Last Saturday, 4th July, The Telegraph carried an article suggesting that if furloughed staff were made redundant the Treasury would seek the return of furlough monies.  That article has also been tweeted.

The article is not quite accurate!

For clarity, furlough monies from HMRC are to pay 80% of wages for those who are on your PAYE system.  Employees who are working their notice period, whether on furlough or not, are employees until their last day of service, the day they come off your PAYE system.  Furlough money therefore applies to them during their notice period.

If you decide to pay an employee in lieu of notice (PILON) , then furlough money stops the day the individual leaves your organisation and not at the end of what might have been their notice period.   It is in these circumstances that HMRC will recoup any money you have claimed for a notice period that effectively did not take place because you gave the individual money instead.

Example:  Jo Bloggs is made redundant and his employer pays him in lieu of his one month notice period.  Jo Bloggs leave the organisation immediately and does not work (or furlough) his notice period.  You cannot claim furlough monies for the notice period that would have happened had you not paid given PILON.

Please take care, you may not give PILON if there is no contractual entitlement to do so.  Check your employees’ Statement of Terms & Conditions to ensure there is a contractual entitlement to PILON.  Specifically do not simply assume that you can go down the PILON route as this could be a wrongful dismissal.

Furlough money is to pay wages and not to pay redundancy money.  Once again, HMRC may seek to recoup furlough monies that have been used to pay redundancy.  So you can claim for wages during a notice period but not for redundancy money to which an employee is entitled over and above his/her wages for the notice period.

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