Coronavirus Job Retention Scheme – the end of the furlough scheme in the UK
With the Coronavirus Job Retention Scheme coming to an end on 30 September 2021, responsibility for staff salary costs will rest solely with employers once more and the UK Government will no longer make financial contributions towards the pay of employees on furlough.
For some businesses, this financial support has enabled them to weather the COVID-19 storm and, once the furlough scheme ends, all staff will be able to return to the workplace. For others, this will unfortunately not be the case and, as the end of the furlough scheme fast approaches, businesses need to urgently consider their options in relation to their workforce.
Fundamentally, businesses have three main options:
- Bring back employees on their original agreed terms and conditions
- Bring back employees on amended terms and conditions
- Consider redundancies.
Returning to work on original terms
Employers who anticipate a return to strong trading conditions and are bringing all furloughed employees back to work on their original terms of employment (including original hours and pay) will need to communicate with staff about the practicalities of their return and any changes or measures that may have been introduced (for example in terms of any COVID-related policies and procedures).
Returning on new terms and conditions
Employers who anticipate reduced trading conditions, and subsequently do not need a full-time commitment from staff in the immediate term, may consider bringing employees back to work on revised terms such as reduced hours.
As is usual practice for making changes to the terms and conditions of employment, employers should seek to agree the changes with the employee, explaining the rationale behind the proposal to encourage employee engagement and agreement.
If an agreement cannot be reached, employers might still be in a position to make changes within the terms of the existing contract, or more controversially, through termination and offers of reengagement. Either course of action presents risk and advice should be sought before such measures are undertaken.
Where an employer is faced with closing a workplace or has the need for fewer staff, they may consider making staff redundant. The same rules of fairness apply to employees whether in the workplace or on furlough. There must therefore be a genuine redundancy situation and a fair procedure followed in order to avoid claims of unfair dismissal (generally speaking, for employees with over two years’ continuous service). Minimum consultation periods also apply where an employer is proposing to dismiss 20 or more employees. So, for employers who fall into this category but have not yet started the redundancy consultation process, consultation will continue beyond the end of the furlough scheme.
Redundancy payments should be calculated on the employee’s pre-furlough pay in any event.
Bringing employees back from furlough is a new process for many which will present unique challenges for each business. Employers should therefore consider their options carefully, taking into account their short term and long term needs, and with financial recovery as the priority. Businesses are advised to seek legal advice, in particular, before changing terms and conditions of employment or commencing a redundancy or ‘fire and re-hire’ process.
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