Flexible furlough – new Treasury Direction published

Flexible furlough – new Treasury Direction published's Tags

Tags related to this article

Flexible furlough – new Treasury Direction published

Published 29 June 2020

The updated Treasury Direction which legally underpins the Coronavirus Job Retention Scheme (CJRS) was published on Friday (26 June 2020). The new Direction sets out the rules that will apply under the amended CJRS from 1 July 2020, which allows for ‘flexible furlough’ arrangements, until 31 October 2020, when the scheme ends. The Government Guidance outlining the mechanics of flexible furlough was published on 12 June 2020. Click here to see our alert on the Guidance.

In summary the Treasury Direction largely reflects the recent Guidance and clarifies a number of points:

Cut-off dates

The new Direction confirms that the cut-off date for making claims under the original CJRS, as set out in the previous Directions and in force until 30 June, is 31 July.

It also confirms that a business will only be able to participate in the amended CJRS that applies from 1 July if it has made a claim under the original scheme by 31 July in respect of an employee who has been furloughed for a minimum of three weeks beginning on or before 10 June.

Maximum number of employees you can claim for

The number of employees who can be claimed for post 1 July cannot exceed the maximum number in any one claim made for furlough periods prior to 1 July – the new Direction refers to this as the “high-watermark number”.

Exceptions to 10 June cut-off and “high – watermark number”

The new Direction confirms the exception to the 10 June cut-off and the “high-watermark number” for family leave returners and armed forces reservists. There is a similar exception where a TUPE transfer takes place after 10 June 2020, in relation to transferring employees who were furloughed by the transferor under the original CJRS (but who cannot satisfy the 10 June cut-off as regards the transferee). The Direction confirms that the number of these previously-furloughed, transferring employees is added to the transferee’s cap in the same way as “returning employees”.

Requirement to reach an agreement on flexible furlough

In our previous alert, analysing the recent Guidance on flexible furlough, we referred to the fact that the Guidance is not clear whether the agreement to flexible furlough needs to be full written agreement with employees as opposed to written confirmation / letter as has been applicable for full furlough.

The new Direction confirms the requirement to reach agreement on flexible furlough arrangements but says that the agreement only needs to be confirmed in writing by employers (which may be in electronic form such as an email). Therefore any flexible furlough arrangements require communication and letters/ emails to employees to evidence agreement. A record of the agreement must be retained by the employer until at least 30 June 2025. As with full furlough, the agreement for flexible furlough can be by means of a collective agreement.

Employers should note that there is a new requirement that the agreement must have been made before the beginning of the period to which the CJRS claim relates – and must not be made retrospectively. However, the Direction confirms that an agreement can subsequently be varied.

Calculation of claim

The new Direction also sets out in great detail the means of calculating the amounts payable by an employer and those that can be claimed under the CJRS in respect of an employee who works part-time on flexible furlough. Businesses will need to examine the methodology in detail with payroll to ensure that they are understood and align with the system.

Purpose of CJRS / redundancy

One point on which urgent clarification is being sought is that the new Direction now says that the purpose of the CJRS is to “continue the employment of employees” which begs the question can it be used to pay notice pay or any costs associated with termination of employment? This new wording appears to contradict the Employee Guidance on the CJRS which still states “your employer can still make you redundant while you are on furlough”. HMRC have apparently referred this question to a specialist team. This is clearly of significance to some employers who are presently exiting people or are planning to and we will of course keep it under review.



Louise Bloomfield

Louise Bloomfield


+44 (0) 113 251 4717

Joanne Bell

Joanne Bell


+44 (0) 161 934 3179

< Back to articles