Furlough leave: short term job protection, but what happens after it ends?

Andrew Masters

Partner & Head of Employment

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May 13, 2020

Categories Coronavirus (COVID-19)Employment Law Updates

With ever increasing demand being placed on ministers to clarify England’s ‘lock-down’ exit plan, and yesterday’s announcement to extend the Government’s Job Retention Scheme until the end of October 2020, organisations are now starting to assess the long-term impact of COVID-19 on their workforce. We answer some of the most commonly asked questions by organisations preparing for re-opening of business:

1. What changes to the furlough leave scheme have been announced?

The Coronavirus Job Retention Scheme (CJRS) was due to close at the end of June 2020. Following the evolving epidemic, and the government’s ‘lock-down’ exit plan being announced, it is evident that businesses will re-open in phases over the coming months. To assist employers, the scheme has been extended until the end of October 2020.

The terms of the scheme will remain the same as they currently are until the end of July 2020 – employees who are furloughed cannot carry out any work for their employer, and will receive up to 80% of their salary, subject to the cap of £2,500, from the CJRS.

Although details are to follow, we know that from 1 August 2020, employers will be obliged to share the cost of an individual on furlough leave with the government, but the amount an individual is entitled to receive will not change. The scheme will also be more flexible in order to accommodate individuals returning to work on an initial part-time basis whilst businesses slowly re-open and re-build.

More details are expected by the end of May, and this will make it clear whether there are any further qualifying criteria for continued support, the terms of the continued support, and the amount the employer will be expected to pay.

2. How do I notify our staff that furlough leave will be ending and they are required back at work and what steps should be taken to ensure their safety upon their return?

Some furlough agreements have stipulated how employees will be informed and how much notice will be given. If the agreement does not stipulate how an employee will be notified that they must return to work, we recommend that you give as much notice as possible, in writing. You should not ask staff to return before you have been able to follow the government’s advice in ensuring the workplace is safe to work and carried out a risk assessment. Specific workplace guidance has been issued for different sectors which should be followed by employers. Steps that may need to be taken include staggering start times, changing shift patterns, social distancing and deep cleaning of the premises.

3. Can I make staff redundant who are on furlough leave?

In short, yes you can. Furlough is “subject to all existing employment law”. You must therefore follow the usual procedures and consult with your staff as required. Sufficient time should be allocated to ensure genuine consultation takes place. Given that fully subsidised furlough leave is due to end at the end of July, organisations are starting to think about redundancy consultation procedures now so that they can limit any financial impact. You will need to be able to establish why a redundancy situation has arisen now, and why continued furlough leave is not an option for the company.

4. Can I pay notice pay at 80% and claim it under the CJRS?

Employees cannot contract out of statutory notice. The position therefore appears to be that if notice is served whilst an employee is on furlough leave, and they are entitled to statutory notice only, an employer must top up the furlough leave pay to 100%. If an employee is entitled to more than statutory notice, the wording on the furlough leave agreement will need to be checked to ensure that the change to their terms and conditions is sufficient to encompass notice pay. It may be that an employer also needs to pay notice pay at 100% in these circumstances.

The guidance is silent on whether notice pay can be claimed through the CJRS, and this may therefore be specifically clarified in the guidance at the end of May, but the current view is that employers can claim 80% (subject to the £2,500 cap) under the CJRS.

5. We will be making 20+ redundancies over the next 2-3 months. When must I start the consultation process?

In this situation, you will need to follow the rules on collective consultation. This will depend on the structure of the business and the location of the redundancies. Where you are proposing to dismiss 20-99 employees on the grounds of redundancy at one establishment, you must consult for a minimum of 30 days, and if 100 + job losses are expected, you must consult for a minimum of 45 days before the first dismissal takes effect. The rules on collective consultation are very strict, and the penalties for failing to comply are high. Employees may be awarded up to 90 days gross actual pay in compensation (a “protective award”). Failure to inform the Secretary of State on the proposals is a criminal offence and the employer will be liable for an unlimited fine.

The current situation facing employers is unprecedented as they adjust to the every evolving situation.

If you need assistance on the furlough leave scheme, steps you may need to take prior to staff returning to work, any potential redundancies, or anything else affecting your workforce, please contact a member of Furley Page Employment Team on 01227 763939.