Furlough and notice

Can a notice period run during furlough/flexible furlough?

There is nothing in law to prevent a notice period running during a period of furlough or flexible furlough, unless this is contrary to the terms of the furlough agreement.  However, since 1 December 2020, employers can no longer claim any part of an employee’s salary for a notice period under the CJRS.  This means that there is now little incentive for employers to furlough employees during notice periods.

How is notice pay calculated for employees who are on furlough/flexible furlough and being paid less than their usual salary?

This depends.  The Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 (SI 2020/814) came into force on 31 July 2020.  The intention of the Regulations was to ensure that statutory redundancy payments and notice payments to employees on furlough would be calculated on the basis of their pre-furlough salary.  However, these Regulations apply only to statutory notice pay and not to contractual notice pay.  Therefore, if an employee’s contract of employment provides for statutory notice only (ie. one week of notice per complete year of service to a maximum of 12 weeks), then the employee is entitled to be paid their full contractual salary for the notice period.  The only circumstances where this would not apply would be where the employee had agreed a permanent variation of their terms and conditions to the lower furlough rate of pay – this will be unusual.

However, where an employee’s entitlement to notice is more than one week in excess of the statutory minimum, it appears to be the case that employers can calculate notice pay (both statutory and contractual) on the basis of the pay which the employee would otherwise have received during their notice period, that is, taking into account the lower amount of furlough pay which they would be entitled to for their non-working furlough days.