Job retention scheme to stop funding notice pay

The Government has confirmed that employers will not be able to claim a furlough grant for any days on or after 1 December 2020 during which a furloughed employee is serving out a period of notice. The reason for termination does not matter. This means that employers will not be able to claim if they dismiss an employee for any reason, nor if the employee resigns or gives notice of retirement. 

The Government's confirmation, in updated guidance, comes after it warned it was reviewing it approach to the funding of notice pay by the job retention scheme.

If an employee starts a notice period after their employer has submitted a claim, the employer will need to adjust their next claim or, if they are not making another claim, pay the money back within 30 days. 

Employers will be able to continue to claim for any period of notice being served up to and including 30 November. Although the employer guidance indicates employers can continue to claim for a statutory notice period, and does not mention a longer contractual notice period, we do not believe the Government intends to limit the grant to the statutory notice period. The employee guidance indicates contractual notice periods are covered and there is nothing in the latest Treasury Direction (which sets out the legal rules for the scheme) to suggest employers cannot claim for a contractual notice period for claims up to 30 November.