This area seems to be causing much confusion, not helped by a newspaper article recently which stated that “Employers may be forced to return cash to taxpayer as Sunak redefines furlough”.
The article follows a new paragraph in the most recent Treasury Direction dated the 25 June 2020, which states: “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 ….”.
The confusion is whether the government is now proposing to limit furlough pay and claims for employees whose employment the employer intends to continue, not to those whom the employer intends to make redundant, either during or at the end of furlough leave. This would be a huge U-turn on previous statements that furlough pay can be used during notice periods.
We think the position is clear: during a notice period, employees continue to be employed, so employers can pay notice using monies reclaimed under the CJRS. NOTE however, claims cannot be made under the scheme for payments made in lieu of notice. Employees need to be served with notice and remain on furlough for the full notice period.
It remains the case that statutory redundancy payments cannot be re-claimed under the scheme.
Please contact us if you need further assistance in this area.