IN A NUTSHELL, THE RESUMPTION OF YOUR ACTIVITY...
What are your plans for adapting your workforce post COVID-19 ? As lock down is easing, how will you resume your economic activity? What will be your needs in the coming months in terms of workforce? Many of you will be forced to take measures to make savings. Part-time furlough, variation of contractual terms and redundancy dismissal are the main tools you may consider in this respect.
You will find below an overview thereof to help make decisions.
The Chancellor announced on 29 May 2020 the changes to the Government’s furlough scheme. All furloughed employees will continue to receive a minimum of 80% pay (up to a max of £2500) until October (from August to October, however, while employees on furlough will continue to get 80% of their salary, who pays for that will change slightly as the amount the State pays will be reduced each month).
In addition, a new flexible furlough scheme has also been introduced and will be effective from 1st July. Employers could opt to return employees on a part-time basis and pay them for the hours worked, and then furlough them for the remainder of their working week.
The furlough scheme will be closed to new entrants on 30th June so, in order to be eligible and have a minimum of 3 weeks on furlough, employees will need to be furloughed by 10th June at the latest.
Varying contractual terms
Reduction in working hours (short time working), reduction of pay for employees requiring them to work the same hours, linking staff contracts to performance of business, etc.: these contractual variations are possible as long as the employee agrees to these (unless there is already a contractual right to impose these changes in the employment contract).
You will need to ensure you explain the rationale, reasons and business cost in detail to minimise employee discontent. If an employee refuses to agree to the proposed change, you will need to consult individually with the employee and attempt to explain the reasons and necessity for the proposed change. If the employee still refuses after additional time and further discussion, you will need to decide on whether to impose the change by dismissal and re-engagement on the new terms or adopt different measures. Dismissals in these circumstances can be fair, so long as there is a clear business necessity for the change and the employer has followed a fair process. Dismissal and re-engagement in this way will trigger collective consultation requirements where 20 or more dismissals are proposed.
Given the unique nature of the situation caused by the pandemic, employers may consider other options (such as the options set out above) first. Many employees may have been personally affected by the pandemic, may not want to return to work until much later, or have childcare issues such as home-schooling or where grandparents or other carers continue to need to shield and therefore employees may be more open to exploring different options. Employers can discuss options such as using unpaid statutory parental leave or granting unpaid sabbaticals. This might enable some employees to remain employed without pay until the situation improves and redundancies may no longer be necessary. The published guidance for employees who have been furloughed states that employees can still be made redundant while on furlough or afterwards. The guidance for employers does not state this expressly but does say that employees’ redundancy rights continue to apply while they are furloughed.
It is important to remember though that the underlying purpose of the Coronavirus Job Retention Scheme is to allow employers to maintain their workforce, so there is some risk that HMRC will question rapid redundancies. The sooner an employer moves to making redundancies after furloughing employees, the greater the likelihood of scrutiny from HMRC later as to whether the employer really intended to make redundancies all along and has just been using the furlough scheme for convenience while carrying out consultation.
Do not leave these conversations until later this year as staff will be less responsive. We are here to assist should you have any questions on these matters.