Direction

  • United Kingdom
  • Education - Briefings
  • Education - Coronavirus


As we reported recently in our briefing on Flexible Furlough, new guidance to the Coronavirus Job Retention Scheme (the Original Scheme) published on 12 June 2020 (the Guidance), confirmed significant changes from 1 July 2020, most notably:

• the introduction of “flexible furloughing”, but also

• reduced financial support from the Government in terms of wage contribution

This revised version of the new Coronavirus Job Retention Scheme (the Revised Scheme), and the legal provisions lying behind it, have now been confirmed in a Further Treasury Direction dated 25 June 2020 (the Direction). (Such a Direction amounts to a legally-binding order from the Treasury to HMRC, with which HMRC must comply and thus sets out the legal framework for the Revised Scheme). In previous briefings we have mentioned the additional conditions which an education institution in receipt of public funding must be able to satisfy to make use of the Coronavirus Job Retention Scheme. For those institutions which are currently using the Scheme the contents of the Direction will be relevant.

As might be expected due to its nature, the Direction is more technical and more detailed than the Guidance. The principles of the Revised Scheme are as set in our previous briefing based on the Guidance. However, particular aspects now confirmed and/or clarified by the Direction are as follows:

Purpose of the Revised Scheme

The Direction (which refers throughout to the Coronavirus Job Retention Scheme as the “CJRS”) states that, “Integral to the purpose of the CJRS is that the amounts paid to an employer pursuant to a CJRS claim are used by the employer to continue the employment of employees in respect of whom the CJRS claim is made whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limits its further transmission”.

Although the guidance for employees states that an employer can continue to make someone redundant while they are on furlough or afterwards, this new, explicit reference in the Direction to CJRS claims being used to “continue the employment” of individuals may cause some concern to employers who are developing restructuring or redundancy plans. The Direction states that no claim may be made other than for the exceptional purpose of the CJRS. .

Closure of the Original Scheme

The Original Scheme closed to all new entrants on 10 June 2020 and payment under it will continue to 30 June 2020. The only exceptions to that 10 June cut-off date are for those returning from family leave or for military reservists returning to work after a period of mobilisation.

From 1 July, the Direction refers to all employees participating in the Revised Scheme as “flexibly furloughed” even if they continue to do no work and remain fully furloughed. Although this will presumably help distinguish the pre and post 1 July periods, such terminology for those who are not in fact undertaking any part-time work could prove confusing.

Transition between schemes/months

The Revised Scheme replaces the Original Scheme from 1 July and, since the premise of flexible furlough is new, it commences an entirely new period for claims. As a result, any claims against the Original Scheme must relate to the period up to and including 30 June 2020. The Direction confirms that such claims must be lodged by 31 July 2020.

Thereafter, a similar cut off applies on 31 July, for any claims related to that month, and similarly for August, September and October until the Revised Scheme ends. In other words, there is no roll-over of claims across months.

Agreement to Flexible Furlough must be in writing

The Direction clarifies the extent to which employee agreement to the terms of flexible furlough is required and must be evidenced. Where the original furlough agreement is made or confirmed in writing (including by way of collective agreement) and clearly specifies the terms, those terms may be varied by agreement to reflect flexible furlough. Alternatively (and we would suggest where there is any doubt that an institution already had the clear written agreement of the employee to furlough), a fresh agreement should be entered into. This agreement can be straight forward and refer back to the original agreement but, importantly, must precede the claim period. This agreement (or confirmation of variation) must be retained by the institution until at least 30 June 2025.

The Revised Scheme will operate in one month blocks

Under the Revised Scheme, any claim to HMRC to recover furlough wage costs must cover a period of at least seven calendar days, unless a claim is being made for the first or last few days in a month. The Direction introduces the terminology “orphan period” to describe such periods of no more than six consecutive days at the start or end of a calendar month, which enables claims to be made for these small numbers of days. Such orphan claims are possible where they are bookended (at the start or end) by other claims for that employee.

Maximum number of employees for whom a claim may be submitted

The number of employees an institution can claim for in any claim period cannot exceed the maximum number it has claimed for under any previous claim submitted in accordance with the Original Scheme. The Direction refers to this maximum as the “high-watermark number”.

When calculating its high-watermark number, the Direction confirms an institution is able to include any family leave or military reservist returners.

TUPE transfers

A transferee employer can claim under the Revised Scheme in respect of employees who are TUPE-transferred to it after 10 June 2020. In such cases, the Direction suggests that the equivalent “high-watermark number” will be the combined total of those transferring employees and the transferee’s existing employees for whom claims have previously been submitted. Unlike the Guidance, however, the Direction does not state that the number of transferring employees is subject to the maximum cap applicable to the transferor. We suspect this is a drafting oversight and transferees should err on the side of caution until this is clarified.

Calculating claims under the Revised Scheme

The Direction sets out various formula for calculating claims under flexible furlough, reflecting the Guidance. The most straight forward examples will arise where employees do no work and remain fully furloughed, although a gradual reduction to the % contribution institutions can recover will need to be factored in. Otherwise, the central concept is that, where flexible furlough is deployed, furloughed hours (for which a claim can be made under the Revised Scheme) are a proportion of the full, normal hours.

Where individuals now undertake some work, the most straight forward examples will arise where a claim is made for an individual on the maximum permissible wage (capped at £2,500 per month) and relates to a complete month. In that event the claim will be calculated according to the formula:

A x F/U

Where A = £2,500, F = the number of furloughed hours in the claim period and U = the number of usual hours in the claim period.


There is little remarkable in the Direction, which gives technical effect to the concepts announced earlier. The Direction deals with the transition from the relatively straightforward government support for wages up to the end of June until the end of the Revised Scheme on 31 October, during which period the amount of support for wages under the Revised Scheme is gradually decreasing