Furlough ending

The end of the UK furlough scheme

The Coronavirus Job Retention Scheme (CJRS) was introduced to support businesses with retaining staff during the coronavirus (COVID-19) pandemic. Under the CJRS, staff members who would have otherwise been laid-off during the crisis could be placed on ‘furlough’ (ie placed on temporary leave). 

While the CJRS was extended numerous times since 2020, it is now coming to an end on 30 September 2021.

 

How did the CJRS work?

Under the CJRS, furloughed staff would get 80% of their wages for the time in which they do not work, up to a maximum of £2,500 per month. The Government would cover a proportion of staff wages, up to the full 80%, which were reduced between July and November 2021.

In July 2021, the Government covered 70% of wages (up to a maximum of £2,187.50) and employers made a 10% contribution to the furlough pay. In August and September 2021, the Government covered 60% of wages (up to a maximum of £1,875) and employers made a 20% contribution to the furlough pay. Employers also had to pay National Insurance and pension contributions.

Employers could claim for staff, provided they were on the employer’s payroll by 30 October 2020 (for claims until 30 April 2021) or by 2 March 2021 (for claims from 1 May 2021).

Staff could either be furlough on a full-time or part-time basis. 

For more information, read Furlough, workforce reduction and managing employees.

 

How can employers recall staff from furlough?

With the CJRS coming to an end on 30 September 2021, employers will need to decide what to do next. When employers are making decisions about how and when to end furlough arrangements, equality and discrimination laws will apply in the usual way.

Employers can consider bringing furloughed employees back to work on their agreed terms and conditions of employment. If employers wish to bring furlough to an end and ask staff to return to work they should consider using a Furlough letter for previously furloughed employees to recall staff. While employers don’t have to give notice to furloughed workers recalling them to work, it is recommended that they do. 

Employers should consider giving staff reasonable notice to return to work to allow employees to make any necessary arrangements (eg child care arrangements). If an estimated recall notice period was included in the initial letter furloughing staff, employers should consider following this.

If employers wish to recall staff from furlough, they should:

  • talk to staff about any plans to end furlough as early as possible; and
  • encourage staff to raise any concerns or problems about returning to work.

With staff returning to work, employers need to ensure the health and safety of all staff in the workplace. A Return to work risk assessment can be used to assess and manage the risks that staff will face when returning to work and to demonstrate compliance with the legal obligation to ensure the health and safety of all staff.

 

What about changing employment terms?

Employers may consider changing the terms and conditions of employment (eg to reduce the hours an employee works) with the furloughed employees’ consent.

Once signed, employment contracts can only be changed if both parties agree (ie neither side can change the contract unilaterally). Agreement to change employment terms can be reached at the time of the change or may be given in advance in the employment contract, which may reserve the right for the employer to make certain changes. It is always useful to consult employees over changes to their terms and, in some cases, it will be essential (eg over health and safety arrangements in their workplace).

Even where employers have a contractual right to make the change, it will usually only allow minor or reasonable changes (even if this is not stated). To make changes that have a significant impact on the employee, such as reducing pay, changing hours or changing the place of work (as may be the case when changing an employee’s terms of employment after furlough), clear and specific wording allowing these sorts of changes is needed. 

A Change to employment terms letter should be used to record any changes made to an employment contract. This document can be used to seek (and record) an employee’s agreement to a proposed change to employment terms.

If an employer imposes a change to employment terms without the employee’s agreement, this is likely to be a breach of contract giving the employee a legal claim. In some cases, the change may amount to constructive or (unfair) dismissal.

Read Changing employment terms for more information.

 

What about redundancies?

If employers cannot recall furloughed staff (eg due to a downturn in business), they can consider making staff redundant. Employers need to bear in mind that furloughed staff retain the same redundancy rights as non-furloughed staff – therefore, the same protections against unfair dismissal and discrimination apply.

Redundancy is one of the potentially fair reasons to dismiss an employee. It has a strict legal meaning and only applies where an employer:

  • stops carrying on the business for which a particular employee was employed, either completely or in the place where the employee works; or
  • stops requiring employees or requires fewer employees to carry out work of a particular type, either at all or in the place where the employee works.

If employers decide to make furloughed staff redundant, they need to follow the correct redundancy process. This process varies depending on business size (eg if the business is a small or micro business – a business with between 1 and 50 employees with a turnover below £10 million – or a larger business). However, the redundancy process generally involves:

  • warning all potentially affected staff of the risk of redundancy at an early stage in the process;
  • consulting each affected staff member about their possible redundancy before the final decision;
  • choosing staff for redundancy carefully, fairly and rationally;
  • considering any suitable alternative employment that might be available within your business;
  • giving staff the right to appeal their selection for redundancy; and
  • complying with dismissal basics relating to issues such as notice period and accrued holiday pay.

Staff dismissed on grounds of redundancy after at least two years’ service are entitled to a statutory redundancy payment according to their pay, age and length of service (capped at 20 years). Employers should also bear in mind that any statutory redundancy pay must be calculated using a staff member’s pre-furlough wage.

For more information, read Redundancy and How to make someone redundant in a small business.

 

What other support is available?

While the Coronavirus Job Retention Scheme is coming to an end on 30 September 2021, other types of funding and support continued to be available, including:

More information on the support offered by the Government can be found on the Coronavirus Business Support page.

The Government also has a webtool for checking what loans, tax relief and cash grants your business may be eligible for.

Rebecca Neumann

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