The end of the furlough scheme: what’s next for employers?

Some employers may be in the fortunate position of being able to bring their employees back to work on their normal working hours.

In this case, all they will need to do is:

• Speak to their employee to discuss the return-to-work arrangements
• Consult with them on their COVID-secure risk assessment if they will be returning to their workplace for the first time since lockdown
• Ensure they have had sufficient training on new procedures put in place to ensure the workplace is COVID secure
• If they have been fully furloughed for a long period of time, consider refresher training generally to ensure that they are able to transition back smoothly to their role

They will also need to write to the employee, bringing the furlough agreement formally to an end.

Unfortunately for many employers, a return to normal is simply not possible. Below we look at some of the main options available.

If your business does not have sufficient work at present to enable all your employees to return to work but it is anticipated that this situation will improve, lay-off and short-time working (LOST) may be a viable alternative to redundancy.

Short-time working is when you reduce your employee’s hours of work. Lay-off is where you have no work to give them at all for the entire working week. These are only intended to be temporary measures, unlike redundancy where the employment relationship is brought to an end (although many people use the term ‘lay-off’ when in fact they mean redundancy).

In order to be able to use these options, you must have a contractual right to do so. Even if you don’t, given the exceptional circumstances of the pandemic and the fact that this is being used as an option to avoid redundancies, many employees may be prepared to agree to a contract variation allowing you to do this.

While employees are on LOST, they only receive pay for the hours they actually work. If there’s no work available for them for an entire day, and the employee has at least one months’ service, they’re entitled to Statutory Guarantee Pay (currently £30) for the first five workless days in any 13-week period. This is reduced pro-rata for part-time employees. Therefore, if an employee only works three days a week, they would only be entitled to Statutory Guarantee Pay for the first three workless days in a 13-week period.

Although this option has the advantage of not requiring the employer to pay anything towards lost hours of work, there are some disadvantages that should be considered.

Where employees with at least two years' service are completely laid off or put on short-time working to the extent that they receive less than 50% of their normal wages (for either four consecutive weeks or six weeks in a 13-week period), the employee can serve notice of intention to claim a redundancy payment.

The only way to avoid this would be if you can provide the employee with at least 50% of their normal working hours for a continuous period of 13 weeks, starting within four weeks of the date they served their notice of intention to claim redundancy pay. This could be costly for the business if there isn’t an imminent upturn in work and you are not in a financial position to make these redundancy payments.

Perhaps you’ve decided that more permanent changes need to be made to your business but want to look at alternatives to the ultimate step of making redundancies.

One option may be to consider changes to your employees’ terms and conditions. This could involve permanent changes to working hours, pay or benefits. This is a complex area and therefore specific advice should be taken if you want to pursue this option.

However, the key thing to bear in mind is that employees must be consulted on the proposed changes and should consent to the changes. If they don’t consent, there are options for the business to push through the changes - a practice commonly known as ‘fire and rehire’ - but this is a high-risk strategy and can give rise to employment tribunal claims. Therefore, it’s essential that advice is taken before going down this route.

It’s also worth bearing in mind that the collective consultation rules (regarding redundancies of 20 or more roles at a single establishment within a 90-day period) include situations where you are making a significant change to contracts. Again, advice should be taken before consultation begins to ensure you do not leave your business open to the risk of protective awards of up to 90 days’ pay per affected employee.

Some employees may have relished their time on furlough and do not feel ready to return to their normal working pattern. In this situation - or more generally as a measure to try and avoid redundancies - a sabbatical could be offered. A sabbatical does not have a legal meaning; therefore, it is important to ensure that a sabbatical policy is in place which sets out, for example:

• how consideration will be given to who would be offered a sabbatical and its length
• if this would be paid or unpaid
• if the continuity of employment would be preserved etc.

In addition, it is useful to document the specific terms of each sabbatical and advice should be taken when drafting any policy or agreement.

The temporary placement or “secondment” of employees to another employer or to a different part of your business may be another way to avoid redundancies. Those chosen to be seconded should have been fairly selected and the terms of a secondment should be clearly documented - with consideration being given in particular to the length of any secondment, how the employee will be paid and confidentiality provisions. These types of arrangement should be made with the employee’s consent.

Unfortunately, sometimes permanent reductions in your workforce can’t be avoided and it’s necessary to make redundancies. The decision to make job cuts, if genuine, is not likely to be challenged by an employment tribunal and therefore if your employee brings a claim, the key question is likely to be whether you followed a fair process in making them redundant.

The key elements to a fair process will be:

• full and meaningful consultation on the proposal to make redundancies
• a fair means of selection if there is more than one person carrying out this or similar work and
• offering suitable alternative employment where it is available.

An important point to bear in mind in your considerations is timing, as statutory rules on consultation apply where 20 or more roles are being made redundant (or significantly changing) at one establishment within a 90-day period. These include the requirement to consult with elected representatives and minimum periods of consultation (30 days if 20 or more roles and 45 days if 100 or more roles).

As part of the redundancy process, voluntary redundancies could be considered as a way of avoiding compulsory redundancies. This may involve the offer of a more generous redundancy payment to encourage employee uptake, but could result in a longer term saving for business.