12th May 2020

Changes to Furlough Scheme: Three Things Employers Will Need to Do

The Chancellor has announced changes to the Coronavirus Job Retention Scheme (CJRS). Currently, employers are reclaiming up to 80% of more than 7 million workers’ wages from the UK Government under the CJRS in the UK. Originally, the CJRS was available until the end of May 2020 before it was extended to the end of June 2020. Whilst the Chancellor had previously warned the CJRS was not “sustainable” and was preparing to “wean” workers and businesses off the CJRS, there was hope that it would be extended for a further period of time.

Announced today:

  • The CJRS will be extended to the end of October 2020 for all sectors and all regions of the UK.
  • Until the end of July 2020 there will be no changes.
  • From August 2020 until October 2020 there will be greater flexibility to support the transition back to work by allowing employers bring furloughed workers back part-time.
  • Companies will be asked to “start sharing” the cost of the CJRS from August 2020.

The devil is always in the detail and while we wait for this to be made available we believe employers will need to start giving some thought to the following three things in light of the changes to the furlough scheme:

  1. Workers must agree to being put on furlough leave. When the CJRS was first introduced, employers sought their workers’ agreement on the basis they would receive 80% of their wages (up to a maximum of £2,500). In return, workers agreed they would waive their entitlement to the remaining 20% (or more) of their wages. If you don’t intend to bring your workers back before the end of October 2020 and there is no change to the rate that your worker will be paid, there’s nothing more you need to do. However, two possible scenarios could change that:
    (a)  Bringing workers back from furlough leave and then wishing to put them back on furlough leave on one or more occasions any time before the end of October 2020. You will likely have to go back through the entire process of getting your workers’ agreement to being on furlough leave again.
    (b)  A drop to the rate you can reclaim from the UK Government and/or a defined contribution the UK Government you are required to pay which you can’t or don’t want to make. Not only would the basis of the agreement reached with furloughed workers have changed, it could place workers and/or your business under huge financial pressure. Workers who now are no longer able to afford to remain on furlough leave may have grounds to withdraw their agreement to furlough leave and you will be faced with decisions about how best to deal with this. Workers able and willing to work are entitled to receive their full pay even if you don’t have work for them to do.
  2. Do you now need to plan to make staff redundant? The extension to the end of July without any changes to the CJRS may give you a little more time to make decisions about potential job losses, but time still needs to be factored in for the individual or collective consultation process. For example, collective consultation can’t begin until a ballot has taken place to elect employee representatives where there is not a recognised trade union and representatives have then received written notification of specific information. Extra time should also be planned into the process to account for any unknowns or surprises.
  3. Can you take advantage of the “greater flexibility” the UK Government will afford you from August 2020? Can you bring furloughed workers back on a part time basis and, if so, how many, which roles, for how long and can you get their agreement to the change to their terms and conditions of employment? Similar to the process of selecting workers for furlough leave, you will need to ensure that you make all decisions fairly and in a non-discriminatory way. You will also need workers’ written agreement, making sure that the terms of employment are clearly documented and conditional on any financial support the UK Government may provide.

As soon as more details become available we will share these and our views with you. In the meantime, if we can help with your forward planning then please get in touch with the Blackadders’ Employment Team.

Donna Reynolds, Partner
Accredited by the Law Society of Scotland as a Specialist in Employment Law & Discrimination Law
Employment Law
Blackadders LLP
@EmpLawyerDonna

www.blackadders.co.uk

 

 

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