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More developments in relation to the CJRS

Just as employers are getting to grips with flexible furlough, yet more changes have been announced in respect of the Coronavirus Job Retention Scheme (CJRS). We examine the impact of these changes for employers.

Statutory redundancy and notice pay

Employees with more than two years’ continuous service who are made redundant are usually entitled to a statutory redundancy payment that is based on length of service, age and pay, up to a statutory maximum. Employees are also entitled to a statutory period of notice before their employment ends, which increases with length of service from one week up to a maximum of 12 weeks’ notice after 12 or more years of service (although an employee may be entitled to contractual notice under their contract of employment which is greater than the statutory minimum).

As a result of new regulations which came into force on 31 July 2020, furloughed employees who are made redundant by their employer are entitled to receive both statutory notice and statutory redundancy pay based on their normal wage. Whilst the normal wage will usually be the pre-furlough rate of pay, this will not be the case where the employer and employee have agreed a contractual variation in pay and hours that is intended to continue beyond the employee's furlough arrangements. In such circumstances, the agreed contractually varied rate of pay should be used. The new regulations also apply to other employment rights that rely on the statutory definition of weekly pay, including when calculating pay during time off to look for employment, calculating unfair dismissal awards and calculating pay for short-time working.

However, employers should bear in mind that the regulations do not impact any enhanced redundancy pay that may be stipulated in an employee’s individual employment contract. Depending on the wording in the contract it may, therefore, be possible for employers to calculate any element of enhanced redundancy pay using their furlough rate of pay rather than the pre-furlough rate of pay. This would apply, for example, where the terms of the enhanced redundancy pay state such pay is calculated using the salary as at the point of redundancy.

In addition, the regulations only apply where the employee is entitled to statutory minimum notice (or less than one week more than statutory minimum). Where, therefore, contractually an employee is entitled to at least one week more notice than the statutory minimum, they are technically not caught by these new regulations and would be entitled to their contractual pay which might be the reduced furlough rate of pay depending on the wording in their contract and furlough agreement.

Claiming for notice pay under the CJRS

HMRC guidance was also updated to clarify that both statutory and contractual notice pay can be claimed for under the CJRS where a furloughed employee remains on furlough leave during the period of notice (but not where a payment in lieu of notice is made). Previously the guidance had only been updated to cover statutory notice pay, leaving many employers wondering if they had to cover the cost of any additional contractual notice pay. The updated guidance will therefore come as a relief to many employers. It is worth remembering, however, that grants under the CJRS cannot be used to subsidise redundancy payments.

Job Retention Bonus

31 July 2020 also saw some further details in relation to the Job Retention Bonus (JRB) being published.

The JRB was initially announced on 8 July as part of the government’s measures to support the UK’s economic recovery whilst preserving jobs for as many employees who have been furloughed as possible. The JRB is a one-off, taxable, payment of £1,000 being provided to UK employers for every furloughed employee who remains continuously employed in meaningful employment through to 31 January 2021.

Employers will be able to claim the JRB in respect of any employees that they have been able to correctly claim for under the CJRS. A new employer may also be able to claim the JRB in respect of employees who have transferred to them, for example in situations where TUPE applied to the transfer (or would have applied had the previous employer not been in compulsory liquidation) and the transferred employees were furloughed and claimed for by the new employer (so therefore excluding any employees who transferred after 31 October 2020). The JRB will not be payable where an incorrect or fraudulent claim has been made. It will therefore be important for employers to keep their payroll information up to date and to maintain accurate records of their historic claims under the CJRS if they want to apply for the JRB.

Eligible employees must earn at least £520 a month on average between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). In addition, the employees in respect of whom the employer claims the JRB must not be serving a contractual or statutory notice period that started before 1 February 2021.

Claims for the JRB can be made once the employer has filed PAYE for January and payments of the JRB will be made from February 2021.

More detailed guidance on claiming the JRB will be published in September 2020.

Getting employees back to work

It is worth remembering that the CJRS grant starts to be tapered from this month. In August, employers will have to start paying the employer NICs and pension contributions for the hours the employee is on furlough. In light of this, the announcement from the UK government that English employers will have more discretion to allow staff to return to the workplace from 1 August 2020 is likely to be welcome news for many organisations.


This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. © Shoosmiths LLP 2022.


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