The furlough scheme ends soon. Is your business ready?
With the end of the Government’s furlough scheme fast approaching, it’s important that businesses are prepared for the change.
The Government’s Coronavirus Job Retention Scheme (CJRS) has been a lifeline for both employers and their employees during the COVID-19 pandemic.
It gave employers the chance to claim back up to 80 per cent of their employees’ wages for any time they couldn’t work due to the restrictions. The scheme supported furloughed employees up to a maximum of £2,500 per month.
Over the last few months, that percentage has been reducing. In July, the Government contribution to a furloughed employee’s wages reduced to 70 per cent. From September 30 2021, employers will need to once again pay 100 per cent of their employees’ wages.
So, with furlough coming to an end, is your business ready?
It’s time to form a plan.
Many businesses will be in a position where they are still struggling financially as a result of the pandemic.
If you haven’t yet formed a plan for the return of some or all of your furloughed employees, you need to do so now. This plan should include:
- Identifying what work is actually available for any returning employees to do.
- Giving adequate notice to those employees who are returning.
- Managing any health and safety considerations around their return to work.
- Identifying any potential changes to employment terms, and making sure all your employee documentation is up to date. If changes to employment terms are needed, these will need to be agreed by the employees or their recognised trade union. If no agreement is reached, a careful process of termination and re-engagement on new terms will need to be followed. Legal advice should always be sought before starting that process, as it may give rise to potential Tribunal claims if not done in the right way.
Consistent, open communication is key.
It’s likely that when you originally set up your furlough arrangements with your team, you agreed to a specific notice period for letting them know when they would need to return to work.
So, talk to your employees as early as possible. If there is insufficient work for them, remember to consider all the potential options before enforcing compulsory redundancy. Can you change their hours or is there another role they can do? Might they be interested in taking voluntary redundancy or a pay cut instead? Consider options to avoid redundancy and see whether agreement can be reached with your employees. Remember that if you have non-furloughed employees doing the same or similar roles, this is likely to involve discussion with them about alternatives to redundancy too.
And if redundancy is inevitable, make sure that you follow a fair dismissal process. Remember that this needs to include identifying pools for selection, applying objective selection procedure and consultation. Avoid jumping to the conclusion that only those furloughed employees should be ‘at risk’ of redundancy and included within the selection pools. If there are non-furloughed employees in the same or similar roles (or in roles which require inter-changeable skills), they will also need to be included in the selection pools and a fair selection procedure applied to all.
Take this opportunity to plan ahead.
Finally, use this period of transition to think more about the short and long term sustainability of your current business model.
Government support for your business is winding down and will soon disappear completely. Planning your future cash flow in this new environment is vital.
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This article must not be construed as legal advice. All cases are different on their facts and you should consult with us directly on your case.