May 2020 – Planning Redundancies & The Furlough Scheme
Employment Update for Small Businesses
As lock down and furlough are now fully embedded, I am afraid I am turning my thoughts this month to redundancy, as many employers have already started planning for a reduced workforce once the restrictions start to ease and business can resume. I also have a small update on the Job Retention Scheme with regards to holiday whilst on furlough.
Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.
Please forward this email to any of your contacts who might find it of benefit.
The Coronavirus Job Retention Scheme (CJRS) is due to end on 30th June, and employers will no longer be able to claim any pay for furloughed staff beyond that point (unless there is a further extension). It is likely to be important to many of you, therefore, to be able to make some staff redundant at that point.
The redundancy procedure is actually not too complex, but it does require some careful planning, and you should start that well ahead of any notices being served. If you would like the termination date for staff to coincide with 30th June, you need to work back from that date – how much notice are they entitled to? If one month, you will need to serve notice on 30th May if you want to be able to claim under the CJRS for their notice pay. You will need to plan in at least two weeks’ consultation with staff before that date and thing about the logistics of that (i.e. consultation by phone or video conference is likely to be best).
Before starting consultation you will need to have put together a business case for the redundancies, identified the relevant pools of employees from whom selection for redundancy will be made, and considered what selection criteria to use – that all takes time. So now is the time to start planning.
It seems clear from the guidance that an employee participating in redundancy consultation or acting as a representative for collective consultation purposes, will not be deeded to be working in breach of the furlough rules, so it will be fine to consult during the furlough period.
We will be able to support you with all of this, but please bear in mind that we are likely to become very busy again as we head into this next phase, so our offer of free support has now been withdrawn.
A good starting point would be to read our guide and Q&As on redundancy which you will find here.
Coronavirus Job Retention Scheme
Holiday Whilst on Furlough
There is still a lot of confusion about the issue of staff taking holiday (or being made to take holiday) whilst on furlough. The Employer Guidance is still silent on the matter, but the Employee Guidance does state that holiday can be taken and should be paid as full pay, but ominously the holiday section ends with this sentence: “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review”. My concern still is that you may block out periods of holiday, claim back 80% of that period and then subsequently find that the rules are changed. I think that is unlikely to happen, but it can’t be ruled out.
You may wish to refer back to my earlier guidance on the risk averse approach to holiday.
National Minimum and Living Wage Rates
From 1st April 2020, the National Living Wage and National Minimum Wage rates increased as follows:
to £8.72 per hour (from £8.21) for workers aged 25 and over
to £8.20 per hour (from £7.70) for workers aged 21 to 24
to £6.45 per hour (from £6.15) for workers aged 18 to 20
to £4.55 per hour (from £4.35) for workers aged 16 and 17
to £4.15 per hour (from £3.90) for apprentices under 19 and those over 19 in their first year*
*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.