In March 2020, the Government announced the Coronavirus Job Retention Scheme (also known as the furlough scheme) as a means of supporting businesses and their employees during the pandemic. The scheme, which was initially intended to last for three months, ended yesterday (30th September 2021).
It was reported at the end of July that there were still 1.6 million employees on furlough. Commentators have estimated that there were still be at least a million people on furlough at the end of September.
The end of the furlough scheme – what next?
As of the start of this month, employers are no longer be able to claim any subsidy from the Government for their employees. This means they will be fully liable for the salary and other costs for their employees unless they negotiate any new arrangements or decide to make redundancies.
We have seen some employers considering lay off, short-time working, reducing hours and switching to zero-hour contracts as options now the furlough scheme is ending. Under contractual layoff and short time provisions, employers can lawfully provide employees with no or less work for a relatively short period (resulting in no or less pay for that period) without terminating the employment relationship. Agreeing with employees to reduce hours (and therefore pay) perhaps temporarily is another option for employers to consider as an alternative to making redundancies in the hope that trading conditions improve soon. Zero-hours contracts give employers the flexibility to offer work according to business requirements and may be appealing on that basis. They can be unpopular with employees though.
For employers who are inviting employees to return to the workplace or come back full time, they should consider how they re-integrate staff and also think about confidence and mental health issues that may result from extended periods of exclusion from work.
HMRC continue to investigate mistakes and misuse of the furlough scheme in an effort to recoup the suspected £7bn of fraudulent or erroneous payments made.
How Nelsons can help
Laura Kearsley is a Partner in our expert Employment Law team.
Employers who are impacted by the end of furlough are advised to take advice on their options for managing their workforce going forwards and mitigating the risk of claims as well as restoring and maintaining morale at this time.
For advice, please contact Laura or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.