You may have read some alarmist headlines suggesting that employers cannot issue notice to people on furlough or that they might have to pay furlough monies back.

It is true that if employers have wrongfully claimed from the Coronavirus Job Retention Scheme that they have been given a moratorium to confess and pay HMRC back the wrongfully claimed monies. So all those unscrupulous employers who have claimed and made people work have a short window to see the error of their ways and correct themselves.

The third and most recent Treasury Direction dated 25 June 2020, which is the semi-legislative framework provided by the Treasury to HMRC, telling HMRC how to operate the Furlough Scheme states:-

“2.2 Integral to the purpose of the CJRS [Coronavirus Job Retention Scheme] is that the amounts paid to an employer pursuant to a CJRS claim are used by the employer to continue the employment of employees in respect of whom the CJRS claim is made whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”

This might seem that government is proposing to limit furlough claims to employees whose employment the employer intends to continue, not to those whom the employer intends to make redundant. I can feel you worrying reading this from here.

If this was the case furlough pay will not be available to (and, under paragraph 2.4(b) of the Direction can be reclaimed from) the employer, if the employer is planning to make the employee redundant at the end of furlough or during it.

That reading is superficial and alarmist.

  1. It would be a U-turn on previous government policy statements that furlough pay can be used during notice periods. All this paragraph is saying is that money claimed under the furlough scheme must be used to continue to pay employees. During a notice period, the employees are continuing to be employed (as opposed to being dismissed without notice). Nothing in the fact they are under notice means that their employment is not continuing during their notice period.  So an employer can pay notice using monies reclaimed under the CJRS.
  2. HMRC’s helpline have confirmed to solicitor colleagues that they don’t intend to prevent employers claiming furlough pay for employees working their notice.
  3. BEIS (the government department) have confirmed to colleagues that this isn’t the intention – see written confirmation.

What this does make clear is that claims cannot be made under the furlough scheme to pay in lieu of notice, or to pay statutory redundancy payments. But we knew that already?

Refreshing Law Limited

7th July 2020