The Coronavirus Jobs Retention Scheme comes to an end
Will the Job Support Scheme help your business?
The Government’s furlough scheme (or the Coronavirus Jobs Retention Scheme to give it its proper title) has been a lifeline for many employers and employees. It has allowed jobs to be retained at little cost to the employer and has bought everybody some time to allow them to get to grips with life during a pandemic.
The scheme is set to end on 31st October 2020 but sadly the pandemic has not gone anywhere so many businesses are still struggling to get back to their pre-March position and some employees may still have valid reasons why they can’t return to work.
Employers are trying to assess what their workforce needs to look like in the short term while we are still subject to social distancing and huge constraints on what we can do.
Across the economy we are seeing sectors that have been hit hard by Covid 19. For many businesses in the arts and entertainments sector that means either not reopening or opening in a limited way. For professional services that may mean having the majority of your workforce working from home or working in the office on a rota basis. Lots of manufacturing businesses have found significant decline in demand for their products. This has resulted in many businesses furloughing employees and with the scheme ending they have to decide their next steps.
Life after furlough: The Job Support Scheme
On 24th September 2020 the Chancellor announced plans for a new scheme that would be commence on 1st November 2020 and run for six months. The Job Support Scheme is aimed at supporting viable jobs in businesses who are facing lower demand over the next few months due to Covid 19.
It works on the basis that employees will be able to fulfil at least 33% of their contractual hours. Employers would pay the employee for the hours worked plus 22% of the hours not worked and the government would also pay 22% of the hours not worked subject to a cap of c£700 per month, resulting in the employee receiving 77% of their salary (subject to the Government cap) while only working 33% of their hours.
The scheme is very much aimed at small to medium sized enterprises so those with less than 250 employees or turning over less than £25 million. Bigger businesses may be able to use the scheme but will have to get over significant hurdles to qualify.
Employers can use this scheme even if they did not use the furlough scheme. The scheme is also designed to work alongside the job retention bonus of £1000 per furloughed employee still employed by the business in January 2021 that employers can claim.
It is important to note that while on the scheme, employees cannot be made redundant. They can be moved on and off the scheme as required but they must be on it for a minimum of seven days at a time.
Job Support Scheme Expansion for Closed Business Premises
On 9th October 2020 the government announced an extension to the support scheme for those business who may be ordered to close as a result of local or national local down measures.
In these circumstances the government has confirmed that they will pay up to 2/3 of the employee’s salaries up to a maximum cap of £2,100 per month. Employers would still be required to cover the employer National Insurance and pension contributions.
I need to reorganise my workforce – where do I start?
For some businesses redundancy will provide the best option to reorganise its workforce to enable it to survive but there may be other options that are suitable depending on the circumstances:
- The Job Support Scheme
This one is a bit of a numbers puzzle. The starting point will be to decide if you are able to provide enough work to employees for them to work 33% of their usual hours. You will also need to think about the number of employees that you have that can perform the same role or have similar skills, is it viable to have two employees working 33% of their hours and you paying them each 55% of their pay or is it more cost effective for you to reduce your workforce and have one employee back on full time hours? The scheme probably requires some projections so you can see the cost of using this scheme versus the other options open to you.
- Continued ‘furlough’/lay off, unpaid leave or sabbatical
The current uncertainty is making it very difficult to plan what your ideal workforce looks like but if you are keen not to lose key staff but there is a specific reason why they can’t currently return to work e.g. your business has been unable to reopen or the employee has a health condition which makes them vulnerable to the virus, then you may want to try and agree some time away from work. Whether this is paid or unpaid will depend on your circumstances and what you agree with the employee. The important thing here is agreement.
- Reduction of hours or pay
You may have full time employees who you currently need for less hours or highly paid staff members who you are struggling to afford at the moment. If these roles are integral to your business then it may be worth discussing with the members of staff short term options such as reducing hours or salary for a fixed period of time. Again, this is only an option if the employee agrees to the change but in the current circumstances you may find employees to be more understanding and willing to support any proposed changes. You will also need to consider whether using the Job Support Scheme would be a better option than agreeing a short term contractual reduction. Factors to consider will include how many hours you require the employee for, their current salary and how long you expect the downturn to last for.
- Change to employee’s terms and conditions – fire and rehire
Some big businesses have hit the press over the Summer with their fire and rehire plans, notably British Gas and British Airways. This process involves terminating contracts of employment and then immediately rehiring employees on different terms. It’s a risky strategy and one that’s likely to bring you some bad press. Our advice would be to seek to negotiate any changes that you propose to contracts of employment with employees or their representatives in the first instance. You may wish to consider other options if agreement is not possible.
If after careful consideration you conclude that the only way forward is to make redundancies then there are some key things to bear in mind.
- How many?
This is a critical question as different procedures and notice periods apply depending on the number of employees that are to be made redundant in any 90-day period. If the requirement is 19 or less then there is no requirement to collectively consult with an employee representative. If the number is 20 or more then collectively consultation is required and there are strict time limits and procedures to follow.
- Do I need to consult at all if I’m making less than 20 redundancies?
You will need to ensure the redundancy process is fair if you want to avoid unfair dismissal claims that could be brought by employees who have 2 years or more continuous service at the date of the dismissal. Consultation is part of a fair redundancy procedure so it is best practice to meet with any affected employees, indeed we would encourage you to have two meetings to discuss with them the reasons for redundancy, the selection process and any alternatives to redundancy. Whilst there is no set statutory time period for redundancies involving this number of employees two weeks is generally thought to be the shortest period of time to allow for meaningful consultation.
- What is the collective consultation process?
The collective consultation process applies where 20 or more employees are being made redundant. The procedure is summarised here https://www.gov.uk/staff-redundant/redundancy-consultations. This is a complicated process and it is easy to get wrong so if you are not strongly familiar with it we recommend you take professional advice before starting a redundancy process. The penalties for getting it wrong can be substantial.
- Are there other things to consider in the current situation?
Normally consultations with affected employees and employee representatives would be face to face. However, with many businesses operating remote working, employees shielding and employees on furlough face to face meetings may not be an option.
If you are planning remote consultations you will need to consider how practical this is. Do all parties have access to the required technology if you are planning to use a video conferencing system? Is it secure? Are there any barriers such as language, ability of the parties to use the technology and restrictions on their time e.g. if they are home-schooling or isolating? Would a disability or other protected characteristic disadvantage an employee in this situation ?
If you are not planning to do face to face consultation meetings or if any of the parties have specifically requested a consultation remotely we urge you to seek advice to ensure the process is fair and meets the requirements set out in the legislation.
Our employment team has been advising a number of businesses throughout the pandemic on their employment law requirements, offering practical, clear advice. If you need our help please get in touch.
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