Guidance updated by HM Revenue and Customs (HMRC) confirms that employers can still claim for furlough payments if an employee has been put on a full notice period.
The original guidance stated that organisations could claim the statutory notice period under the scheme, however, an amendment has made it clear that employers are able to keep employees on the scheme for the duration of their notice period. However, grants cannot be used as a substitution for redundancy payments.
Under the job retention scheme, the government will continue to pay 80% of furloughed employees wages, capped at £2,500 until October 2020, however, employers will need to start paying national insurance and pension contributions, representing 5% of employment costs, from August 2020.
Alan Lewis, partner at Constantine Law, said: “There was uncertainty about full notice periods not being covered by the furlough scheme. This was caused by a sentence in the HMRC guidance which said that employers can use the Coronavirus job retention scheme to pay statutory notice. This then begged the question as to whether or not longer contractual notice periods would be covered by the scheme.
“Thankfully, HMRC has updated its guidance to remove any uncertainty. This has neatly resolved an issue that employers have been grappling with over recent weeks and which will, without doubt, be more commonplace as the scheme is being wound down and redundancies happen.”