On 25 June an update to the Treasury Direction, which dictates how the CJRS or 'furlough scheme' operates, was published. The wording at paragraph 2.2 of that Treasury Direction has generated much debate as it states: “Integral to the purpose of 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 whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”
Some commentators have taken this to mean that employers shouldn’t be using the CJRS in respect of employees who they are likely to make redundant or for employees who are on notice and that, consequently, there is a risk of HMRC later trying to reclaim grants paid for redundant employees – although of course the HMRC guidance for employees does clearly state that employers can still make them redundant while they are on furlough or afterwards.
Whilst it is unclear whether, or how, this new wording will affect an employer’s ability to claim under the scheme in a redundancy situation, my view is that nothing has yet changed and there would be massive uproar from thousands of employers if it was the case that you couldn’t use your furlough monies towards your notice pay obligations. Whether that was right from the outset is a different point but to change it now would not be received well. The HMRC Guidance and all commentary to date points to employers being able to consult with and make redundant those employees who are furloughed and to keep them furloughed whilst they work their notice. What employers can’t do, of course, is to make a payment in lieu of notice and claim for that under the scheme.
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