HMRC clarify that furlough pay can be used for contractual and statutory notice pay

Member News published by Howes Percival LLP, under Legal / IP

Following a series of requests to HMRC to clarify the position on notice periods the government guidance on the Coronavirus Job Retention Scheme (CJRS) has once again been updated.

The latest Treasury Direction from the 26 June 2020 introduced a condition to the CJRS that the amounts paid to an employer are used to continue the employment of employees.

The new wording caused concern as to whether employers could use the furlough grant as pay for furloughed employees working their notice period. The government guidance was updated again on the 10 July 2020 confirming employers could continue to claim for employees whilst they are serving a statutory notice period, however grants could not be used to substitute redundancy payments.

This caused additional confusion as to whether the furlough grant could be used to pay any enhanced contractual notice pay above the statutory amount. HMRC has again updated its guidance to remove this uncertainty. The relevant passage now says: "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.

Nick Benton comments:

"The clarification from HMRC that the furlough grant can be used to pay furloughed employees serving contractual notice pay as well as statutory notice pay is welcomed. Whilst many employers were already relying on comments made by HMRC, updating the official guidance will provide much needed reassurance."

If you require any further assistance or have questions please do not hesitate to get in touch with a member of Howes Percival's employment team.

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