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End of furlough: next steps for employers

After a year and a half since it was first introduced, the Coronavirus Job Retention Scheme (“CJRS”) is ending today (30 September 2021). For some employers, the issue will be how to retain employees as they continue on the road to recovery without the benefit of the cushion of the CJRS, if they still do not have sufficient work for all employees.

In general, the options available to employers are essentially to facilitate the return to the workplace of furloughed employees on either their pre-furlough terms or on revised terms, considering short-time working or lay-off or commencing a redundancy process.

Return of furloughed employees on existing pre-furlough terms and conditions

Taking all options into consideration, this is perhaps the easiest and yet most expensive. Where the procedure for returning to work is already set out in the furlough agreement, then employers should follow this. In the absence of this, then furloughed employees should already have been given notice that they are required back at work tomorrow.

Prior to returning employees to work, employers need to consider, for example, conducting a health and safety risk assessment, consulting with employees about their return, or taking steps to ensure that the workplace continues to be COVID-secure. Furthermore, employers may wish to consider whether they can take steps to ease the transition back into work for employees, such as an initial adjustment of hours, or providing refresher training.

Return of furloughed employees on revised terms and conditions

Employers may be able to reduce expenditure and avoid redundancies by altering employees’ terms and conditions, by e.g. introducing hybrid working, agreeing with employees to reduce both hours and pay; agreeing a pay cut, offering unpaid leave; continuing furlough without claiming the CJRS grant or reducing the number of locations the business is operating from to reduce overheads (which may also be a redundancy).

If a company is contemplating a change involving 20 or more staff, a period of collective consultation would be required prior to effecting any change, followed by individual consultation. Changing terms and conditions requires an employee’s written consent, unless agreement has been reached via collective consultation and is required if a change is being made to less than 20 employees’ contracts.  This process should not be confused with the concept of ‘firing and rehiring’ or imposing a change unilaterally, both of which carry significant risks and specific advice on the proposed changes should be sought prior to pursuing either of these options so the risks and likely costs can be weighed.

Short-time working or lay-off

Employers should check their employees’ contracts of employment to check whether there are any express provisions permitting lay-off or short-time working. Employers may also be able to lay-off employees if there is custom or practice within your business for doing this however, this not a usual practice for most businesses.

Any employees laid off are entitled to a statutory guarantee payment if their employer does not provide them with a full day’s work when they would usually work. In most circumstances employees will be entitled to up to £30 a day for 5 days in any 3 months.

There are complicated provisions allowing employees to claim a statutory redundancy payment if the lay-off or short-time working runs for 4 or more weeks in a row or 6 or more weeks in a 13 week period (where no more than 3 are in a row). However, the employee must give written notice in advance if they are going to claim a redundancy payment and the employer can give counter-notice if it is expected that work will resume within 4 weeks. It is very important to comply with the time limits in the statutory scheme.

If a business lays off or imposes short-time working without the contractual right to do so, employees may resign and claim constructive unfair dismissal. Alternatively, they may remain in employment and claim an unlawful deduction from wages.

If a company wishes to change terms and conditions of employment to enable lay-off or short-time working, or the change affects 20 or more employees, there will be the necessity to consult on a collective basis, consult with individuals and agree any change in writing (see revised terms and conditions above).

Redundancy

If a business has insufficient work for all its employees, it may have to consider making redundancies. Depending on the numbers involved it may be necessary to enter into a period of collective consultation under Section 188 Trade Union Labour Relations (Consolidation) Act 1992, followed by individual consultation.

When assessing candidates for potential redundancies, employers should consider appropriate pools and score individuals in such pools as far as possible using objective criteria. If employees are, for example, selected for redundancy because they have been on furlough, this is likely to result in claims for unfair dismissal and, depending on the circumstances, claims for discrimination.

Any redundancy payment should be calculated on the employee’s full salary prior to being furloughed and they will be entitled to full pay during any notice period or a payment in lieu if this is permitted by the contract.

Need further assistance?

Baines Wilson is returning to in person events with its series of Employment Law Update Seminars in October 2021, where the end of furlough, among various other Employment topics, will be delivered. For more information and to register your attendance, click here.

Alternatively, if you have any queries relating to the options available to employers after the end of furlough or have any other Employment Law or HR queries, please do not hesitate to contact our Employment team on 01228 552600 or 01524 548494.

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