20th July 2020

Legal Issues – Job Retention Scheme update

As lockdown continues to have a dramatic impact on the economy and many employers are increasingly forced to consider making redundancies to ensure long term survival, a recent issue about what could be claimed by employers using the Job Retention Scheme has helpfully been clarified.

Recent discussion has focused on whether an employer could properly claim for notice pay paid to an employee who was being made redundant.  Many employers were unclear about this and quite properly asked if they could use a scheme designed to save jobs as a way of helping pay the cost of making an employee redundant.

For the sake of all concerned, we are pleased to confirm that HMRC has now formally updated the guidance on the website and it is now specifically stated that employers can continue to claim for a furloughed employee who is serving a notice period.  Going even further, the guidance also makes It clear that this applies whether the employee is serving statutory notice or contractual notice (invariably this is relevant where it is enhanced and longer than the 12 week statutory maximum) and that gives employers peace of mind that there is no restriction to the period that can be claimed.

Employers are still liable for payment of the statutory redundancy payment itself but this helpful update from HMRC should help employers budget for future plans with greater certainty.  A helpful development during challenging times.

If you have any questions on any of the issues mentioned in the above article, please contact Russell Eadie.

20th July 2020