The Government has updated its guidance in relation to the Coronavirus Job Retention Scheme, to confirm that monies paid under the scheme can be used to fund contractual notice payments.
Notice Payments
At paragraph 2.2 of the 3rd Treasury Direction to the Coronavirus Job Retention Scheme, it stated that: "Integral to the purpose of CJRS 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." This statement, that furlough monies should only be used where there is an intention to "continue the employment of employees," suggests that the monies cannot be used to fund notice payments, as it would be contrary to the raison d'être of the Coronavirus Job Retention Scheme.
Nevertheless, in updated advice issued on the 10th July 2020, the Government stated: "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." However, this caused further confusion in that it begged a brand new question as to whether furlough monies could be used to fund enhanced contractual notice payments, and not just the statutory minimum.
On the 17th July 2020, the Government updated its guidance yet again to confirm that monies paid under the Coronavirus Job Retention Scheme can be used to fund enhanced contractual notice payments. The updated guidance reads: "Where you must make redundancies, you should do so in accordance with the normal rules. This includes giving a notice period and consulting staff before a final decision is reached. You can continue to claim for a furloughed employee who is serving a statutory or contractual notice period, however grants cannot be used to substitute redundancy payments."
Ill-Thought Out Earlier Guidance And Drafting
The unavoidable conclusion from all of the various updates is that the earlier guidance and drafting was ill-thought out. Although the Coronavirus Job Retention Scheme needed to be implemented quickly, given the emergency of the situation, and inevitably mistakes were going to be made, by the 26th June 2020 when the 3rd Treasury Direction was issued, arguably all of the issues with the scheme should have been ironed out, including those relating to notice payments. Instead, paragraph 2.2 of the 3rd Treasury Direction created more confusion, a situation further compounded by the 10th July 2020 update. Moreover, in relation to a written parliamentary question on the issue (which asked: "whether employers are prohibited from using grants from the CJRS for employees placed on redundancy notice periods; and whether those grants must be repaid by employers if used during this period?"), Jesse Norman, the Financial Secretary to the Treasury, stated: "Employers may continue to claim under the Scheme for a furloughed employee who is serving a statutory notice period subject to eligibility based on contract of employment." By this stage, the Government should really have sorted the matter out.
Nevertheless, regardless of the earlier mistakes, the updated guidance issued on the 17th July 2020 does at the very least provide clarity, especially to those employers who have already used furlough monies to fund enhanced contractual notice payments.
