In this article we look at how the Coronavirus Job Retention Scheme (CJRS) applies to employees who transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and those who are off sick, and any differences between the guidance and the Direction.


TUPE 2006 provides that an employee who transfers to a new employer is entitled to all their terms and conditions from the previous employer.

Employees who transferred under TUPE after 19 March 2020 can be furloughed if either the TUPE or PAYE business succession rules apply to the change in ownership. A succession occurs when the ownership of a business changes from one legal entity to another and the new owner takes responsibility for the pay records.

Where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 19 March 2020, those employees can also be furloughed.

The Direction and the guidance appear to be at one in relation to the position of employees who transfer to a new employer. Paragraph 9 of the Direction concerns the transfer of employees, and essentially provides that employees only qualify under the Scheme where the transfer to the new employer takes place after 19 March 2020.

Sick leave

Employees on sick leave or who are self-isolating as a result of coronavirus (COVID-19) are entitled to statutory sick pay (SSP), assuming they are eligible (LELRs 665 and 666). Previous government guidance had stated that those off sick and in receipt of SSP could not be furloughed. 

Those on sick leave

The guidance issued on 15 April 2020 states that while short-term sickness absence or self-isolation “should not be a consideration in deciding whether to furlough an employee” an employer can decide for business reasons to furlough an employee who is off sick. Where the employer decides to furlough the employee they should no longer receive sick pay and should be treated the same as other furloughed employees and receive pay at the furlough rate.  

While the guidance states that the CJRS is not intended for short-term sickness absences, it is up to employers to decide whether they furlough employees who are off on either short-term or long-term sick leave.

Those on furlough leave

The guidance states that it is up to the employer to decide whether an employee who becomes sick while they are furloughed remains furloughed or is moved onto SSP.  If the employer moves the employee onto SSP they cannot be paid furlough pay. As SSP and furlough pay cannot both be claimed for the same period, the employer will have to pay the SSP, although they may be able to claim it back through the rebate scheme (which allows the employer to claim up to 14 days SSP).

Conversely, if the employer furloughs the sick employee at the furloughed rate, it can claim for those costs through the furlough scheme.

Where an employee returns from sick leave and is then furloughed the guidance provides that their pay should be calculated on their salary, before tax, not the pay they received whilst on sick leave.

What does the Direction say?

However, the government seems to have backtracked on the position of those on sick leave, to the more restricted position set out in earlier guidance. 

The Direction states at paragraph 6.3 that for employees who were off sick at the time the employer instructed them to cease work, the period of furlough leave does not begin until the end of the deemed SSP period irrespective of whether the employee has claimed SSP. This means that employees who are off sick can only be furloughed after the first period of sick leave. 

However, the Direction does not cover the position of those who have already been furloughed and who then become sick. It is not clear, but it would seem to be the case that once an employee is furloughed they can remain furloughed even if they become sick during that period. Again, clarification would be welcome.

You can read the guidance in full here.

You can read the Direction in full here.  

Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at