The CJRS was implemented to aid employers to keep employees employed so that business could return to usual once restrictions are lifted with the minimum possible adverse effect on the economy. Indeed the RS of CJRS stands for Retention Scheme.
It is therefore noteworthy that there is a) no provision in the furlough scheme rules or guidance that expressly prohibits an employer claiming furlough money whilst at the same time placing the employee on notice and b) no requirement for employers to continue to employ employees who have been furloughed until at least the end of the CJRS – currently 30 June 2020.
With most employees with relatively short service only being entitled to a month’s notice or less, we may see employers whose short to medium term future looks as bleak as British Airways’ future, decide to cut their losses early and make employees redundant. Subject to conducting a fair consultation process with employees who have over 2 years’ service, it appears employers will be free to serve notice on employees and have their notice run throughout June so that some of employees’ notice costs are funded by the CJRS. There’s even an argument that employers may be able to get away with only paying the employees their CJRS money rather than full notice pay, although I don’t think a Tribunal will find that argument attractive.
For employers who wish to penny pinch even further, either out of necessity or greed (there have been reports of multi-millionaires such as Premiership Football Clubs and Victoria Beckham using CJRS funds to furlough public staff), there is also an argument that employees can be required to take their accrued holiday within their notice period. The Working Time Regulations allow employers to dictate when employees take holiday as long as employees are given notice to take holiday which is at least double the duration of the holiday that is to be taken. An employee with 10 days’ notice therefore must be given 20 days’ notice of when to take it. Taking this approach will have the effect of making an employee’s accrued holiday disappear for no extra cost beyond the notice pay that had to be paid anyway (and is being funded by the CJRS). For this to work, employers need to be careful to give notice to employees to take holiday on particular dates that comply with the above rule about duration of notice and not simply say “take your holiday in your notice period”.
For employees who are not entitled to redundancy pay, combining the above approaches, means employees can be dismissed with only 20% of costs being paid by the employer. Even where employees have over 2 years’ service and therefore an entitlement to redundancy pay, there is still a significant saving to be had for employers who use the CJRS to subsidise notice pay, despite that not being within the spirit of the CJRS.
One small hope for employees, is that the Treasury Direction to HMRC which sets out the rules for the CJRS, does have a general anti-abuse provision: “No CJRS claim may be made in respect of an employee if it is abusive or is otherwise contrary to the exceptional purpose of CJRS”. Whether taking the above approaches will be seen to be enough to be classed as abusive or contrary to the exceptional purpose of the CJRS remains to be seen.
Leave A Comment