Will CJRS payments to cover contractual notice periods?

In our earlier blog, 'The Coronavirus Job Retention Scheme: Government Update', we discussed whether or not employers can use the Coronavirus Job Retention Scheme (CJRS) in relation to the salary paid during an employee's period of notice.

Can employers claim for statutory notice pay under CJRS?

HMRC's Employee CJRS guidance of 10th July included the following statement: "Your employer can continue to claim for you while you are serving a statutory notice period; however, grants cannot be used to substitute redundancy payments." Our emphasis.

From this, it was clear that in order to rely on CJRS an employee must remain an employee during the notice period and, as such, payments in lieu of notice made to employees cannot be recovered under the scheme. It was also clear that the CJRS scheme can be used in respect of statutory notice periods (i.e. one week per year worked up to a maximum of 12 weeks) but that it cannot be used to pay statutory redundancy payments.

Can employers claim for contractual notice pay under CJRS?

The government's reference specifically to statutory notice on 10th July caused uncertainty for employers that provide contractually enhanced notice periods. To remove this concern, the guidance was amended on 17th July to "Your employer can continue to claim for you while you are serving a statutory or contractual notice period" confirming that pay in relation to both statutory and contractual notice periods are reclaimable under the CJRS scheme. The guidance remains unchanged that notice must be served and that redundancy payments cannot be reclaimed under the CJRS scheme.

For how long will CJRS cover notice payments?

CJRS is being phased out between now and the end of October, and only payments made in relation to employment up to 31st October may be claimed.  In order to maximise financial support from the CJRS, many employers will need to plan and take action imminently. For example, an employer proposing the redundancy of an employee with an entitlement to 12 weeks' notice will need to have completed the consultation and issued notice by the first week in August.

Given the winding down of CJRS, many employers are now being forced to consider requirements to restructure and reorganise workforces, re-sizing them to match the post-coronavirus business models. For many, this will sadly mean significant job losses through redundancy. Our Guide to reorganisation and redundancy can be found here.

From a timing perspective, where significant numbers of employees may be affected (20 or more) employers proposing redundancies will need also to factor in requirements to collectively consult with employee representatives for minimum statutory periods of up to 45 days. The clock is already ticking in these cases and employers must act quickly to implement required changes, if they have not already done so.

We're here to help.

Be sure to follow our social media channels as we continue to keep you updated on the latest coronavirus developments from the Myerson Employment Law Team. If in doubt, please take advice. You can reach us on 0161 941 4000 or via email at lawyers@myerson.co.uk.