16th November 2020
Last week, we shared some observations on the latest official guidance relating to the Coronavirus Job Retention Scheme (CJRS) and confirmed we would update you once further guidance was issued (https://www.leonardcurtislegal.co.uk/update-furlough-and-redundancy). Less than three days after the last update, the guidance was updated again on the afternoon of Friday 13 November.
As we pointed out in our last update, the government was considering changes relating to notice payments. The 10 November guidance stated:
“The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.”
The update on Friday changes the guidance to confirm that, with effect from 1 December 2020, employers will no longer be entitled to claim under the CJRS for notice pay. The guidance now states:
“For claim periods relating to November, you can continue to claim for a furloughed employee who is serving a statutory notice period however grants cannot be used to substitute redundancy payments.
For claim periods starting on or after 1 December 2020, you cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation).”
This change is likely to have significant implications for employers, particularly those contemplating or in the process of progressing redundancies, who will now be faced with significant increases in the costs of those redundancies. We can also anticipate that the changes will create surprising consequences for employers, as most employers will be surprised to find that they are no longer able to claim for notice pay under the scheme where the employees themselves resign during a period of furlough.
Please contact one of the team at Leonard Curtis Legal for advice and support on this and other legal issues.