Notice pay for furloughed employees

As we will all now be aware, the Coronavirus Job Retention Scheme (commonly known as the ‘furlough scheme’) has been extended to be in place until 31 March 2021. You can read more about this in our recent article – Extended Coronavirus Job Retention Scheme Guidance released

On Friday 13 November, HM Treasury published The Coronavirus Act 2020 Functions of her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction which forms the legal framework for the extended scheme (the Treasury Direction). The Treasury Direction formally extends the scheme from 1 November until March 2021 and notably withdraws the Coronavirus Job Retention Bonus which would have been due at the end of January 2021.

The Treasury Direction also sets out that for claim periods starting on or after 1 December, an employer cannot claim for any days on or after 1 December during which the furloughed employee was serving a contractual or statutory notice period. This includes people serving notice of retirement or resignation. This appears to be in keeping with the spirit of the initial guidance which seemed to indicate that the extended scheme serves to protect viable jobs rather than to prolong inevitable redundancies.  

Employers may therefore need to re-assess their workforce strategy and consider whether any planned redundancies need to be brought forward in light of this updated guidance. Our employment law team can assist you with all elements of the redundancy process including consultation, pooling and scoring, preparing scripts for meetings as well as all related correspondence. In addition, we can provide advice about severance packages including negotiation of terms and drafting the settlement agreement.

An additional consideration for employers is how they will deal with an employee who is serving notice after 1 December. In the absence of being able to put them on furlough leave the employer will have to consider the options available to them. This may be to bring the employee back to work for their notice, to put them on garden leave or to make a payment in lieu of their notice. The options available will depend on the terms of the employment contract and it is important to give this proper consideration to ensure you do not inadvertently breach the contract. Furthermore, careful consideration will have to be given to the impact of the decision made about serving notice, or otherwise, on the overall fairness of the dismissal at the effective date of termination.

Our employment law team are on hand to help you to navigate the furlough rules and assist you with your employment related queries. If you have any questions or need any advice please do not hesitate to get in touch.