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Government introduces new policy on CJRS, termination of employment and unpaid leave

Covid-19 virus

The latest CJRS Treasury Direction published on Friday, 13 November, contains a restriction on making a claim under the CJRS in respect of any day between 1 December 2020 and 31 January 2021 (inclusive) on which an employee is under notice of termination of employment.

This appears to follow on from the guidance published last week which indicated that measures would be introduced during the latest extension of the CJRS to prevent employers using it to claim payments for employees who were made redundant.

The restriction now introduced applies to termination of employment for any reason, not just redundancy, but is obviously limited in time.  It does not prevent a CJRS claim being made in respect of an employee on notice, but excludes the period beginning 1 December 2020 and ending 31 January 2021 from the claim. Therefore, if an employee is already serving notice on furlough, the employer may not use the CJRS to fund their notice pay beyond 30 November 2020 (or to fund a payment in lieu of notice).

A further restriction prevents a claim being made for any day during the period beginning on 1 November 2020 and ending on 31 January 2021 during which an employee is on unpaid leave.

This is an important change and any employers considering redundancies amongst furloughed staff, should look carefully at the timing in order to establish not just whether they wish to make a claim, but also whether they are able to recover any of those employees’ notice pay costs under the scheme. For further advice, please contact our Employment Team.

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