From 1 December 2020 the furlough scheme rules are changing to prevent the scheme being used for any employee that is being made redundant, is retiring or is working their notice.
The government has now made clear that an employer cannot claim a grant under the furlough scheme for any employee who is serving their notice.
Where an employer makes redundancies, these must be done in accordance with employment law. This includes giving a notice period and consulting staff before a final decision is reached.
For furlough claim periods relating to the month of November 2020, an employer can continue to claim for a furloughed employee who is serving a statutory notice period, though grants cannot be used to substitute redundancy payments. (The guidance is silent on contractual notice).
For claim periods starting on or after 1 December 2020, an employer cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation).
If an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, an adjustment will be required.
Where an employee is made redundant, the employer will need to base statutory redundancy and statutory notice pay on their normal wage rather than the reduced furlough wage.
Where employees are made redundant, or they stopped working for the employer on or after 23 September 2020, they can be re-employed and put on furlough.
This applies as long as the employee was employed by the employer on September 23 and a PAYE RTI submission to HMRC was made between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
On 13 November 2020, a Treasury Direction (the legislation) was issued applying from 1 November 2020. The following additional points are notable both in the Direction and guidance:
For more details on the furlough scheme, please see our separate guide.
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