Today, the Government updated its Coronavirus Job Retention Scheme ("CJRS") guidance to end the confusion around whether employers are entitled to claim back notice pay or not. It follows an update earlier this week (15 July) which clarified the position that statutory notice can be claimed, but left the position on contractual notice open to interpretation.
The guidance now states “where you must make redundancies, you should do so in accordance with the normal rules. 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.”
So, employers are able to claim funds from the CJRS in respect of both statutory and enhanced contractual notice payments made to employees, subject to the usual furlough rules. Although we suspected this was the case, the previous update making reference only to statutory notice lead to confusion. It is reassuring that the updated guidance has now cleared this up.
However, there was no change relating to payments in lieu of notice (PILON). We therefore assume that the position on this remains that PILON payments are not recoverable through the scheme. HMRC have previously explained to us that the reason for this is that claims could only be made in respect of a period during which an employee was working for the employer and this would not be the case if a PILON was made.