How can your business prepare for the end of furlough? Employment lawyer Catherine Wilson gives her tips below. Plus, you can download Catherine's checklist of 10 key actions for employers to make sure you're taking all the steps you need as the scheme comes to a close.
The Government’s Furlough Scheme, otherwise known as the Coronavirus Job Retention Scheme, has been credited with saving millions of jobs. It was introduced in March 2020 and few employers could have envisaged that, some 19 months on, 1.9 million employees would still be furloughed as the scheme approaches its end on 30 September 2021.
The majority of furloughed workers, some 970,000, have been on full furlough as of June 2021, so carrying out no work for the employer. 930,000 employees, on the other hand, are working so-called “flexi furlough” (or part time work).
From 1 July 2021, the level of grant was reduced, and employers have been asked to contribute increasing amounts towards the cost of furloughed employees’ wages. To be eligible for the grant, the employer must continue to pay furloughed employees 80% of their wages, up to a cap of £2,500 per month, for the time they spend on furlough.
The current minimum Government contribution has tapered to 60% for up to a maximum of £1875 per month. This reduced scheme is currently scheduled to cease altogether at the end of September 2021.
Jobs linked to travel and transport and trade shows are among those with the highest rates of furlough, but furlough usage stretches across most business sectors. Pending a further last-minute extension or change of heart, the long-term fate of these employees is unclear, with no clarity as to how many will resume their old jobs or be made redundant.
The end of furlough provides a crucial opportunity for employers to reassess their business model but, short term, there are various steps employers should take to prepare themselves.
An essential piece of housekeeping for all businesses is to make sure that their claims have been made promptly. Employers can claim before, during or after they process their payroll if any claim is submitted by the relevant claim deadline. An employer cannot submit a claim more than 14 days before the claim period end date.
It is important to note that employers do not have to wait until the end date of the period for a previous claim before making their next one. An employer can, for example, make a claim more than 14 days in advance of the pay date if they pay their employee in arrears. Drafted or incomplete claims can also be saved on the online portal for up to 7 days. Against this background, claims for September 2021 must be submitted by 11.59pm on 14 October 2021.
Since November 2020, if employers make an error that results in an underpayment, then they are only able to apply to increase the amount for the claim within 28 days after the month the claim relates to. As such, any claims for amendment relating to September 2021 must be made by 28 October 2021. As a reminder, all furloughed employees must receive the full 80% payment regardless of any claim for amendment.
There are three main options:
Either of these latter two options will require at least individual consultation with affected employees.
Turning to the option of termination, if 20 or more employees are affected at the same time and by the same establishment, then the employer will also need to engage in collective consultation with either employee representatives or Trade Union representatives.
Employers in these circumstances will also need to complete and file the Government HR1 form and factor in time scales. There is no time limit for how long the period of consultation should be, but the minimum length of consultation is at least 20 days if between 20 to 99 redundancies.
Employers should also bear in mind that any statutory redundancy pay, notice pay, and accrued holiday entitlement are all calculated based on pre-furlough salary. Similarly, periods spent on furlough are counted towards an individual’s continuous employment; note that many employees may have acquired employment rights, as their employment passed the two-year mark whilst on furlough.
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A decision to vary terms and conditions may provide an attractive alternative to employers. Again, care must be taken to ensure that changes are implemented in a fair manner and do not disproportionately disadvantage particular groups of staff, such as part timers. Any changes need to be confirmed in writing and the employee’s consent sought to any changes in advance.
Although employees are not normally entitled to statutory redundancy payments in this situation, wholesale changes affecting large numbers of employees also triggers the collective consultation requirements described above.
To help employers navigate the end of furlough effectively, I've created a checklist of 10 key actions for employers, which you can download from the myhrtoolkit website.