Following the Third Treasury Direction published on 26 June 2020 setting out the mechanics of the changes to the Coronavirus Job Retention Scheme and the implementation of the ‘flexible furlough scheme’ available from 1 July 2020, there was some confusion about whether the Scheme could be used to recoup notice sums paid to employees who serve notice whilst still on furlough leave.
HMRC has now confirmed in its updated guidance that the Scheme can be used in respect of both statutory and contractual notice periods. The relevant section of the employer guidance states:
“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.”
A similar amendment has also been made to the employee guidance.
As such it is now clear that the Scheme can be used to pay the whole of an employee’s statutory or contractual notice period in circumstances where the furloughed employee is dismissed on notice. We are sure this is welcome news to employers.
Please do not hesitate to get in touch with us if you have any questions regarding the above or the Scheme generally.