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With the outbreak of coronavirus, or Covid-19, and subsequent partial closures for schools and childcare providers we know the early years sector is understandably extremely worried about the impact of this on their families and future sustainability.

We know there are many more questions about how childminders, nurseries and pre-schools will be supported through this outbreak and the practicalities of 'partial closures' and we're continuing to raise these to government. 

These meetings will continue on a regular basis so we will have the opportunity to raise the questions we receive from our members and the wider sector to try and get clarity on the key issues facing you over the next few months.

What business support is available for childcare providers during this period of disruption?

Business rates relief

The Chancellor has announced that private childcare settings will be eligible for a business rates holiday for one year. That means non-local authority providers of childcare (registered with Ofsted and providing EYFS) will pay no business rates in 2020 to 2021.

Nurseries in receipt of small business rate relief or rural rate relief will benefit from small business grant funding of £10,000. This includes nurseries who are eligible for a charitable status relief – who will also pay no business rates at all in 2020 to 2021.

Some settings operate from shared spaces which may now benefit from a 100% rates relief. The government strongly encourages those shared spaces to reflect any business rates saving in their rent charges.

The Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme means that for employees who are not working but kept on payroll (furloughed), the government will contribute 80% of each worker’s wages of up to £2,500, backdated to 1 March 2020. We have much more detail on this scheme in the Q and A section below.

Self-employment Income Support Scheme

The Self-employment Income Support Scheme for those who are self-employed or members of a partnership and have lost income due to coronavirus (COVID-19). The scheme allows individuals to claim a taxable grant worth 80% of trading profits up to a maximum of £2,500 per month for 3 months. HMRC will contact individuals who are eligible and invite them to apply online.

For the self-employed (including childminders), the minimum income floor will also be temporarily relaxed, meaning Universal Credit can be accessed at a rate to match statutory sick pay (SSP).

Small Business Grant

The Government announced there would be support for small businesses in the form of the Small Business Grant Fund. The scheme will be delivered by Local Authorities – if you are eligible, your Local Authority will be in touch with you to arrange payment. 

Read the guidance on the Small Business Grant 

Other support
  • The Business Interruption Loan Scheme will now be interest-free for 12 months, an increase from six months.
  • VAT payments due with VAT returns between now and the end June 2020 will be deferred. UK VAT registered businesses will not need make those payments until March 2021.
  • The business secretary announced on 28 March 2020 that he will make changes to enable UK companies undergoing a rescue or restructure process to continue trading to help them avoid insolvency. This includes temporarily suspending wrongful trading provisions retrospectively from 1 March 2020 for 3 months for company directors so they can keep their business going without the threat of personal liability.
  • Working tax credit has been increased by £1,000 a year.
  • The government has also announced a £20 per week increase to the Universal Credit standard allowance and Working Tax Credit basic element and an increase in the Local Housing Allowance rates for Universal Credit and Housing Benefit claimants so that it covers the cheapest third of local rents.

Coronavirus Job Retention Scheme, Furlough Leave and Related Employment Matters

What is the Coronavirus Job Retention Scheme?

The Coronavirus Job Retention Scheme is a new scheme announced by the government where employers can apply for a grant to cover 80% of usual monthly salary costs of furloughed employees. Furloughed employees are employees who are still employed but are not currently working.

The grant, which does not need to be repaid, will be a maximum of £2,500 a month per employee, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that salary. Fees, commissions and bonuses are not included.

Settings can apply for grant to cover wages as of 1 March 2020. Each grant amount will be based on the employee’s actual salary before tax as of 28 February.

Why has the scheme been introduced?

The scheme is designed to minimise the need for redundancies (because of provision closures or a downturn in business) during the coronavirus outbreak. It introduces a new concept of employees being furloughed and kept on the payroll. 

If a staff member’s wage varies from month to month, how will the scheme work?

If an employee has worked at a setting for at least 12 months before a claim is made, but their pay varies, employers can claim for a grant based on whichever is the higher of: the same month's earning from the previous year (e.g. earnings from March 2019); or average monthly earnings in the 2019-20 tax year.

If the employee has been employed for less than a year, the employer can claim for an average of their monthly earnings since they started work.

How long will the scheme run?

The scheme will initially run from 1 March 2020 until the end of May 2020. The government has stated that it “will extend the scheme for longer if necessary”.

Which employers is the scheme open to?

The scheme is open to all UK employers (small or large, charitable or private) that had created and started a PAYE payroll scheme on 28 February 2020.

What’s the minimum period that a staff member can be placed on furlough leave?

The minimum period is three weeks.

Which employees are eligible?

Employees on the PAYE payroll on 28 February 2020 on any type of contract, including: full-time employees part-time employees employees on agency contracts employees on flexible or zero-hour contracts.

To be eligible for the subsidy, an employee cannot undertake work for or on behalf of their setting while on furlough leave. This includes providing services or generating revenue. 

Settings will not be able to claim for workers whose employment started after 28 February 2020. If an employee has been made redundant since 28 February 2020 but are rehired by their employer, they will be eligible for the scheme.

Can early years staff on reduced hours benefit from the scheme?

Staff on reduced hours or reduced pay will not be entitled to furlough leave under the government’s scheme. This means that as childcare providers who have less children to care for may be advised to reduce the number of employees, rather than their hours.  

What if members of staff are self-isolating or are sick?

Furlough leave doesn’t apply where staff are self-isolating or are sick. In these circumstances, employees should receive Statutory Sick Pay, but can be furloughed after this. 

What about staff shielding in line with public health guidance?

Employees who are shielding in line with public health guidance can be placed on furlough. Shielding is required for people, including children, who are at very high risk of severe illness from coronavirus (COVID-19) accessing the provision. It’s also for their family, friends and carers.

What about staff on unpaid leave?

Employees on unpaid leave cannot be placed on furlough leave. However, it is not currently clear how this guidance applies to employees who have returned from unpaid leave after 28 February. The Alliance is seeking further clarification on this point.  

Will employees continue to accrue service and annual leave?

Employees will remain on the payroll and therefore continue to accrue continuous service and their annual leave. Settings are obligated to ensure that staff are entitled to the statutory annual leave entitlement of 5.6 weeks. Where enhanced annual leave is provided any variation will normally need to be agreed. Settings should review their contracts and Alliance members can obtain legal advice from the free member legal advice service Law-Call. 

What if an employee has more than one job? 

Both employers will be able to make a claim under the scheme. The 80% cap applies to each employer. 

If an employer stops employees working now, will they be able to claim salary payments for the whole of March? 

No, the furlough leave will not cover any time that the employee was actually working.

Can an employee work while on furlough leave?

A staff member of furlough leave can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of, the setting. However, if employees are required to, for example, complete online training courses whilst they are on furlough leave, then they must be paid at least the National Living Wage or National Minimum Wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

If staff have already been put on short-term hours working, can this now be converted this to furlough leave?

If employees have already put staff on short-time working on reduced pay, then employers should be able to vary this arrangement so that staff can benefit from the 80% payment.

short term contract must be for a fixed duration and will come to an end once the end date is reached or, if the contract is for a specific task, when the task is complete. Specific advice should be sought from a legal advisor or helpline. Alliance members can contact Law-Call, the 24-hour legal helpline. 

What information will settings need to make a claim?

To claim, employers will need:

their ePAYE reference number

the number of employees being furloughed

the claim period (start and end date)

amount claimed (per the minimum length of furloughing of three weeks)

their bank account number and sort code

their contact name

their phone number.

HMRC has stated that it will retain the right to retrospectively audit all aspects of the claim.

Can a setting make more than one claim?

Employers can only submit one claim every three weeks. 

When will the HMRC online claims portal be open?

The new online claims system is expected to be ready by the end of April 2020. 

Points for further clarification

  • Whether early years providers can benefit from both the Coronavirus Job Retention Scheme and ‘free entitlement funding’

We have received a large number of queries from our members about whether or not early years providers can receive 'free entitlement' funding and access the Coronavirus Job Retention Scheme.

The DfE guidance for early years providers published on 24 March, and updated yesterday (1 April), still states: "The Coronavirus Job Retention Scheme means that for employees who are not working but kept on payroll, the government will contribute 80% of each worker’s wages of up to £2,500, backdated to 1 March 2020. Settings can access this scheme while continuing to be paid the early entitlements funding via local authorities."

However, concerns were raised following general guidance for all businesses published by HMRC on 26 March, which states: “Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.”

It is the Alliance's view that the HMRC guidance should not be applied to early years settings, not least because 'free entitlement' funding is not exclusively used for staff costs, and because the early years-specific guidance clearly states that providers can access both schemes. 

It was our hope that the Department for Education would issue an immediate clarification to the sector confirming that the HMRC guidance did not apply to the sector - however, after a week, this is still not happened.

We are also aware that different local authorities are issuing conflicting guidance on this point, with some telling providers that they are not able to access both schemes.

It is for this reason that we are continuing to chase full, definitive and official confirmation from the Department for Education on this issue as a matter of urgency.

Once we have this, we will update the sector as soon as possible.

Implementing furlough leave

How should I select which staff to place on Furlough Leave and which staff to continue working?

You must be careful not to discriminate when deciding who you will offer Furlough Leave to. The Equality Act and the duty to consider the health and safety of individuals will still apply. You should consider the following key points when taking the decision:

the business needs of the organisation (i.e. which roles are critical)

if staff roles are identical you could ask for volunteers

rotate Furlough Leave amongst employees complying with the minimum three week period (subject to clarification)

health or other relevant circumstances of individuals (place those at risk on Furlough Leave first)

ensure that sufficient staff are in place to carry on operating.


This is not an exhaustive list. 

You should record the reason for your decision and clearly communicate this to staff in an open and transparent manner. 

What process do I need to go through to Furlough staff on 80% of their salaries?

You should make sure any process followed is fair and involves consultation with each employee affected. Furlough Leave should not be unilaterally imposed without written consent. In seeking to agree a temporary variation to the contract to place an employee on Furlough Leave, consideration must be given to the following practical steps: 

  • check the employment contracts for staff (including short term layoff clauses, consultation requirements and notice periods for changes)
  • discuss the business case for the change with the employee
  • where there is no provision in the contract to reduce pay, you are required to obtain written consent; (you may be able to impose a reduction in pay in line with the relevant clause within the contract of employment – however, you will still need to deal with the matter appropriately, proportionately and sensitively
  • you must ensure that the employee's consent was not obtained by duress and that your communications are propionate and reasonable
  • where a trade union is recognised for collective bargaining purposes, the trade union should be consulted
  • place staff on Furlough Leave from an agreed date if you do not have enough work for them or are closing the setting
  • confirm and obtain agreement in writing with affected staff 
  • inform staff that you will keep them updated.


Employment law requirements including consultation obligations and timescales will apply. However, this will be a challenge given the pandemic. Consequently, you should take legal guidance. Alliance members can obtain support from the free legal helpline Law-Call in our member area. 

In these extreme circumstances, employees (and any trade unions) may agree to a period of Furlough Leave because the alternative is likely to be redundancies. Where there is no provision in the contract to reduce pay, and the setting is unable to obtain agreement from the employees, then you should obtain legal guidance. 

Do we have to top up the pay of a worker on Furlough Leave to 100%?

The guidance makes it clear that this is the employer’s choice and is not compulsory. The decision may depend on the financial circumstances of the setting or organisation as a whole. However, there will need to be a clause in the contract to allow for a reduction of pay in these circumstances. Otherwise written agreement will be required from the employees. Specific legal advice should be sought, if settings intend to apply this top up to only certain groups of staff as this could lead to direct or indirect discrimination.

We cannot afford to top up our staff pay to 100% during Furlough Leave, what other support is available?  

Employees, whose income has fallen, may be eligible for other government support such as universal credit, or housing benefit. They may also be eligible for a three-month mortgage holiday.

What process do I need to go through to Furlough staff on 100% of their salaries?

It is unlikely to be a breach of contract to place an employee on Furlough Leave (without their agreement) provided you pay them their full pay, and deal with the matter appropriately, proportionately and sensitively.

This will include:

  • discussing the business case with your employees
  • placing staff on Furlough Leave from an agreed date if you do not have enough work for them or are closing the setting
  • confirming in writing
  • informing staff that you will keep them updated.
Will an employee be entitled to their contractual benefits and to accrue annual leave during Furlough Leave?

Employees will be entitled to continue to receive all of the non-discretionary benefits of their contract, including the right to accrue annual leave, unless they expressly agree to waive these. Statutory holiday, 5.6 weeks per annum and minimum auto enrolment pension contributions cannot be waived and must therefore continue. Where you are seeking to agree to vary any terms and conditions during Furlough Leave you should obtain legal advice.

What decisions will the setting need to make if there is an ongoing financial impact of the pandemic?

Settings will need to decide whether to continue operating or to close. This will be a decision for settings based on their individual business and financial circumstances. Whatever course of action is chosen, employment law requirements must be followed. 

 I issued staff with notice of redundancy last week, can I re-employ then and place them on Furlough Leave?

Anybody who was on the payroll on 28 February 2020 and has since been made redundant can be rehired and put on the scheme with their agreement. Members should take legal advice from the free legal advice service, Law-Call, to ensure that they follow an appropriate process that will enable them to claim from the scheme.  

Does Furlough leave apply to Casual Workers?

Technically no. However, you will need to consider the work pattern of individuals to understand whether they are truly casual workers. Further clarification should be sought from your legal advice service.  

Can staff be furloughed multiple times?

Employers can place staff on furlough more than once – and one period can follow straight after an existing one. The minimum length of a furlough period is three weeks. 

Can I ask furloughed staff to complete tasks remotely?

You cannot ask staff to do work for your setting once they have been furloughed. Staff can volunteer to do some tasks for your setting – but they cannot do anything that creates revenue or provides a service.

This means that staff may be able to volunteer to complete essential training courses remotely or stay in touch with families by posting information on Facebook, for example.

However, they cannot be asked to complete tasks such as providing lesson plans to parents or remotely offering services such as story time via Skype.

The intention is that staff will no longer be doing their job while on furlough.

If they are required to do any training courses or other services, they will need to be paid the National Living or National Minimum Wage for any time spent on this – even if this means that they are paid a higher rate than they would be through the Coronavirus Job Retention Scheme.

Other questions

What should I do if my setting is due to have an Ofsted inspection during the outbreak? 

Following the Alliance’s letter to Ofsted chief inspector Amanda Spielman calling for a halt on routine early years inspections, Ofsted has temporarily suspended all routine inspections due to the outbreak. You should not have to take part in any routine inspections during this time, unless there has been a safeguarding concern raised.

If we are struggling with staff absences can we relax staff ratios?

Ofsted has advised the Alliance that the EYFS section 3:30 allows for the relaxation of ratios in exceptional circumstances, and where the quality of care and safety and security of children is maintained, changes to the ratios may be made. As the coronavirus outbreak is an exceptional circumstance, there is no need to notify Ofsted to minor changes to ratios. However, no official guidance is yet available on this. We are in contact with Ofsted and will provide an update to the sector as soon as formal guidance becomes available.

What should we be communicating with Ofsted?

On its website Ofsted says: 'At this time, you do not need to let us know if you are closed due to COVID-19 (coronavirus), whether that’s because you are not caring for the children of critical workers or vulnerable children, or because you are ill.'

My Paediatric First Aid Certificates will expire within the next three months. What should I do?

The Health and Safety Executive has announced a three-month extension to the validity of all certificates coming up for renewal on or after March 16 during the current Covid-19 crisis. You can see the full statement here.

Because of fluctuating food supplies we are struggling to manage our menus. What should we do?

With the growing risk of coronavirus, many providers now need to find ways to adapt their menus to cope with fluctuating food supplies.  

It’s important to note that there is enough food coming into UK retail system. In such an extraordinary situation, it has been necessary for some retailers to limit sales to ensure that food can be bought by larger numbers.  Some vulnerable families may be struggling to access the foods they need at home so it’s particularly important at the moment to help ensure food security for all. The Alliance has written to the heads of all the major supermarkets in the UK to ask for the development of a scheme which ensures that childcare providers are able to access the food and other key items they need.

Read our tips and guidance on managing your menus.


Our FAQs are not an exhaustive list of points for consideration. This is a new and fast-changing situation for providers and the wider sector.  For this reason, you should seek legal advice (Alliance members can access free legal advice as part of their membership, contact details are available in the members’ area).

We are also seeking further clarification from the DfE on a number of areas to ensure we are completely clear about implications for employers and employees. We will continually update these FAQs on our website as new information or further guidance is made available. 

While many employers will be pragmatic, we know that they will work hard to protect the interests of their employees. 

Any employer should be aware that if they fail to follow employment law requirements, their actions could potentially result in employment claims.

Guidance for Alliance members

Alliance members have free access to Furlough Leave template letters in the Members’ Area.

Government financial support 

 The Coronavirus Job Retention Scheme

Self-employment Income Support Scheme

Small Business Grant 

Covid 19: Support for businesses

Government guidance — operational

Coronavirus (Covid-19) guidance for the charity sector

Guidance to help with running your charity during the coronavirus (COVID-19) outbreak.

Read the guidance here

Early years and childcare closures

This guidance covers Ofsted-registered childcare providers for children of all ages, including childminders, nurseries and wraparound childcare and clubs (before- and after- school and holiday care). This guidance does not cover nannies or au pairs, as they work in the child/children’s family home.

The following question and answer based guidance should be read alongside the guidance on critical workers and vulnerable children.

Coronavirus (Covid-19): early years and childcare closures

Implementing Social Distancing in Education and Childcare Settings

This guidance is for education and childcare settings that are remaining open to support vulnerable children and the children of critical workers. It should be read in conjunction with guidance for social distancing.

 Guidance for education and childcare settings on how to implement social distancing


Useful template letters and resources

Download: To parents re partial closures and eligibility as a key worker 

Download: Guidance on prioritising places for vulnerable children and children of key workers 

Download:  Prioritising places - risk assessment tool


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