The extension of the Coronavirus Job Retention Scheme (CJRS) over the Christmas period until March 2021, means that employers may wish to use the CJRS to pay for employee holidays over the Christmas period. Before doing this, employers need to ensure they comply with CJRS rules, specifically: 

  1. CJRS guidance states that employees should not be placed on furlough simply because they are on holiday for that period (see paragraph 4 under ‘Holiday Pay’ at https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme). Furloughing employees so that you can issue a CJRS claim for an employee’s holiday would therefore breach CJRS rules. 
  2. The purpose of the scheme is ‘to continue the employment of employees whose employment activities have been adversely affected by the coronavirus’. Paragraph 2.5 of the third Treasury Direction also specifically prohibits CJRS claims that are “abusive” or “otherwise contrary to the exceptional purpose of the CJRS” (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/895778/Further_Treasury_Direction_made_on_25_June_2020_under_Sections_71_and_76_of_the_Coronavirus_Act_2020.pdf). 

It is not clear how the HMRC will interpret or apply these rules either now or in the future. It is also possible that further guidance or conditions related to holiday will be issued, especially as many businesses operate a Christmas shutdown. 

If an employer is aware that a furlough period will coincide with an employees’ holiday, then the employer should consider whether the reason for furloughing an employee accords with the CJRS rules before furloughing them. Requiring employees to take holiday from their first day of furlough or for the majority of a furlough claim period, or furloughing employees for a business’ annual Christmas shutdown could be problematic and risk breaching CJRS rules. 

Breaching CJRS rules could mean having to repay the overclaimed amount but financial penalties can also be imposed with company officers being held personally liable. Furlough fraud is also a criminal offence and details of employers that deliberately overclaim may also be published. 

If you have any queries or need advice on any employment law related matter, please get in touch: [email protected] or telephone 01626 202404.