Furlough & Redundancies

Many employers have used the Government Coronavirus Job Retention Scheme (CJRS) to furlough their employees as an alternative to making redundancies.

The CJRS is a scheme, backdated to 1st March 2020, introduced to assist employers with retaining and paying their employees during the coronavirus pandemic. At the time of the CJRS being introduced it was confirmed that this would run for three months, but is has subsequently been extended, with some changes until 31st October 2020 (see our update).

The CJRS will continue in its current format until the end of July 2020. After that date, employees on furlough will continue to receive 80% of salary but employers will be required to start contributing under the scheme as follows:

  • From 1st August 2020, the Government will continue paying 80% of salary up to a monthly cap of £2,500, but employers will have to pay employer’s National Insurance contributions and pension contributions and will no longer be able to reclaim those amounts via the CJRS;
  • From 1st September 2020, the Government will pay 70% of salary up to a monthly cap of £2,187.50, with employers being required to top up salary to 80% up to a cap of £2,500 and pay employer’s National Insurance contributions and pension contributions;
  • From 1st October 2020, the Government will pay 60% of salary up to a monthly cap of £1,875, with employers being required to top up salary to 80% up to a cap of £2,500 and pay employer’s National Insurance contributions and pension contributions.

Faced with uncertain trading times for many businesses and partial financial responsibility for all employees from 1st August, many employers will need to review their workforce and requirements to consider whether current levels of staffing are sustainable.

Collective consultation

As per our previous blog, if an employer intends to make more than 20 people redundant, this triggers collective consultation requirements including minimum consultation periods during which redundancy dismissals cannot take effect.

Why does this matter?

The consultation period for employers who anticipate making 100 or more people redundant is 45 days and for those anticipating making between 20 and 99 redundancies is 30 days.

For employers who are concerned about the changes in the furlough scheme, they need to think carefully about whether they want to commence redundancy consultation so that they are in a position to make redundancies before the Government funding reduces, rather than waiting until that point to start consultation and being faced with employment costs during the consultation period.

Redundancy procedure

As well as complying with the requirements of collective consultation (which include liaising with recognised trade unions or elected employee representatives), employers that are making any number of employees with over two years’ continuous service redundant will need to adhere to minimum requirements in terms of consultation and meetings, this could be challenging in the coronavirus lockdown.

Furlough RedundanciesHow Nelsons can help

Laura Kearsley is a Partner in our expert Employment Law team.

For further information on the CJRS, furlough leave, redundancies or any related subjects, please contact Laura or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.

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