· News

CJRS amendment creates redundancy confusion

?A new amendment added to the Treasury’s Coronavirus Job Retention Scheme (CJRS) direction has created further confusion and potential worries for employers with workers on furlough.

The wording suggests that employers may have to pay money back to government if an employee they claim furlough money for is later made redundant.

Paragraph 2.2 of the document now states that “[…] the amounts paid to an employer pursuant to a CJRS claim are used by the employer to continue the employment of employees in respect of whom the CJRS claim is made […]”

Many perceive the wording to be part of the Treasury’s efforts to prevent employers making fraudulent furlough claims, though others have criticised it for a lack of clarity.

This chimes with the CIPD’s warning that the CJRS could become a ‘waiting room for unemployment.’

Speaking to HR magazine Kate Palmer, associate director of advisory at Peninsula, said: “Once again, the latest Treasury direction fails to provide clarity for employers on the Job Retention Scheme and has instead increased confusion regarding claims made.

"The new wording included on the purpose of the scheme has left employers wondering if their use of the scheme has been restricted in a way that it was not restricted before as it can be read as discounting claims for wage payments to an employee during their notice period.”

Clarifying the new wording Lucy Lewis, partner at law firm Lewis Silkin, told HR magazine that: "It has now been made clear that an employer can claim the furlough grant for employees serving notice but cannot claim the furlough grant for PILON payments or redundancy pay. It is worth highlighting though that whilst it’s clear that employers are able to claim the furlough grant in respect of notice pay, where notice is being worked, actually doing this has led to some very negative media attention for some companies."

Yet further clarity from HMRC may still be needed, as Palmer added: “Employers are now in limbo: either continue to make a claim but be aware that it may be classed as an overclaim which needs to be paid back, or don’t make a claim and put potentially unnecessary extra pressure on the company finances. Until clarification is brought forward, it will be challenging for employers to know what to do.”

From 1 July, employers have been allowed more flexibility in how they furlough staff in a bid to help them in the lead-up to 31 October when the scheme officially ends.

For high-risk workers such as those who have been shielding, the TUC is campaigning for the scheme to be extended.

Due to the confusion surrounding redundancy, some campaigners are hopeful that the wording will deter employers from making lay-offs of furloughed employees.

For those concerned about making mistakes in their claims Sally Morris, employment lawyer at mfg Solicitors advised: “Overall, it’s vital employers keep full and detailed records because HMRC is prepared to spend the next five or six years checking whether the Job Retention Scheme was used correctly.”