NOTE: read the new article regarding Extended Furlough Scheme, https://www.hrsolutions-uk.com/extended-furlough-scheme/ which was published on 2nd November 2020.
The Coronavirus Job Retention Scheme ends on 31 October 2020, but with Covid-19 cases rising and local lockdowns in place, what options do employers have once the ‘furlough scheme’ ends? HR Solutions Knowledge Manager, Victoria Templeton, answers some frequently asked questions.
When does the Coronavirus Job Retention Scheme end?
The Coronavirus Job Retention Scheme (CJRS), also known as the ‘furlough scheme’ ends on 31 October 2020, having already been in place for 7 months.
What’s replacing the Coronavirus Job Retention Scheme?
However, as the infection levels rise across the UK and local lockdowns are put in place, the government have introduced new measures that support business and hopefully avoid or delay redundancies:
- The government has introduced the Job Support Scheme, which will start 1 November 2020 and will provide more targeted financial support to those businesses which need it the most in the hope that it keeps businesses operating for longer and avoid or delay redundancies.
- A new local COVID alert level system has been introduced which will categorise areas of the UK into one of three tiers depending on local infection rates. Restrictions will therefore be targeted based on risk level and will mean that those businesses which operate in a high-risk area will be forced to close and as a result receive additional financial support.
What is the Job Support Scheme?
From 1 November 2020 the newly created Job Support Scheme will be in place to support business. It will see the government directly supporting the wages of people in work, giving businesses the option to keep employees in jobs on shorter hours rather than making them redundant:
- The company will continue to pay the employee for time worked
- The cost of hours not worked will be split between the employer, the government (through wage support) and the employee (through a wage reduction)
- The employee must be work at least 33% of their usual hours to qualify
- Government contribution will be capped at £697.92 a month
- In practice, employees will earn a minimum of 77% of their normal wages, where the government contribution has not been capped
- The scheme will open on 1 November 2020 and run for 6 months, until April 2021.
What support is there for businesses in local lockdowns?
Alongside the Job Support Scheme, and directly linked to the new local COVID alert level three tier system, the government will also cover two thirds of an employee’s salary (capped at £2,100 per month) should the business be forced to close as a result of a local lockdown.
In order to receive this financial support, the employee must be off work due to business closure for at least 7 consecutive days. Employers will not be required to contribute towards the wages, although they will be required to cover National Insurance Contribution and pension contributions. The scheme will be in place for six months with a review in January, with claims being made via an online portal from December.
What are your options after 31 October if you do not qualify for the Job Support Scheme?
If your business does not qualify for the Job Support Scheme, other options available to businesses feeling the negative effects of COVID-19 include:
Freezing budgets during a crisis is perhaps one of the first steps to take. Employers should take all obvious options to cut costs before resorting to either redundancies or making fundamental changes to employee’s terms and conditions of employment. As well as putting a freeze on budgets, you could also not backfill vacancies when people leave and put a halt on recruitment.
Finding innovative ways in which to deal with the crisis other than redundancy is essential, and flexible working is one of them. Flexible working can be permanent or temporary and examples can include:
- Part-time hours
- Condensed hours
- Home working
- Term time working
- Job share
- 9-day fortnight
- Split shifts or hours.
Reducing pay or hours
If redundancies are a real possibility, a more serious option is to consult with your employees about either temporary or permanent pay cuts or reduced hours. This would be a fundamental change to the employment contract and so a full and thorough consultation process would be required, and you would need consent to make the change.
It may seem an impossible option since you are asking employees to take a cut in pay, however, given the current climate, people are likely to prefer pay cuts than being made redundant or the possibility of the business closing.
Extending furlough without HMRC grant
Furlough was introduced in the CJRS specifically to allow employers to make use of government funds which contributed towards staff wages. However, furlough could always be extended without the government contribution to wages.
Employers will have set out the terms of the agreement at the outset relevant to the leave of absence and/or any part time work arrangements under the flexible furlough scheme. So, to continue with an employee being on furlough leave without government support, employers would need new written agreements and follow all the legal processes and consultations.
How do you make someone redundant?
If you are in the difficult position of making redundancies, then these are the key steps that underpin a legally fair process:
- Make a sound business case, based on a genuine redundancy situation including a clear plan as to how the proposed structure needs to operate moving forward
- Identify which jobs are no longer required, whether there needs to be a selection pool and if so, what the provisional selection criteria is going to be
- Determine whether you need to elect representatives, based on the number of roles that will be at risk of redundancy
- Notify the Department for Business, Energy, and Industrial Strategy if you propose to make 20 or more dismissals
- Design a project plan that determines each step starting from the announcement through to terminating the employment contracts
- Make the announcement to all staff, ensuring those out of the office either long term (maternity, long term sick) as well as short term (holiday, short term sickness) are also briefed
- Consult, taking in to account the legal requirements based on number of proposed dismissals
- Seek alternative employment as part of the redundancy consultation process – redundancy must always be the last course of action
- Carry out dismissal meetings once consultation has closed
- Offer support to those who have been confirmed redundant, through outplacement support, which includes support on writing CVs, interview skills, reasonable time out of the workplace to attend interviews
- Allow for payment in lieu of notice, where the contract allows, or require the employee to work their notice.
How do you calculate redundancy pay for furloughed staff?
In July, the government brought in new laws to ensure that furloughed employees would receive statutory redundancy pay based on their normal salary rather than their furlough salary.
Statutory redundancy pay is:
- Half a week’s pay for each full year worked, under the age of 22
- One week’s pay for each full year worked, between the ages of 22 and 40
- One and a half weeks’ pay for each full year worked the age of 41 and over.
To calculate statutory redundancy pay, a week’s pay is set each April by the government and the current rate is £538. Employees need to have two years’ service with the company to qualify, and the length of service considered is capped at 20 years.
Should employers be encouraging staff to return to the office?
Given the increasing infection levels, the latest government advice is to work from home if you can. However, if this is not possible, then a return to work can take place but only once a risk assessment has been carried out and measures put in place to make the working environment COVID-secure.
For more guidance articles relating to the pandemic visit the HR Solutions’ ‘Coronavirus Advice and Guidance for Employers’ section.
HR Solutions are here to provide you with support and advice on any employment-related issues. Find out more by calling us on 0844 324 5840 or contact us online.