There has been recent confusion in the legal press about whether or not employers are permitted to validly claim the subsidy under the Coronavirus Job Retention Scheme (“Scheme”) in respect of salary or wages paid to a furloughed employee during their notice period.
This question has become particularly relevant in recent weeks now that many employers are looking to make redundancies and to offset the cost of the pay during notice as much as they can under the Scheme.
The confusion appears to have been caused by updates to the Treasury Direction issued on 25 June, 2020 which states that amounts paid to an employer pursuant to the Scheme are to be used by the employer to continue the employment of employees in respect of whom the Scheme claim is made whose employment activities have been adversely affected by the coronavirus, or the measures taken to prevent or limit its further transmission.
Some commentators have said that this means that claims under the scheme are only valid if the employer actually intends to continue the employment of the individual, and not where the employer intends to make the individual redundant.
“It is has always been evident to me”, says Alan Lewis, partner with Constantine Law, “that where an employer issues an employee with notice of termination, the employment continues in the ordinary course until the end of the notice period.
“The only difference with the usual kind of employment situation is that the employee is furloughed. Other than that, the terms and conditions of employment remain in place. Therefore, the salary or wages appear to be properly payable and the subsidy recoverable under the Scheme.”
Lewis has confirmed that he knows of at least two firms of solicitors who have published that they have made enquiries of HMRC and been assured that payment of wages or salary to furloughed workers during their notice period is covered by the Scheme. Whilst those confirmations in themselves are not law, they support the above view.
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