Clarity provided on claiming furlough grants during a notice period?

Following on from last months updated treasury order, government guidance on the Coronavirus Job Retention Scheme (‘CJRS’) has been updated to address the use of the scheme for employees who are being made redundant, specifically whether the grant can be claimed for the employee’s notice period.

As explained in our previous article, whilst claiming a grant under the CJRS for a notice period had been viewed by many as possible, confusion arose due to a new provision in the Treasury Direction stating that it is integral to the scheme that employers use the amounts paid under the scheme to ‘continue the employment of employees’, and any grant not used for that purpose must be ‘returned immediately’. If an employee is working a notice period, the employment has been terminated, thus calling into question whether the grant could be claimed for the notice period, and if not significantly increasing the costs for an employer.

The matter has been raised with government by trade bodies, including the Association of Recruitment Consultancies (‘ARC’), and in parliamentary questions, following which an update has been issued to CJRS guidance. The guidance now includes a clear statement that a grant can continue to be claimed for a furloughed employee serving a ‘statutory notice period’.

The confirmation will be a welcome relief to businesses making redundancies, however it should be noted that the grant can only be claimed where an employee remains employed for the notice period. Amounts claimed under the CJRS cannot be used to make payments in lieu of an employee’s notice period, nor to cover any redundancy payments due to the employee. The wording of the guidance, and specifically the use of the words ‘statutory notice period’ also still leaves some uncertainty where a contractual notice period is greater than statutory entitlement. Subject to some limitations, employees have a statutory entitlement to one weeks’ notice for each complete year of employment, however this is only a minimum and contracts may provide for a greater period of notice. Whether an employer can claim the CJRS grant for a notice period which goes beyond the statutory entitlement, is therefore still unclear.

Getting the notice right is an important component in avoiding a claim arising from any dismissal, including redundancy, whilst also protecting your business and any post termination restrictions. The Lawspeed Employment Team is here to help, contact us on 01273 236 236 or [email protected]

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