Flexible Furlough and Your Business

from Silk Helix
Photograph of Jenefer Livings, Founder of Silk Helix Ltd
UPDATED 12 January 2021
First Published: 2 June 2020
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On 29th May plans to wind down the furlough scheme were announced by chancellor Rishi Sunak. The plan was to close the scheme completely by the end of October. The pandemic has changed course considerably since then and furlough was reinstated at 80% paid by the government on the 1st November. At the time of writing this has been extended to the end of April with a review planned in January, however with a national lockdown including school closures planned until at least February half term, it seems immediate changes to the scheme are unlikely.

Whilst the scheme is in place to protect jobs and will continue to be available in some form until at least April, there will come a time when the scheme is withdrawn again. Now is the the time to start planning the next steps for your business.

Crucially - furlough can no longer be claimed during any periods of notice. Therefore any redundancies that are planned must be planned taking into account the cost of notice periods.

Changes in Working Hours

A change or reduction in working hours is likely to be a change to terms and conditions of employment, whether temporary or permanent. This will require consultation and agreement from employees.

Consider both the immediate period whilst the furlough scheme is still available and what may happen beyond that.

Redundancies

Whilst the aim of the furlough scheme has been about job retention the unfortunate reality is that for many businesses redundancies will be unavoidable.

Redundancy is a dismissal with notice. Many people have a contractual notice of one month. Even without a contractual notice period, the statutory notice period is 1 week for up to 2 years service and then 1 week for each year of service up to a maximum of 12 weeks after 12 years. As a result many of your employees may have 4 or more weeks notice.

A reduction in work or closure are both reasons for dismissing someone by reason of redundancy, which is a fair reason for dismissal. However, in order for that dismissal to be deemed fair, a fair procedure must be followed.

A fair procedure requires that employees are warned that redundancy is possible. This should be happening at the early stages of the business becoming aware that this may happen. Even with the furlough scheme, if it is likely that redundancies will still be necessary once the scheme ends then this should be communicated to employees.

Once this has been communicated, employees should be consulted and a fair selection criteria and process used. Where a selection pool is required because you are only making some rather than all redundant then you should consult with employees on the method of selection. The consultation should also consider whether there are alternatives to redundancy.

If you will be making less than 20 redundancies then individual consultation is required. There is no statutory minimum length for this, though the process must be fair as described above. When over 20 redundancy dismissals may occur then collective consultation is required, over a period of 30 days for 20-99 redundancies and 45 days for 100 or more redundancy dismissals. Specific advice should be taken when considering any redundancies to ensure the appropriate consultation is undertaken.

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While this guide covers the basics, every situation has its own complexities so you should always seek professional advice. We can help, so call us on 01245 910 500.
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Article last updated: 12 January 2021

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