In keeping with its tradition of issuing updates to the Coronavirus Job Retention Scheme (“CJRS”) on Fridays, the guidance issued earlier this week on the extended CJRS has been amended this evening in relation to the recoverability of notice pay.

Whilst the CJRS did not in any event cover payment in lieu of notice or statutory redundancy payments, the Government has now decided to stop covering the relevant proportion of the wages payable to employees who are serving out their notice periods.

The updated guidance provides that, for claim periods starting on or after 1 December 2020, an employer cannot claim for any days on or after 1 December 2020 during which a furloughed employee is serving a contractual or statutory notice period. This is expressly stated to include employees serving notice of retirement or resignation. If an employee subsequently starts a contractual or statutory notice period on a day covered by a claim which has already been submitted, then the employer would need to make an adjustment to its claims

This is an important change with the effect that employers are fully responsible for termination costs, whether in relation to dismissals for redundancy or other departures. It potentially makes the continued use of the CJRS less attractive and may diminish the extent to which it encourages staff retention. Employers may therefore need to carefully consider the financial implications of this change in short order.