The Third Treasury Direction relating to the furlough scheme was published last week.
Amongst many changes included within the Direction, including further details relating to the flexible furlough scheme, it now includes an additional paragraph regarding the overarching purpose of the furlough scheme.
The Direction states that:
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 the coronavirus disease or the measures taken to prevent or limit its further transmission (paragraph 2.2.) (our emphasis).
The inclusion of this new statement has definitely set some hares running.
Does this mean that employers should not be making furlough claims in respect of employees who will be being made redundant? Does this apply to employees who are engaged in a redundancy consultation? What about employees under notice (for any reason)?
We have spoken to HMRC on the subject to try and address these concerns.
Senior technicians from HMRC have told us that, in their view, the statement in the Treasury Direction has not altered the position. When asked, they reassured us that it is permissible for employers to continue claiming furlough grants in respect of employees serving out their notice periods.
Whilst this is helpful, there remains an understandable degree of nervousness amongst clients, particularly in view of the emerging picture relating to the compliance regime and the potential for HMRC to recover furlough payments where claims have been made in breach of the rules.
Current proposals in the Finance Bill suggest that there will be an amnesty for employers to repay furlough payments which will last for 30 days from the date the legislation comes into force.
Given the uncertainty, employers would be well advised to take advice on any concerns, and pay close attention to further updates to the scheme as they are published.