Clarity welcomed on using the Job Retention Scheme to supplement notice periods

Government guidance on the Coronavirus Job Retention Scheme (‘CJRS’) has been updated to address the use of the scheme for employees who are being made redundant, specifically whether the grant can be claimed for the employee’s notice period.

Whilst claiming a grant under the CJRS for a notice period had been viewed by many as possible, confusion arose due to a new provision in the Treasury Direction stating that it is integral to the scheme that employers use the amounts paid under the scheme to ‘continue the employment of employees’, and any grant not used for that purpose must be ‘returned immediately’. If an employee is working a notice period, the employment has been terminated, thus calling into question whether the grant could be claimed for the notice period, and if not significantly increasing the costs for an employer.

The matter has been raised with Government by trade bodies and in parliamentary questions. The guidance now includes a clear statement that a grant can continue to be claimed for a furloughed employee serving a ‘statutory notice period’.

The confirmation will be a welcome relief to businesses making redundancies, however it should be noted that the grant can only be claimed where an employee remains employed for the notice period. Amounts claimed under the CJRS cannot be used to make payments in lieu of an employee’s notice period, nor to cover any redundancy payments due to the employee.