Furlough ending – what next?

posted by KeithDaniel

Selena Baker, Senior Associate at Berry Smith Lawyers, considers the Coronavirus Job Retention Scheme as it draws to a close on 30th September 2021.

The Coronavirus Job Retention Scheme (CJRS /FURLOUGH) has now entered its final month as it draws to a close on 30th September 2021. Except for any last-minute unexpected announcements, there are no plans for the government to extend the CJRS further. Latest available figures show that at the end of June 2021, 28% of employers were still using CJRS with nearly 2 million employees still on furlough.

Practically, now is the time to start considering your workforce requirements post furlough including changes to employees’ conditions of employment, internal restructures and/or redundancies.

Collective Consultation

If you are considering dovetailing the phasing out of the furlough scheme with a redundancy exercise, thought needs to be given to consultation requirements and the impact they may have on redundancies taking effect where minimum consultation periods apply.

If an employer is proposing to make 20 or more employees redundant at one establishment within 90 days, legal requirements in respect of collective consultation will apply and therefore consultation will also be required with trade union or employee representatives. The secretary of state will also need to be informed.

An employer will need consult no less than:

  • 30 days before the first dismissal if there are 20-99 proposed redundancies, and
  • 45 days before the first dismissal if there are 100 or more proposed redundancies.

If employee representatives need to be elected, this will need to be completed before the consultation period mentioned above commences. Therefore, employers will need to factor this into the time-frame for the redundancy process and consider how the election process will be managed where any employees remain on furlough.

The legislation surrounding collective consultation is burdensome on employers and a failure to comply with the legal requirements could mean a potential claim for unfair dismissal as well as each employee potentially being awarded a “protective award” of up to 90 days’ pay (gross) for each affected employee. It should also be noted that the employee does not need two years’ service to qualify for a protective award.

Individual or small-scale redundancies (19 employees or less)

I have summarised some key steps in respect of following a fair redundancy process:

The process

1 - Establish whether there is a genuine redundancy situation - The first consideration is always going to be to establish whether there is a genuine redundancy situation.  Once the business case has been established, employers should then turn their minds to the process they are going to follow.  The process is where the majority of employers land themselves in unfair dismissal territory. 

2 - Decide upon the pool for selection - Where there is a need for reduction of employees doing the same, similar or interchangeable work, the employer is required to ‘pool’ those employees and select those to be made redundant by using fair and objective selection criteria. The starting point is usually to consider which particular kind of work is ceasing or diminishing and which employees perform that kind of work. Where the role is unique or “stand-alone”, there is no requirement to pool with other staff (indeed it’s impractical to do so) and therefore no selection criteria come into play.

3 - Carry out a consultation process - Where there is a pooling situation, the consultation process should consist of an initial group meeting to set out the proposals and selection criteria, and a subsequent group meeting to enable employees to challenge the proposals or comment on the pools and selection criteria.  Once the scoring exercise is complete, we would then move to individual consultation meetings with the employees with the lowest scores to consult on the scores, suggest alternatives to redundancy and explore alternative vacancies. Where the role to be made redundant is a standalone role the individual should be allowed to challenge the redundancy proposals or their selection for redundancy. If the proposals are confirmed, then the emphasis shifts to exploring alternative employment. 

4 - Explore alternative employment - Employers should consider suitable alternative employment and failure to do so is likely to render any resulting dismissal unfair.

5 - Decision and Appeal  -  Once the consultation process has ended, the decision to dismiss (if appropriate) should be communicated in writing with the option to appeal the decision along with details of the appeal process. In terms of notice of termination, since December 2020, employers have not been able to claim a grant under the CJRS for the period for which employees are serving notice. Employers must therefore fund any payments in respect of the notice period / any payments in lieu of notice.

6 - Calculating notice payments / redundancy payments - Calculating notice payments is not straight forward. Furloughed employees who are only entitled to statutory notice are entitled to have their notice pay calculated on their pre-furlough pay. However, employees who have a contractual notice period which is at least a week more than the statutory minimum may only be entitled to notice pay at their furlough rate. This will depend on the terms of the contract of employment and furlough agreement. In our experience many employers are choosing to nevertheless make notice payments at the full rate of pay. In terms of redundancy payments, statutory redundancy payments must be calculated using an employee’s pre-furlough wage and CJRS grants cannot be used to fund redundancy payments. The cap of £544 per week still applies. Statutory redundancy payments are payable to all employees with at least two years’ service.

Varying an employee’s terms and conditions

If you are seeking to amend an employee’s contract of employment it is always best to fully consult and seek consent. We strongly advise you seek legal advice when considering changing an employee’s contract of employment as this can be a complex area of law, particularly if the employee does not provide consent to the variations and/or collective consultation applies.

Conclusion

We strongly encourage employers to imminently consider what their workforce might look like following the end of subsidised furlough and a return to more normal working patterns. If you do need any support in terms of considering a variation of contract, restructure or redundancies then please contact us at 02920 345 511 or employment@berrysmith.com.

To assist employers also, we are offering:

  • Template hybrid working policy to employers for a fixed fee of £250 plus VAT.
  • Post-COVID Check-ups for employers at a reduced fixed fee £250 plus VAT (for a limited time). As part of this package we would carry out a review of your template employment contracts, staff handbook or any employment-related GDPR, homeworking, or IT policies that you have in place to ensure that they are up to date and comply with best practice. If you would like to take advantage of this offer, or would like some further information, please contact us on 029 2034 5511 or at employment@berrysmith.com.

Selena Baker - Senior Associate at Berry Smith Lawyers, is a specialist employment and HR lawyer and advises businesses on a wide range of employment and HR issues.