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What will employers face when furlough finishes?

The latest data from HMRC shows that as at 30th June 2021, there were 1.9 million staff on furlough (Source: HMRC, Coronavirus (COVID-19) statistics; ONS, Labour market overview, UK: June 2021.) Although more people will have returned to work, come 30th September, when furlough is due to be phased out, it is likely that significant numbers of people will still be affected.

The Job Support Scheme (the replacement for the furlough scheme) was postponed back in November 2020 because of the extension of the furlough scheme at that time. The government has since announced that a new retention incentive scheme alternative would be introduced but there have been no announcements about this as yet.

The reality of the situation for employers when furlough ends is that they will have to decide whether to bring their employees back into work, whether on the same or different terms, or make them redundant. For many businesses, they will not have the work to sustain pre-furlough staff levels so redundancies may be the only option. If so a fair redundancy process must be followed. This includes genuine and meaningful consultation with staff, on a collective as well as an individual basis where there are significant numbers of employees affected.

Employers are also urged to consider alternatives to compulsory redundancies, including reducing hours, redeployment and voluntary redundancy. Employees with at least 2 years’ service have protection from unfair dismissal (including unfair redundancy process/selection), and will be entitled to Statutory Redundancy Pay, in addition to notice and unpaid accrued holiday.

Changing terms and conditions may also be an option – reducing pay, reducing hours etc. Generally speaking , even if there is a general right to amend contractual terms, pay cuts cannot be forced through unilaterally by employers, and employee consent is needed to avoid legal claims for breach, or unlawful deduction from wages or constructive dismissal. That said, staff may be willing to accept reduced pay/hours rather than no pay/hours at all.

Exploring all possible alternatives to redundancy has previously been highlighted in a joint statement from ACAS, CBI, and TUC in relation to preparing for redundancy. Further, they’re calling on all employers to get the process right by following five principles – all in line with an ethical redundancy approach.

  1. Do it openly

There are rules for collective redundancies (those involving 20 or more staff), but whatever the scale, the sooner people understand the situation, the better for everyone.

  1. Do it thoroughly

To understand what’s happening, people need information and guidance. Staff representatives should be trained in how it all works.

  1. Do it genuinely

Consultation means hearing people’s views before decisions are made, and being open to alternatives from individuals and/or unions.

  1. Do it fairly

All aspects of redundancy procedure should be conducted fairly and without any form of discrimination.

  1. Do it with dignity

Losing your job has a human as well as a business cost. Businesses should think about how they will best handle the conversation.

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