The Music Stops on CJRS Claims for Notice Pay, Probably (UK)
“I told you so” has always been one of the least attractive things that one adult can say to another, but I did and I was right, so there.
This concerns the question of whether an employer can make any claim under the CJRS for sums paid to employees in respect of their notice period. Treasury Direction Number 3 was almost wilfully obscure on the point, noting only that “integral to the purpose of the CJRS is that the amounts paid to an employer pursuant to a CJRS claim are used by the employer to continue the employment of employees in respect of whom the CJRS claim is made”. Perhaps unsurprisingly, that led to a written parliamentary question – “whether employers are prohibited from using grounds from the CJRS for employees placed on redundancy notice periods…?“. This led in turn to a written answer by Financial Secretary to the Treasury Jesse Norman some days later, so by someone who had at least notionally had at his disposal both the time and expertise to prepare a proper and considered answer. Instead what we got was this: “Employers may continue to claim under the scheme for a furloughed employee who is serving a statutory notice period subject to eligibility based on contract of employment“. The only way that the statutory minimum notice can be “subject to eligibility based on contract of employment” is of course where the contractual entitlement is longer (since it cannot be less), which suggests that what Mr Norman was groping towards here was a statement that CJRS claims could be made in respect of the employee’s contractual notice period.
However, further CJRS guidance issued almost immediately afterwards in the now distant mists of Monday this week said “You can continue to claim for a furloughed employee who is serving a statutory notice period“, with no reference to the contractual period. If that meant what it said, the two obvious questions it left unanswered were (i) what happens if an employee’s contractual notice entitlement is longer than their statutory notice period?; and (ii) what was Mr Norman talking about?
Our immediate conclusion was that the reference to a statutory notice period in the new guidance was simply shoddy drafting and that pay in respect of contractual notice periods would be claimable also, at least up to the end of October. While I would normally be very hesitant to suggest that a clear reference in Government guidance actually means something completely different, the numerous earlier inaccuracies and inconsistencies in the CJRS guidance make that not as bold as proposition as would normally be the case. Limiting the claim to statutory notice periods only would impose huge costs on employer and add a new layer of complexity into furlough claims, especially as the application process contains no questions around who has given notice, of what length or how much of it is in excess of the statutory minimum for each individual employee – the admin burden on both employers and HMRC would be colossal, another sharp poke in the eye to the hoped-for legacy of the CJRS. Surely in this case employers could put aside the mere fact that the government had said something clear in official guidance and be safe in the view that it intended something different?
And so it now appears – complete vindication for the governmental chaos theory in the form of new guidance issued today which states “You can continue to claim for a furloughed employee who is serving a statutory or contractual notice period”.
So there it is — all rather regrettable in the level of confusion and disarray which it shows among those in Government charged with explaining the CJRS to the public, or perhaps to each other, but clearly the right answer in the end.