Updated: 16 November 2020 with the latest guidance
In the updated Government Guidance on furlough, published 11 November 2020, many noticed the following:
“The government is reviewing whether employers should be eligible to claim for employees serving contractual or statutory notice periods and will change the approach for claim periods starting on or after 1 December 2020, with further guidance published in late November.”
This seems to indicate that employers will no longer be able to claim furlough for employees who are serving notice where the employer decides to claim furlough from 1 December onwards. In other words, if an employer is considering dismissal, they should do so before 1 December 2020 to be able to use furlough for their notice. This is quite a short window for decisions!
This is, of course, a big change; until now you could use furlough for notice.
On 13 November this position was clarified in further guidance; Claims may not be made for any day that an employee is serving notice between 1 December 2020 and 31 January 2021.
This includes statutory and contractual notice.
For periods before 1 December 2020, it is clear that claims may be made if the employee is serving statutory notice only. It is silent on contractual notice.
It’s a strange move from the Government; the purpose of the scheme is job retention and yet this is nudging employers to make quick dismissal decisions. Does it seem to be a further push from the Government not to prop up what they deem as “unviable” roles? Arguably, it’s a push for employers to dismiss those persons whose jobs now only exist within the furlough scheme.
It does perhaps assist those employers who are undergoing redundancies where employees insist that furlough should be considered as an alternative to redundancy; if the notice cannot be given at the same time, this effectively limits those arguments. Roles cannot be propped up until January “just because”.
Alternatively, it does perhaps encourage employers to retain their staff until the end of furlough, without dismissal being inevitable at the end.
Overall this is a very odd new line to draw and, given current uncertainties, it’s far more likely that lots of people will receive their notice on 30 November where their employer cannot afford to pay notice pay once furlough ends.
We still have few outstanding questions which we hope will be clarified as the guidance is published: some of which was answered by updates on 13 November 2020:
Can employees receive PILON as well as furlough?
- This remains unclear. Claims may not be made for any day that an employee is serving their notice, therefore this implies that notice can also be given as the employee is not serving their notice therein.
Will there be a different position between statutory notice vs contractual notice?
- It applies to both statutory and contractual notice after 1 December 2020, and the guidance specifies that people can serve statutory notice and be on furlough prior to 1 December 2020.
Will this also apply if the employee resigns? Surely then they’d be forcing the employer’s hand to remove them from furlough and pay notice when perhaps they simply can’t afford to?
- Employees cannot serve notice, statutory nor contractual, whilst serving furlough. This would appear to include resignation scenarios. It remains the case that this appears to have the ability to force an employer’s hand to pay in lieu of notice.
Once we know more and have seen their updated guidance we will be in touch. If you don’t already subscribe to our updates email email@example.com and we can ensure any updates comes straight to your inbox.
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