Furlough - further changes and new Treasury Direction

Any employer who is using, or intending to use, the Coronavirus Job Retention Scheme (‘the Scheme’) must take note of two important new developments.

Changes to notice pay

First, from 1 December 2020, it will no longer be possible to use the Scheme to meet the wage costs of employees working their notice. This applies regardless of whether the furloughed employee is serving contractual or statutory notice. It also includes people serving notice of retirement or resignation.

If an employee will start a contractual or statutory notice period on a day covered by a previously submitted claim, employers must make an adjustment to their application for a grant. 

The employers’ guidance states that for November claim periods, employers can claim for statutory notice pay; but the employee’s guidance states that employers can claim for both contractual and statutory notice pay up until the end of November 2020.

The updated employee guidance is hereThe updated employers’ guidance is here.

New Treasury Direction

The second important development in relation to the Scheme is that the government has now published a new Treasury Direction. 

This sets out the detailed legal framework which underpins the extension to the original Coronavirus Job Retention Scheme.

It officially extends the period of the Scheme from 1 November 2020 to 31 March 2021. 

The rules of the Scheme set out in this direction apply for the period from 1 November 2020 until 31 January 2021.  The rules applying to the Scheme after 31 January 2021 will be set out in a further direction made by the Treasury.

The Treasury Direction also confirms the withdrawal of the Coronavirus Job Retention Scheme bonus. This was the £1000 payment which was going to be paid to employers who retained furloughed staff until the end of January 2021.

The Treasury Direction should be read alongside the guidance published HMRC.

The new Treasury Direction is here.

Other points to note

Finally, note that

  • from December 2020, HMRC will publish online the names of organisations using the Scheme, including how much has been claimed (paragraphs 34.1-34.8 of the Treasury Direction); and
  • agreements to furlough employees must now be in place before furlough commences, and furlough agreements can no longer be backdated; and
  • the government has previously announced that it will review the Scheme in January 2021, and may increase the contribution required by employers.

Get in touch

Related insights & events

View all

Hot topics

Related services