What Employers Should Consider Now Furlough Has Ended
On 30th September 2021, the Coronavirus Job Retention Scheme (CJRS) came to an end. The scheme, more popularly known as furlough, had enabled millions of employees to avoid redundancy when their employers were forced to close back in March 2020 due to the COVID-19 pandemic.
Although the government has said it is looking into other job support schemes, it is unlikely they will be on the same scale, or to the same extent as furlough, which is believed to have cost the taxpayer somewhere in the region of £70 billion.
It is safe to say, therefore, that employers who had workers on furlough before the end of September 2021 are now thinking about what to do without the government support for those jobs; despite the economy continuing to normalise, many businesses are still in a parlous state and therefore may be unable to accommodate the wholesale return to work of their entire workforce.
Decisions will be taken in the coming weeks by many employers on the course of action they will have to take. However, it is important to remember that employment law has not been suspended and employers will still need to comply with legal requirements if they are planning to carry out redundancies, changes in employees’ contracts and agreeing a reduction in employees’ hours. Each possible scenario is addressed in more detail below.
If employers decide that they want to bring formerly furloughed employees back into their posts, they need to consider the terms under which this will happen. Normally, this will mean the terms that have been agreed under the employment contract.
However, those terms may have been drafted and agreed during more halcyon days before the COVID-19 pandemic and its associated disruption. The new “normal” may be less forgiving on such terms, and employers may find that they need to revisit their contracts of employment. If they do so, they need to remember that there are rules surrounding contractual changes, and that, if those rules are breached, the employer may find themselves facing a tribunal claim.
The rules say that an employer can make a change, otherwise known as a variation, to a contract of employment if there is an existing flexibility clause which allows them to make that change, if the employee agrees to the change being made (although they must be consulted and have the implications of the change explained to them), or if their representatives (either elected by the employees or a recognised trade union) agree to the change.
As a last resort, if agreement can’t be obtained, the employer can force a new contract on employees, although this is a legal minefield and should be handled with expert advice and guidance to hand.
Alternatives to redundancy
Generally speaking, redundancy is a wasteful option – losing employees with years of experience can leave a business badly prepared for future events and that is in addition to the cost of redundancy payments, the time that the employer will spend following the statutory process, and the cost of recruitment if the financial situation improves. Therefore, many employers will look to alternative courses of action in order to avoid it.
So, what are these alternatives?
Unpaid leave, otherwise known as lay-offs;
Short-time working or reduced hours; and/or
Temporary or permanent pay cuts - but it is important to remember that whatever payment is agreed should not be below the National Minimum Wage.
Whatever the employer decides, they will need to get the employee’s written consent unless the current employment contract allows them to make the changes in question.
Should the employer reluctantly decide that they are unable to take back all the employees who were on furlough, then their employment will need to be terminated. In this event, normal redundancy rules apply and employers would need to ensure a fair process is followed. Not doing so at any point could result in a tribunal claim for unfair dismissal.
That process includes identifying the correct pool for selection, the criteria to be used, lawful selection criteria, the process of consultation, offers of alternative work, redundancy pay, time off to look for other work and the right of appeal.
Employers should bear in mind that the furlough agreements need to be retained for five years. This includes a written record of how many hours the person worked, and how many hours they were on furlough. This information may well be needed by either employer or employee when redundancy pay is being calculated.