Coronavirus Job Retention Scheme: update affecting notice periods

Wed 8th Jul 2020

The Treasury has published a further Direction to provide rules that will govern the Coronavirus Job Retention Scheme (CJRS). Most of the rules in the Direction are to provide reinforcement to the recent amendments to the scheme, including flexible furlough arrangements, which you can read about in more detail here.

However, the Direction contains new wording regarding the purpose of the CJRS. The Direction states that the CJRS (in respect of all claims) must be used to “continue the employment of employees in respect of whom the CJRS claim is made”. It therefore implies that the CJRS cannot be used for those employees who are under notice, or whose employment the employer does not intend to continue after the CJRS ends.

This is a new stance from the previous Direction which only required the employer to be affected by the COVID-19 pandemic to access to the scheme. Additionally, it has raised questions as to whether employees who are at risk of redundancy or are undergoing consultation can access the scheme (although these questions appear to be dealt with in the employees’ CJRS guidance which expressly states that employees can be made redundant while they are on furlough leave or afterwards).

Despite the lack of express guidance and the obvious fact that this will put many businesses into further financial turmoil, it is recommended that employers take a more cautious approach to avoid falling foul of the CJRS. We would recommend employees prepare to pay for employees notice periods out of their own pocket, regardless of whether they have previously been claimed or were intended to be claimed under the CJRS.

Next steps

Employers should:

  • Review whether any employees were previously or are currently on their notice periods whilst on furlough leave, and whether a CJRS claim has or is intended to be made in respect of that employee;
  • Consider whether any previous CJRS claims will need to be revised and whether your resources will need to be reallocated to ensure that your business can fund these notice periods independently; and
  • Consider your plans for your workforce, and whether this additional expense will affect the intended plan.

If you would like our assistance, please do not hesitate to contact a member of our team.