Redundancy fears as the Furlough Scheme comes to an end

In March 2020, Chancellor Rishi Sunak announced an unprecedented government-sponsored furlough scheme designed to protect jobs during the pandemic. The scheme meant that the UK government would pay the 80% salaries of furloughed workers up to a maximum of £2,500 a month, in a bid to prevent job losses while lockdown restrictions meant that companies across the country couldn’t operate as usual.

As restrictions are lifted, the scheme is set to come to an end on October 31st. Without the government’s furlough pay, many people in the UK worry that businesses will start cutting jobs in the weeks leading up to this date. If companies either aren’t operating at full capacity or aren’t making the same income they were before the pandemic, it’s easy to see why job losses might be the likely outcome.

How has the UK fared so far?

2020 has already taken a toll on the UK’s employment levels. Since March, the number of employers in the UK planning 20 or more redundancies has consistently been at least twice as many as in the same month in 2019. 695,000 UK workers have been cut from the payrolls of UK companies since lockdown hit, and many more could be set to join them once the furlough scheme ends.

Sunak has repeatedly ruled out an extension of the furlough scheme beyond October, but what does this mean for the coming months? The Trades Union Congress general secretary Frances O’Grady thinks government intervention is the only way out, saying: “If the government doesn’t act, we face a tsunami of job losses”, which was backed by governor of the Bank of England Andrew Bailey who suggested some sectors would benefit from further help, having previously backed the decision end the scheme in August.

Does employment law offer any protection from redundancy?

It’s possible to challenge a redundancy with proper legal advice, although if your employer is making you redundant alongside many other employees as part of Covid-19 cuts, it’s unlikely your appeal will be upheld. However, some protections are in place: you are still entitled to the full 45 days redundancy notice, and the government has recently brought in a new law to ensure that furloughed employees receive redundancy payments based on their full salaries, rather than their furloughed salaries.

For help and advice on matters relating to employment law, please get in touch with our employment team today

Employees returning from parental leave continue to be eligible for furlough scheme

Employees returning from statutory maternity and paternity leave in the next few months will remain eligible for furlough through the Coronavirus Job Retention Scheme (CJRS).

Since 10 June, it has no longer been possible to furlough an employee for the first time, with the Government set to introduce part-time furlough from 1 July onwards. To facilitate this, the scheme will only be available to employers that are using the CJRS and employees that have previously been furloughed.

Because workers must complete 21 days of furlough to be eligible for part-time furlough, this means that the cut-off date for employees to be placed on furlough leave was Wednesday 10 June.

However, employees returning from parental leave will be eligible for the CJRS as they return to work, with further details set to be announced by the Government imminently.

The CJRS has helped more than one million employers so far, with more than one quarter of the UK workforce being furloughed.

Rishi Sunak, Chancellor of the Exchequer, said: “When I announced these changes to the furlough scheme last month, I was clear that we wanted to do this in a fair way, that supports people back to work as the country begins to re-open following coronavirus.

“But for parents returning from leave, their circumstances has meant that they are still in need of support, and I’m pleased that they will be able to receive the financial assistance they and their family will need.”

Are employers responsible for commuter safety as people return to work?

Current guidance recommends that anyone who is not able to work from home should return to work within the ‘COVID secure’ guidelines.

As part of this return to work, people are being encouraged to avoid public transport where possible, but for many this may not be possible.

To assist those who commute via public transport the Department for Transport has published guidance. These guidelines include:

  • Take a less busy route
  • People should travel at off-peak times
  • Wait for other passengers to get off before boarding
  • Keep two metres away from other passengers where possible
  • Wash hands for at least 20 seconds after completing a journey

It is mandatory for passengers on all forms of public transport to wear a face covering from 15 June. Fines will be issued to those who refuse to follow this rule and they may be refused travel.

Employers are not legally responsible for any risks associated with an employee’s commute to work, but they do need to be aware of travel arrangements as it may increase the risk of transmission at work.

It is in an employer’s best interest to have a discussion with workers about their return to work and be receptive to concerns they may have about their commute.

Employers are being encouraged to discuss what is possible, and what might not be when taking their circumstances into account.

When bringing people back to the workplace employers should be careful not to discriminate against an employee based on their circumstance or create a situation that could lead to a potential legal dispute.  

Employers face imminent decisions on redundancies

Employers concerned at the prospect of contributing to the cost of furloughed employees’ wages from August now face imminent decisions about whether to begin the redundancy process.

An employer wishing to make 100 or more redundancies from 1 August, when the Coronavirus Job Retention Scheme (CJRS) will cease to cover the cost of National Insurance and pension contributions, has until 15 June to initiate a 45-day consultation.

Meanwhile, employers looking to make between 20 and 99 redundancies must initiate a 30-day consultation, giving them until the start of July.

Additionally, employers may also need to allow for time for employee representatives to be elected, where there is no recognised trade union.

Collective consultation must follow a set structure, which begins with notifying the Redundancy Payments Service (RPS) ahead of the consultation, consulting with trade union or employee representatives, providing information to staff, responding to requests for further information, issuing termination notices and issuing redundancy notices.

For employers looking to make fewer than 20 employees redundant in a 90-day period, there is no statutory consultation period, but some form of consultation is generally recommended in order to mitigate the possibility of disputes arising.

Whistleblowers make almost 2,000 allegations of furlough fraud

Figures show that almost 2,000 allegations of furlough fraud have been made by whistleblowers against employers, with HM Revenue & Customs (HMRC) expected to impose steep penalties on businesses and directors found to have abused the scheme.

Such claims come in several forms, including requiring furloughed employees to work, failing to pass the full value of the grant to the employee and backdating claims to include periods when the employee was, in fact, working.

Draft legislation published by the tax authority indicates that retrospective auditing of the Coronavirus Job Retention Scheme will be rigorous with severe penalties for employers found to be in breach of the rules.

The proposed legislation provides for HMRC to raise Income Tax assessments to recover amounts wrongly claimed from the scheme and to charge penalties in instances of deliberate wrongdoing.

Significantly, the legislation also contains provisions for holding company directors jointly and severally liable for any breaches.

Chancellor unveils changes to furlough scheme

The Chancellor, Rishi Sunak, has announced a series of changes to the Coronavirus Job Retention Scheme (CJRS) from July that will see furloughed employees able to return to work part-time, but with the value of Government support reducing gradually from August.

Meanwhile, the scheme will, in effect, close to employees who have not previously been furloughed from 10 June, before closing completely at the end of October.

A system of ‘flexible furloughing’ will come into effect from 1 July, allowing employers to bring back furloughed employees for any amount of time on any shift pattern, while still able to claim a grant in respect of the time not worked when they otherwise would.

Employers will have to pay employees at their usual rate of pay for any hours they work, while also covering the cost of Employer National Insurance Contributions (NICs) and minimum employer automatic enrolment pension contributions that this pay attracts.

They will need to reach new flexible furlough agreements with any furloughed employees brought back on a part-time basis.

From 1 August, CJRS grants will cease to cover Employer NICs and pension contributions, with this cost passing to employers. The grant will continue to cover 80 per cent of furloughed employee’s usual wages, up to a cap of £2,500 a month.

However, from 1 September, the value of the grant will fall to 70 per cent of a furloughed employee’s usual wages, capped at £2,187.50 a month. Employers will be expected to contribute the remaining 10 per cent plus NICs and pension contributions to reach a combined total payment to the employee of 80 per cent of their usual wages, up to a cap of £2,500 a month.

October will see the value of the Government contribution fall again to 60 per cent, capped at £1,875 a month, with employers expected to contribute 20 per cent of a furloughed employee’s usual wages plus NICs and pension contributions to reach the total of 80 per cent, capped at £2,500 a month.

At the same time, the Chancellor confirmed the closure of the scheme to new entrants from 30 June. After this point, employers will only be able to furlough employees who have been furloughed for three full weeks at any point before 30 June.

This means the last day an employer can furlough an employee for the first time will be Wednesday 10 June.

Furthermore, after 30 June, employers will not be able to claim for more employees in a claim period than the maximum number they have claimed for in any period under the scheme in its current format.

Full details of how the scheme will operate from this point are expected to be announced on 12 June 2020.

The announcement comes against the background of an easing of the lockdown restrictions that have closed down large sections of the economy since late March, with the Government now encouraging certain sectors back to work.

The CJRS was announced by the Chancellor in March and currently allows employers to furlough any employees who were on a PAYE payroll and reported to HM Revenue & Customs (HMRC) through the Real-Time Information (RTI) system by 19 March 2020.

Since then, more than a million employers have collectively claimed £15 billion from the scheme in respect of 8.4 million employees, via the Government’s online portal.

The announcement comes days after the Chancellor issued a new Direction to HMRC, updating the record-keeping requirements of the scheme.

Under these requirements, the written agreement that the furloughed employee will, under the current terms of the scheme, cease all work must be retained until 30 June 2025 and:

  • State the main terms and conditions;
  • Be incorporated either expressly or implicitly in the contract of employment; and
  • Be either made or confirmed in writing.

It is widely expected that HMRC will audit use of the scheme retrospectively over the coming months and years, with potentially hefty penalties for those found to have acted improperly.

What happens if my employees have to self-isolate following contact tracing?

Following the launch of the Government’s contact tracing system, employers should be prepared for the possibility of multiple employees being required to self-isolate if one employee from the workplace tests positive for Coronavirus.

This means it is vital that employers are aware of the arrangements concerning Statutory Sick Pay (SSP) and self-isolation.

Changes to the regulations that were implemented after the outbreak hit the UK mean that self-isolating employees are entitled to SSP from the first day of absence, if they cannot work from home.

Employers can claim a grant to cover the cost of SSP resulting from Coronavirus for up to two weeks per employee.

Where a self-isolating employee does not have symptoms, is otherwise fit to work and can work from home, they should continue to do so on full pay.

Acas launches new guidance on mental health in the workplace during COVID-19

Acas has published new guidance to help businesses manage mental health in the workplace during the current pandemic.

It comes after a new Acas-commissioned YouGov survey found that nearly two out of five employees working from home felt stressed, anxious or experienced mental health difficulties.

To help you manage your team’s wellbeing during this crisis, we have summarised the Acas guidance below.

How can staff manage their mental health?

Whether staff are working from home, returning to the workplace or on furlough, employers have a responsibility to ensure their welfare needs are met.

Staff may be finding it hard to cope and be suffering a decline in mental health and wellbeing due to longer hours, social isolation, childcare responsibilities or work pressure.

Where a staff member has an existing mental health problem it’s important that they talk to their manager about how they’re feeling, so that extra support can be offered.

Staff can improve their mental health by:

  • staying in contact with people
  • creating a daily routine to manage their time
  • keeping active and exercising
  • reflecting on what helps them feel positive and what does not.

Encourage staff to talk to their manager

Acas advises that staff members talk to their manager or employer regularly about their situation and how they are coping. Employers should, in turn, help them to work through any problems.

It is advised that employers discuss with staff what kind of contact they would prefer to ensure it meets the needs of their team, this could include regular calls, video conferencing or even having online social events.

Back to the workplace

Staff returning to a place of work outside their home should discuss any concerns around how health and safety that could affect their mental wellbeing. Managers should take these concerns into consideration and be supportive, wherever possible.

Employer support

Employees should check with their employer what support is available if they have concerns about their mental health.

Employers must remember that they have a ‘duty of care’ to all employees, regardless of where they are working. This means that they must do all they reasonably can to support their staff members’ health, safety and wellbeing.

In some workplaces this may mean offering counselling, often through an Employee Assistance Programme (EAP), appointing a mental health ‘champion’ or working with other organisations to create a mental health support group.

Discrimination

Mental health issues can be considered a disability under the law if all of the following apply:

  • it has a ‘substantial adverse effect’ on the life of an employee
  • it lasts at least 12 months, or is expected to
  • it affects their ability to do their normal day-to-day activities.

This applies even if there are not symptoms all of the time or the symptoms are less severe at some times than at others.

Employers must be careful not to discriminate against a person because of a mental health disability, as it is a protected characteristic. Instead, they should work with employees to make appropriate adjustments to working arrangements for them.