Claiming notice pay under the Job Retention Scheme
As you know and further to our recent updates, on 1st July 2020, the Government issued the Third Treasury Direction which sets out how the Job Retention Scheme will run from that date. In and amongst the headline points of ‘flexible furlough’, there is wording contained within the direction which appears to cast some doubt on an employer’s ability to reclaim notice pay under the Job Retention Scheme. The relevant paragraph states that a claim should only be made where the payment will be used to continue employment – this suggests that it would be contrary to the purpose of the scheme to use the funds where employment has been terminated and the employee is working under notice.
However, since then, the Employers’ CJRS guidance, the Eligible employees guidance and the Employees’ CJRS guidance were subsequently amended on Friday 10th July 2020 to explicitly provide that employers can continue to claim for a furloughed employee who is serving a statutory notice period, seemingly in the context of a redundancy situation.
This leaves employers with two issues as follows; can employers claim notice pay for employees who resigned or are dismissed for reasons other than redundancy (whether or not they are on furlough), and can an employer claim only statutory notice pay, rather than contractual notice pay. Whilst we have seen some indication from HMRC that claiming statutory notice for employees who have resigned may be eligible (up to the cap), the answers to both of these questions are unclear therefore given the changed wording within the Third Treasury Direction, the best advice for employers is to conduct an audit of their claims and identify whether funds have been claimed which are potentially contrary to this new wording. Employers which have, or which intend to, use the JRS to pay employees working under notice in this way should contact HMRC for further clarification or guidance to ensure their claims are legitimate.
As with all things JRS, this is a very fluid situation and we are continuing to monitor updates.
If you require any further support on this matter, please contact a member of the employment team on 01274 864999
