What Happens When The Furlough Scheme Ends?
The Five Rs
The Coronavirus Job Retention Scheme (CJRS) was introduced in March by the Government to enable organisations to keep staff on payroll and not make them redundant but send them home. It served two purposes – ensuring people stayed at home at the height of the Covid-19 pandemic, whilst enabling people to keep their jobs. As it is fundamental to the employment relationship that the employer provides work and the employee undertakes work in order to avoid a breach of contact, the furlough period could only be put in place with the employee’s express agreement. “Furlough”, prior to March was not a term that had ever been used in relation to employment contracts/relationships.
Employers are now contributing to the scheme but with the Government still contributing 70%. In October employers will be contributing 20%. The Chancellor has made it clear there will be no further extensions to the scheme. It will end on 31st October.
So, what happens to the millions of people on furlough on 1st November:-
RETURN TO WORK – the ideal would be that the staff member returns to their job and full pay. There is no specified notice period that should be given to an employee that they are required to return, unless something specific was agreed at the start of the furlough leave.
REDUCTION IN HOURS/PAY – this can only happen if the staff member agrees to this. An employer cannot force a reduction in hours or pay. Some employees may be willing to agree to this to avoid losing their job.
REDUNDANCY – if the employer has become insolvent then there will be a redundancy situation. If the employer cannot afford to pay redundancy then the Government National Insurance Fund scheme may be able to assist employees. Employees will only be eligible for statutory redundancy pay if they have at least two years continuous employment. Redundancy pay should be calculated in accordance with the employee’s full pay, not any reduced pay whilst on furlough. If the employer no longer has a need, or has a reduced need for employees of a particular kind, this will fulfil one of the statutory definitions of redundancy. How the employer consults and selects those identified for redundancy will determine whether a dismissal for redundancy is fair in accordance with the Employment Rights Act 1996.
REMAIN AT HOME – the employer could discuss with staff the idea of working from home to assist with social distancing in the workplace. An employee cannot be forced to work from home if their contract of employment provides for a different place of work.
REFUSE TO RETURN – if an employee refuses to come back to work the employer will need to address the reason for the refusal and possibly address any concerns that mean the employee will not/cannot return, including if they are vulnerable and have worries about Covid-19 transmission.
If the employee is not invited back to work and/or is kept on reduced pay then this is likely to amount to breach of contract and potentially a constructive unfair dismissal.
Time is running out. If a genuine redundancy situation arises then the employer must still give notice that the employment is ending for this reason. The contract may dictate the notice period, but statutory minimum notice periods will apply in that one week’s notice for each complete year of service must be given, up to a maximum of 12 weeks.
If an organisation plans to make more than 20 staff redundant there must be a minimum consultation period before any notice of termination is given of at least 30 days.
It is going to be a difficult time for employees and employers so we are here to give the legal advice to guide you through it.
Contact Jennifer Carpenter, solicitor and partner with 20 plus years of providing employment law advice and representation to employees and employers.
