The Furlough Scheme and Notice Periods
HMRC have moved the goalposts again and stated that the furlough scheme cannot be used for employees who are on notice of termination of employment after 1 December.
That will apply irrespective of:
- Whether notice was given by the employer or the employee. (It also includes retirement.)
- Whether the notice is statutory or contractual.
- Whether notice has been given which is longer than the statutory or contractual minimum.
- When notice was served.
What if we have employees to whom we have given notice and whose contractual or statutory notice periods run into December?
Previously our advice was to place those employees on furlough so that you could recover notice pay from HMRC. Now, you may wish to consider terminating their employment on 30 November and making a payment in lieu of the balance of their notice period. That will mean that they will no longer accrue holiday and the employee is off your books sooner rather than later.
What if we have given employees longer notice than we needed to, to try and support them?
If you have given employees longer notice than you needed to, and that notice extends into December you could either:
- Tell those employees that, in light of the change in the rules, their employment will now end at the end of their normal notice period. (Or it could end on 30 November and you could make a payment in lieu of any balance of their notice period.)
- Retract the notice and then re-serve it at a later date. That will mean that you will be able to continue to use the scheme but if/when you re-serve notice you will not be able to use the scheme for the notice period.
What if we previously made employees redundant, we have brought them back and told them that their employment will end on a certain date?
The new rules do not specifically address that but HMRC could take the view that those employees are now “on notice” of termination. The safest approach would therefore be to tell those employees that, as a result of the change in the rules, their employment will end on 30 November. There is a hypothetical risk that those employees could attempt to claim for breach of contract but that is unlikely in practice and they would not have the tribunal’s sympathy since you had only reinstated them to support them and the rules of the scheme had then changed.
What if we previously made employees redundant and they want to come back to us and be furloughed?
That is still possible but, frankly, it is probably more trouble than it is worth, especially since you will have to give notice to them again at some point and you will not be able to recover the notice pay from HMRC.
What if employees are on fixed term contracts?
Notice does not have to be given to terminate a contract at the end of a fixed term. Our view is therefore that you could use the furlough scheme for employees who are on fixed term contracts which will not be renewed.
From December, HMRC will publish details of employers who are using the scheme, but that should not deter you from using it.
Please email firstname.lastname@example.org if you have any questions and he will be happy to give you a quote for our retainer service.