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Employers Can’t Use Furlough For Notice Periods From 1 December
This week the Government provided clarity through the Treasury Direction that for claim periods starting on or after 1st December 2020, furlough cannot be used to pay contractual or statutory notice period that falls on or after 1st December 2020. Here’s a summary of what that means.
The furlough scheme has been a lifesaver for many employers and as we all know it was designed to keep jobs open and fill the gaps in demand created by lockdown.
To date, many employers have used the furlough scheme to also cover statutory and contractual notice pay – amounts of money they would often otherwise not be able to afford.
Here are some FAQs about the new information:
1. If someone is already serving their notice period and being furloughed, what are our options?
You can only claim furlough money up to 30th November 2020. After that you can either bring the person back to work, to work out their notice, put them onto gardening leave, or pay them in lieu of their notice period.
This is going to be an admin burden for employers who will need to write to their employees on notice to change arrangements.
The individual employee’s income shouldn’t change as it is already a requirement to make furlough up to 100% for notice periods.
2. Is it worth rushing through redundancies to speed up the process?
It is almost never worth rushing through redundancies!
There is a significant cost to getting redundancies wrong in terms of appeals and even tribunal claims. Even working at high speed, in order to fairly consult with your employees, it takes 10 days to run the process (for less than 20 redundancies). Even starting today, you would only save a few days of notice period money, which is unlikely to be worth the cost of rushing the process and getting it wrong.
3. Should I simply give notice today?
If someone has less than 2 years’ notice, it could be worth giving notice today if you are certain that there is no need for the role in the future, or that you have the wrong person in the job. It would allow you to claim furlough funding up to 30th November 2020, but it is worth remembering that the Treasury Direction has made it very clear that this isn’t what the furlough scheme was designed for, it was created to protect viable jobs.
It does remain a difficult decision for employers that otherwise would be able to be making use of that person’s skills, but currently cannot because of lockdown or the economic environment.
It is always worth consulting with an employment law specialist before you make quick decisions about ending employment contracts.
With everything we do that changes jobs or impacts employment, our teams are watching, and it will have an impact on their trust in the organisation and the people who lead it. If you want to build trust, increase motivation and engagement, do make sure that you live out your values, and continue to treat people inline with how your organisation wants to be seen.
At People Puzzles, we are experts in helping businesses get the best out of their people, and we’re here to help. Whatever you do make sure you follow all relevant consultation requirements and ensure all agreements are in writing and signed by the employee or their representative. For practical help on how to implement all of this please do get in touch on [email protected] or call 0203 239 3307.