Statutory Notice Periods No Longer Included in Furlough - Just Global Payroll
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HM Treasury has updated its guidance for businesses.

Note: With the situation changing rapidly, please be aware that information in the following article may not reflect current guidance. For the latest information and to understand its effect on your payroll, please get in touch.

Even for a payroll provider that spends every day meticulously keeping up to date with changes announced by HMRC and the Treasury, keeping track of changes to The Coronavirus Job Retention Scheme (CJRS) has become something of a full-time job. Those changes continued recently with the latest adjustment to its T&Cs which affects statutory and contractual redundancy notice periods.

Earlier in November the government announced that the CJRS, which was due to end on 1 December, will be continuing until 31 March. The announcement confirmed that employees on payroll as at 30 October would be eligible for the payments providing the business had made a PAYE RTI submission to HMRC since CJRS first launched in March. Despite the dwindling generosity of CJRS in recent months, the reinstalled version of the scheme would see rates return to their initial 80% values.

But one part of the announcement teased further changes, as the government confirmed it was reviewing statutory notice periods.

Can you make staff redundant on furlough?

The review is now complete and the Treasury has confirmed that, from 1 December, statutory and contractual notice periods will no longer be covered by the CJRS. That doesn’t stop any business from making necessary redundancies, but it may change whether those people can be furloughed whilst serving their notice periods. For any business in the difficult position of needing to make staff redundant, payroll departments should now apply the following rules:

Redundancy pre-December 2020

Where the claim period relates to November, companies can still claim for furloughed employees who are serving notice periods. CJRS payments must not, however, be used to substitute redundancy payments.

Redundancy December 2020 onwards

For claims from 1 December, companies must not claim for furloughed employees serving contractual or statutory notice periods or notice of resignation or retirement.

How do you calculate redundancy and what are the rules?

The government guidance confirms that, aside from the changes to furlough payments during notice periods, the process for running a redundancy exercise remains as normal with all notice and consultation periods operating as usual.

You can find the ACAS step-by-step guide to managing redundancies here.

Statutory redundancy pay is determined by age, pay and the length of service. Furlough should not influence the redundancy pay, as gov.uk notes:

“If you were paid less than usual because you were ‘on furlough’ because of coronavirus, use what you would have earned normally when calculating your redundancy pay, not what you were paid while on furlough.”

Reemploying staff

The new guidance does clarify that, where employees were made redundant (or simply stopped working) after 23 September but have now been placed back on payroll, they will qualify for furlough payments provided a PAYE RTI submission made between 20 March 2020 and 30 October 2020 included a payment of earnings for that employee.

Managing payroll changes

Even if you’re not needing to consider redundancies right now, staying on top of the ongoing CJRS changes isn’t easy when you already have a full-time job managing your business.

To explore ways of cutting the time, hassle and cost of managing your payroll, outsource it to us. Find out more now.  

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