Beyond Furlough – 4 Important Considerations
This week (28th May 2020), UK Chancellor Rishi Sunak is expected to announce the government’s planned changes to the Coronavirus Job Retention Scheme – one significant change being that of employers making contributions to the scheme’s continuance.
Under the furlough scheme, employees receive 80% of their pay, up to £2,500 a month, with employers fully compensated for pay, employer national insurance contributions and pension contributions. To date, there are approximately 8.4 million workers in the UK on furlough.
1 August 2020 marks the inclusion of part-time furloughing, but also a time where, going forward, companies may have to pay 20% of furloughed workers’ wages, plus National Insurance contributions. The government wants employers to take a proactive approach over whether they can retain their workforce post-Covid 19, or whether they need to make redundancies.
Although it is hard to forecast the future, not knowing how and when businesses can or will reopen, now is the time to make what may be some tough considerations for your company:
- Are you in a financial position to make the contributions from 1 August? If so, will you top up to 100% of their salary, or the 80%? You may need to obtain employee consent over any changes, on the basis of their contract of employment.
- If taking advantage of the part-time furlough option, will you be in violation of your employee’s contractual rights by changing their working hours, particularly if they are not currently paid 100% of their salary?
- Will you need to move to alternative premises in order to continue work in a manner that supports social distancing and other health guidelines? If so, how will this affect employees’ contractual clauses that govern place of work and mobility?
For some organisations, these changes may be challenging, and the discussion moves to how many employees can be retained.
- To allow for a minimum consultation process period (30 days for 20 to 99 redundancies, and 45 days for 100 or more redundancies), employers must consider the dates of 16 June 2020 and 2 July 2020 (45 days and 30 days, respectively, prior to the start of the ‘contribution’ stage on 1 August 2020), and 15 September 2020 and 1 October 2020 (45 days and 30 days, respectively, prior to the end of the Coronavirus Job Retention Scheme on 31 October 2020). If you are making fewer than 20 employees redundant, there is no statutory set consultation period.
Details from the government are being published frequently, so it can be difficult for employers to make solid plans, but these considerations, though difficult, should be prioritised, wherever Covid-19 takes us.
Consensus HR has been operating for almost 12 years. It was founded by Matthew Pinto-Chilcott in 2008, who himself has accumulated over 20 years of Human Resources experience with advanced qualifications in Employment Law & Human Resources.
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