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Looking post-CJRS

Redundancy during furlough

The Government have confirmed that employers can carry out consultation processes and make employees redundant whilst they are furloughed under the CJRS. If an employee is made redundant, they will still be entitled to a statutory redundancy payment and this must be calculated using their pre-furlough wages and not the reduced furlough amount. Additionally, employers cannot use money from the furlough scheme to subsidise redundancy packages. Employers are however able to use the CJRS to subsidise the costs of notice pay (which must be paid at the employee’s normal rate of pay, not the reduced furlough amount) and in order to do so, employees will need to remain on furlough throughout their notice period.  Funding from the CJRS is not recoverable if the employee is paid in lieu of their notice period.

Government incentives

To encourage employers to retain employees once the CJRS has ended,  the Government has announced that it will pay businesses a bonus of £1,000.00 for every furloughed employee that remains in employment until the end of January 2021. These employees must be paid an average of at least £520.00 per month between November 2020 and January 2021 in order for the employer to be eligible for the bonus.

In addition, until the end of January 2021, any firm that hires a new apprentice aged 16 – 24 will receive funding of £2,000.00 and those that hire new apprentices aged 25 and over will be paid £1,500.00. Such payments will be made to employers in  2 equal instalments: 50% after the apprentice completes 90 days of their apprenticeship and the remaining 50% after 365 days. To be eligible for the full payment, the apprenticeship must last for at least one year. Employers can only apply for this payment for new apprentices who started with them between 1st August 2020 and 31st January 2021.

Returning to work

Many businesses are facing challenges when bringing employees back into the workplace. For some businesses, the end of the furlough scheme will trigger the need to identify ways to reduce costs or to reduce the workforce/hours that the employees work. It is therefore important that employers implement the correct process in order to achieve their outcome, so as to limit the risk of claims arising.

Where there is a need for employers to reduce the number of hours that employees work, this will usually amount to a change in their terms and conditions. As such, employers will be required to consult with employees and obtain their consent to a variation of terms. If an employee does not agree to the variation of terms, employers will need to consider whether there are any other options available, such as termination and re-engagement on new terms, that will enable them to achieve their desired outcome. Note that employers must ensure that they are consulting on a collective basis where a variation of terms could trigger 20 or more dismissals in a 90-day period. A failure to do so will expose the business to protective award claims of up to 90 days gross pay per affected employee.

Unfortunately, many businesses may have no other option but to make redundancies. Employers must be alive to the fact that there is a specific process that must be implemented so as to ensure that a dismissal by reason of redundancy is fair and reasonable in the circumstances. Where an employer fails to implement a fair process, they are at risk of unfair dismissal claim and/ or potential discrimination claims depending on the circumstances, As such, it is important to ensure that you are aware of your obligations before starting the process, seeking advice as appropriate.

If you require further guidance in relation to redundancy or varying terms and conditions, please contact a member of the Employment Team.