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Preparing for the End of Furlough

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The CJRS, or furlough scheme, is now scheduled to run until 30th September 2021. The scheme was previously due to end in October 2020 and then April 2021, but has been extended in light of the continued challenges of the pandemic and the mandatory closure of businesses in many sectors of the economy, including leisure, non-essential retail and hospitality.

With the end of the furlough scheme approaching, and with lockdown restrictions ease, UK employers are planning for a return to the workplace for staff who have been placed on furlough.

The options for ending furlough are generally to either bring the employees back into work, whether on the same or different terms, or letting them go through redundancy.

Timing will be a key concern for employers when ending furlough, to ensure there is sufficient work for the employee, while ensuring health and safety considerations have been addressed for the return to work plan.

Importantly, there will also be a number of legal obligations on employers when dealing with the end of furlough.

You will need to ensure the correct amount of notice is given to returning employees. If any changes are being sought to the employment terms, these will need to be managed and implemented correctly within the employment documentation. If redundancy is the only option, a fair dismissal process has to be followed. If the employer mismanages any aspect of these changes, they risk tribunal claims.

 

Increase in employer contributions 

July, August and September will see a wind-down period of the scheme. During this time, furloughed employees will continue to be eligible to be paid up to 80% of their usual wage for hours not worked, up to a maximum of £2,500 per month, although the level of government contribution towards this 80% will decrease as employers’ contribution increases.

From 1 July 2021, 70% of furloughed workers’ wages will be covered by the government under the CJRS, capped at £2,187.50 each month, with the employer paying 10%, ie; up to £312.50.

From 1 August to 30 September 2021, 60% of wages will be covered under the CJRS, capped at £1,875, with the employer having to pay 20%, ie; up to £625.

 

When should employers end furlough?

In making any decisions to end furlough, employers will need to take into account a number of different considerations, including:

  • which specific roles and skills are needed in the workplace once lockdown has been lifted
  • whether all furloughed staff will be needed back at the same time
  • whether any staff might be kept on furlough because they’re temporarily unable to work, for example, if they’re caring for someone at home or because they’re shielding.

 

When deciding on a suitable timeframe for bringing furlough to an end, employers will also need to factor in the continuing level of financial assistance provided by the government under the Coronavirus Job Retention Scheme (CJRS) and when this assistance will cease.

 

Workforce options after furlough 

The CJRS has helped to cover the wages of millions of people who may otherwise have lost their jobs during the pandemic. However, despite the financial assistance that has been provided by the UK government, many businesses have still been forced to make drastic cuts.

Even for those businesses who have so far managed to survive the economic crisis, further loss of jobs may still be inevitable, especially with the level of government support tapering down. However, as an alternative to forced redundancies, there may be other options available to employers when bringing furlough to an end, such as reduced hours, redeployment or voluntary redundancy. We look at each of these workforce options in turn.

 

Reduced hours

Once your business is allowed to fully re-open, you may be in a position to take all your staff off furlough and allow them to return to work full-time. However, where cost-cutting measures are still required to ensure the survival of your business, temporarily placing staff on part-time hours, or what’s known as flexible furlough, is one possible option.

Under the extended CJRS, flexible furlough continues to be a viable option. This means that staff can work part-time, with their employer paying only for the hours they’re needed, while continuing to receive a furlough grant for unworked hours calculated by reference to their usual hours worked in any claim period. You can agree any working arrangement using flexible furlough, and this can also change from week to week.

Alternatively, it’s also possible to rotate staff between full furlough and work, or to bring some staff back permanently while others stay on furlough until things pick up. However, when making any decisions about who returns to work and who stays on furlough, you must ensure that you do so in a non-discriminatory way, otherwise risk exposing yourself to a claim for unlawful discrimination before the employment tribunal.

Further, in any scenario where some form of flexible furlough or extension of furlough is to be used, even in the short-term, you will need a written agreement with each affected member of staff, covering the hours or days they will be both working and furloughed.

 

Redeployment

When the furlough scheme closes at the end of September 2021, the hope is that all furloughed staff will be able to return to work full-time. However, if your trading conditions have not improved sufficiently for you to bring all of your workforce back, you may need to consider how you can restructure your business so as to minimise any redundancies.

One way of achieving this is by redeploying members of staff from one role into another. The new role does not necessarily have to be similar to the original one and can involve different duties, locations, or seniority levels, although generally speaking you must have the agreement of each individual affected by any changes so as to avoid any legal risks.

Through agreement, employers can also implement a variety of other new working arrangements, including reduced hours for the same pay or the same hours with reduced pay. However, the general contractual principle is that change can only be effective where:

  • there’s contractual provision which permits a change to be made
  • the employee agrees to the proposed change
  • the employee’s representatives agree to the proposed change, for example, a trade union.

 

If a proposed change is clearly covered by a flexibility clause within the individual’s contract of employment, for example, to their hours worked, their rates of pay or the employee’s place of work, you can usually introduce the change. However, the extent to which any changes can be made, what notice must be given to effect such change and what procedure must be followed, will depend on the precise wording of the clause. For example, if the flexibility clause says the employee can be asked to work anywhere in the UK, you could change their place of work, although a reasonable period of notice should still be given to allow the employee to relocate.

Even where a change is covered by a flexibility clause, it’s still important for employers to consult with their employees before implementing any change. In this way, you can pre-empt any potential issues, and find a way forward that works for both your business and your staff.

In the absence of any flexibility clause covering the proposed change, the employer and employee, or employee representatives, would usually need to agree to the change before it can go ahead. If changes cannot be agreed, the employer might still be able to force a change by dismissing and rehiring their staff.

However, re-engaging employees under a new contract should only be used as a last resort where the changes are absolutely necessary, and only after consulting the employee and following a fair dismissal procedure. If an employer decides to dismiss and rehire 20 or more employees, this will also trigger the collective consultation rules.

 

Voluntary redundancy

If after the furlough scheme has come to an end your business is yet to return to pre-pandemic levels of profitability, and redeployment or other contractual changes are out of the question, you may be forced to consider reducing your head count by way of redundancies.

In some cases, compulsory redundancy may be unavoidable, although employers should always consider the option of canvassing across their workforce for voluntary redundancies, even if this requires the offer of a more generous redundancy package to encourage uptake. The cost of voluntary redundancies could equate to much greater savings in the long-term.

It’s important to bear in mind that even with a forced redundancy situation, furloughed employees continue to enjoy the same redundancy rights as any other employee. For an employee who has worked for you for 2 or more years, they will be entitled to at least the statutory minimum redundancy pay, up to a maximum of £16,320 (if made redundant on or after 6 April 2021). They will also be entitled to a minimum notice period of up to 12 weeks.

When calculating statutory redundancy or statutory notice pay for furloughed staff, you must use the employee’s full normal pay, not their reduced furlough rate. Further, as from 1 December 2020, a CJRS grant cannot be claimed for an employee during any notice period, nor can the scheme be used to substitute redundancy payments.

 

How to bring furlough to an end in your company

To end furlough for staff that are returning to work, employers should give notice in writing. There’s no prescribed minimum notice period for ending furlough, unless the issue of notice has been previously agreed as part of any furlough agreement.

Absent any agreement as to how to bring furlough to an end, employers should still discuss with their staff about any plans to end furlough, encouraging individuals to raise any concerns or problems linked to their return and agreeing a convenient return date.

Further, even with the introduction of the government vaccination programme, many staff will have reservations about their health and safety in the workplace. As such, at the heart of any plans to end furlough should be a commitment to support flexible and remote-working where at all possible or, where working from home is not possible, facilitating a return to work in line with COVID-secure workplace guidance.

This means that employers must consider detailed risk management approaches to safeguard employees’ health and minimise the risk of infection, based on up-to-date government and public health guidance. This should include the introduction of strict hygiene measures, such as regular hand-washing and sanitising. If your premises have been closed during lockdown, you should also consider carrying out a deep-clean before reopening.

 

What should an end of furlough letter include?

There is no set format for notifying a member of staff about the end of furlough. However, any letter should contain a clear statement that the furlough agreement is being brought to an end and the impact of this, for example, that they will be required to return to the workplace on a specific date, or that they will be required to start working from home as of that date.

In cases where a member of staff is required to return to the workplace, you should take care to describe the measures that have been implemented in the workplace to protect their health and safety, for example, the introduction of hand-sanitising stations and regular deep cleans.

It’s also important to clearly set out how any return to work, whether in person or remotely, will impact that individual’s wages, for example, that they will resume work on their pre-furlough rate of pay, together with some clarification of their annual leave entitlement.

Finally, you should thank the individual for their co-operation during these difficult times and provide a point of contact with whom any queries or concerns about their return to work can be raised. Maintaining good relations can be key to a smooth transition back to work, so it’s vital that you keep the lines of communication open with all furloughed staff.

 

Need assistance?

DavidsonMorris’ employment lawyers can help with all aspects of workforce management, including adapting to the challenges of the COVID pandemic on employment terms and employee engagement. Working closely with our specialists in HR, we deliver comprehensive advice on the options open to you as an employer and provide practical support through any process to vary contractual terms or to draft new employment documentation adjusted to post-pandemic conditions and requirements. For help and advice with a specific issue, speak to our experts.

 

End of furlough FAQs

Can employees on furlough take holiday?

Yes, employees are allowed to use their entitlement to annual leave during the furlough period without impacting their furlough status. They must request permission from their employer for time off in the usual way.

What does it mean by being put on furlough due to COVID-19?

If an employee has a reduced amount of work for an employee due to COVID, they can furlough the employee and claim under the Coronavirus Job Retention Scheme to pay a proportion of the employee's wages while they are not working.

 

Last updated: 21 June 2021

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