TREASURY DIRECTION ON EXTENDED FURLOUGH SCHEME – NOTICE PERIODS NO LONGER COVERED

David Reid
16th Nov 2020

By David Reid, Director.

 

On Friday, the Treasury published its fourth Direction to HMRC on the operation of the Coronavirus Job Retention Scheme (Furlough Scheme). This Direction sets out the formal legal rules applying to those making claims under the Furlough Scheme.

 

You can read the Direction here. The Direction contains all of the measures set out in recent HMRC guidance, which our recent JEL alerts have covered.

 

The most important clarification in the Direction is that with effect from 1 December 2020, an employer can no longer claim in respect of an employee who is serving out any sort of notice period, whether contractual or statutory. Even where notice was given prior to 1 December 2020 but will not expire until after that date, claims to HMRC in respect of that employee must cease with effect from that date.

 

The following important points should be noted:

  • Employers can place employees on flexible furlough or “full-time” furlough from 1 November 2020.
  • An employee doesn’t need to have been furloughed before, to be eligible for the extended period.
  • An agreement to furlough an employee from 1 November 2020 can only be backdated if the employee’s agreement to be on furlough was given on or before 13 November 2020.
  • There are now fairly tight deadlines for making claims for a grant under the scheme as follows:
    • Claims for the month of November 2020 must be submitted by 14 December 2020.
    • Claims for the month of December 2020 must be submitted by 14 January 2021.
    • Claims for the month of January 2021 must be submitted by 15 February 2021.
  • By making a claim for November, December or January, the employer now has to agree to permit HMRC to include them in a published list of employers using the extended scheme. This list may include some information about the approximate level of grants claimed.
  • The government will decide later whether employers will have to contribute more to furlough costs for the months of February and March 2021. At present, for the months of November, December and January, the government will cover the full 80% of employee wages that the employee must receive, up to a cap of £2,500 per month. Employers will only have to fund employer’s NI and pension contribution costs. It is possible that for February and March, HMRC might not reimburse the whole 80% of wage costs.
  • The Job Retention Bonus for keeping employees on payroll until February 2021 will no longer be paid. It remains to be seen if a Job Retention Bonus will be offered at a later date, once the Furlough Scheme ends.

 

If you wish to discuss this further, or you need support on any other employment law matters, please do not hesitate to contact a member of the team on 0141 331 5150.

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