The government has released a new Treasury Direction on the furlough scheme, confirming that claims will not be able to be made for furloughed staff who are serving notice from 1 December 2020.
Since the extension of the furlough scheme to the end of March 2021 was announced, all eyes have been on the government to clarify how it should now be used. Now, in addition to guidance released last week, over the weekend an additional Treasury Direction was released on the scheme, covering the rules until the end of January 2021.
The main area confirmed is that claims will not be able to be made for furloughed staff serving a notice period after 1 December 2020. This is to reflect the fact that the furlough scheme is to preserve jobs, with the encouragement that organisations should therefore look at all alternatives to making staff redundant, such as using the extended scheme. From 1 December, those serving statutory or contractual notice period, including if they have retired, cannot be claimed for under the scheme.
It has also been confirmed that claims cannot be made for statutory payments, such as statutory maternity pay, and the gross amount of earnings falling for reimbursement must be correspondingly reduced. Whilst guidance released last week seemed to confirm that employees had to provide, and wait, eight weeks of notice before being moved from maternity leave to furlough leave, the Direction has clarified that the notice period can be shorter in certain circumstances. In this situation, a conversation should be held between the organisation and their employee.
Further clarification has also been provided regarding work that can be carried out whilst on furlough. Employees are able to undertake training during hours recorded as furlough. Training for the purpose of improving an employee’s effectiveness in the employer’s business, or the performance of the employer’s business, is permitted provided employees do not provide services to or generate revenue for their employer.
Furloughed workers undertaking training must be paid at least the minimum wage rate applicable for the time they spend on this activity though this is likely to be covered by the grant payment in any case. If the pay attracted by the training is in excess of the furlough payment, employers must pay the excess.
Directors on furlough may make a JRS claim, run payroll, and also carry out any statutory duties in relation to filing accounts or providing other information relating to the administration of the company, without it affecting a claim in relation to them.
A further Treasury Direction is expected to outline how the scheme will work from February 2021, meaning that there may be some changes to the scheme in the new year. One change currently expected is the government may contribute less to the scheme, meaning organisations may need to top up furlough pay to make the 80 per cent. However, this is yet to be confirmed.