The Coronavirus Job Retention Scheme (CJRS), otherwise known as the ‘furlough scheme’, is due to end on 30 September 2021.
Since furlough was introduced 18 months ago at the start of the pandemic, more than 11.4 million jobs have been supported by the scheme and it has been used by an estimated 1.3 million employers. Data suggests that around 2 million employees still remain on furlough or flexible furlough leave.
Up until the end of this month, the government will continue to contribute 60% of wages with employers contributing 20%, and employees will receive 80% of their wages for hours not worked, capped at £2,500 per month.
Employers still using the scheme will now need to think about managing the return to work when the scheme ends and mitigate the financial impact of the pandemic on their business.
There are several options for employers when preparing for the end of the furlough scheme.
Bring Employees Back to Work on their Pre-Furlough Terms and Conditions
Employees should be given reasonable notice that they are being brought back from furlough leave. Employers should consider the steps required to facilitate a safe and smooth return to the workplace including health and safety measures, employee wellbeing and flexible/hybrid working arrangements.
Temporary Changes to Terms and Conditions of Employment to Reduce Costs
There are a number of different options for businesses seeking to reduce payroll costs and avoid making redundancies:
- Lay-off – providing employees with no work and no pay for a short period of time, whilst retaining them as employees. This provides an immediate saving, together with the flexibility to restore the workforce when work starts to pick up.
- Short-term working – employees are provided with less work and less pay for a short period of time. Reducing an employee’s hours is a substantial variation to an employee’s contract of employment and will need to be agreed in writing.
- Unpaid/paid leave – arranging for employees to take periods of unpaid leave is a way of stopping or reducing work temporarily. Alternatively, the employer can request that employees take their annual holiday entitlement during quieter periods.
The best way to make changes to an employee’s terms and conditions of employment is to consult with employees, obtain their written consent to any changes and ensure up-to-date documentation is in place.
Even if there is a contractual provision to allow for such temporary measures, employers should still consult with affected employees and give reasonable notice of any changes to protect the employment relationship and avoid potential claims.
If work is unlikely to increase, redundancies may be the only option. Redundancy is a fair reason for dismissal providing the redundancy is genuine and fair and the correct process is followed. Employees who have been on furlough leave have the same legal rights as any other employee and have protection against unfair dismissal.
Employees with more than two years’ service who are dismissed on the grounds of redundancy are entitled to receive a statutory redundancy payment, notice pay and payment for accrued but untaken holiday. Redundancy pay for furloughed employees is based on their normal wages and not their reduced furlough pay.
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