22.07.2020

CJRS Guidance Update: Contractual Notice Pay

Guidance for the Coronavirus Job Retention Scheme (CJRS) was updated again on 17th July 2020. This time, there was one change made in two pieces of guidance and it's an important one. It's all to do with notice periods.

Both employee and employers Coronavirus Job Retention Scheme Guidance now stipulates that notice periods being served by furloughed employees includes contractual notice periods.

The change clarifies that an employer can make a claim under the CJRS for an employee serving a notice period, whether that be a statutory one or a contractual one.

It is worth reiterating that any pay that is paid for a notice period can only be reclaimed under the CJRS for an employee who is serving their notice period. This therefore excludes any payment made to a leaving employee in lieu of notice.

Statutory versus Contractual Notice – What’s the difference?

At a time when, unfortunately, employers may have to look at this, it is important to be clear on the difference between the two.

Statutory Notice

This is the minimum amount of legal minimum notice that an employer can give an employee.  This has not changed as a result of the COVID-19 pandemic.  The employer must provide the employee with:

  • One week’s notice (when employed for a month or more)
  • Two weeks’ notice after two years of continuous employment
  • Three weeks after three years of continuous employment
  • And so on up to a ‘cap’ of 12 weeks

Employees must give the employer at least one week’s notice when employed for a month or more.

Contractual Notice

However, it could be that the contract of employment specifies for a longer notice period.  For example, regardless of service, it could be that the contract specifies that three months’ notice will be given. As the employer and employee have mutually-agreed to this, this is the notice period.

For more information visit the guidance on the Advisory, Conciliation and Arbitration Service (ACAS) Website for this important employment law consideration.  The last thing that employers want at this time is to find that they are in breach of providing statutory or contractual notice and, therefore, the termination of the employment is a ‘wrongful dismissal’.

To summarise, there are two aspects which employers will want to consider:

  1. Statutory versus contractual notice
  2. Whether the notice period is served (CJRS claim) or a payment is made in lieu (no CJRS claim)
Back to Intel