Furlough & Notice Pay

I have had a lot of clients asking if you can give a furloughed employee notice of termination of their employment and claim the notice pay back from the government via the Coronavirus Job Retention Scheme (CJRS). Background There has been some confusion on this issue, stemming mainly from a Treasury Direction, issued on 25 June 2020, which is guidance advising HMRC how to operate CJRS. The new Direction included the following paragraph:- “2.2 Integral to the purpose of the 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 whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.” On the back of that paragraph in the Treasury Direction, the Daily Telegraph ran the following headlines last weekend, causing not a little alarm amongst employers: "Employers may be forced to return cash to taxpayer as Sunak redefines furlough" "Employers who lay off vast swathes of their workforce after receiving government money may be forced to make reparations to the taxpayer" So what's the answer? The answer is that you can give a furloughed employee notice of termination and you can recoup their notice pay (whilst they are furloughed) from CJRS.  However the effect of the Treasury Direction is to make clear that you cannot reclaim Payments In Lieu of Notice from CJRS nor statutory redundancy payments. What's the evidence for this answer? First - if the answer was that you could not recoup notice pay in respect of furloughed employees it would run counter to previous government policy statements on the issue. Next, solicitor Paman Singh tweeted the following answer from HMRC in response to a request for clarification on that issue: Finally on Wednesday Jesse Norman, Financial Secretary to the Treasury, said the following in response to a question in parliament: "The CJRS is designed to protect jobs and to keep people in employment. Where employers must make redundancies, they should do so in accordance with the normal rules and with contractual obligations. This includes giving a notice period and consulting staff before a final decision is reached. Employers may continue to claim under the scheme for a furloughed employee who is serving a statutory notice period subject to eligibility based on contact of employment."

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