director business furlough

We now know that the Coronavirus Job Retention Scheme (CJRS) will come to an end on 31 October 2020.

Our article on the new Jobs Support Scheme refers to what will happen from 1 November, but in the meantime businesses still need to be aware of the rules up until 31 October. Our Key Questions Answered article still contains the nuts and bolts about how the furlough scheme operates during the Coronavirus pandemic.

The key development back in May was the announcement of the extension to the Scheme and in relation to flexibility. The Scheme remained in its then form until the end of June 2020, and the last date for furloughing a new person was 10 June 2020. From July, employers were given more flexibility to bring their furloughed employees back to work part-time whilst still receiving support from the scheme.

This runs for three months from August through to the end of October, when the Scheme ends. During this three months, employers are paying a percentage towards the salaries of their furloughed staff. The employer payments substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month. More specific details can be found here.

We have been advising many businesses on how to un-furlough (is that even the right word?) and shape their business for the future.

Here are the six most commonly asked questions:

What do I need to consider when I want to bring someone back from furlough?

There is no formal guidance on this so on the face of it, it seems as easy as telling staff to return. Before you do so you should however consider:

  • Do you have a sound business case to un-furlough?
  • Has the person been on furlough for the minimum period of 3 weeks between 1 March and 30 June 2020 (21 calendar days)?
  • If you are not bringing all employees in a team back, you will need to ensure that you use a fair selection process as the Government has flagged that equality and discrimination laws would apply in the usual way;
  • You should carry out an appropriate risk assessment to ensure that you can comply with the health and safety requirements around Coronavirus;
  • Consider whether rather than bringing the person off furlough in full, you bring them back on flexible furlough (from anytime after 1 July). This may be helpful if you are unsure whether you do have enough work for them to return to;
  • Speak to the employee to discuss your plans and explain why the decision has been made, when you would want them to return and reassure them of the measures you have take to keep them safe, including any PPE to be provided; and
  • Issue a letter to the employee to confirm when the employee’s furlough will end, that their pay will return to 100% (assuming you do not intend to maintain lower rates of pay post-furlough – see below; or are bringing them back on flexible furlough – see above) and the practical arrangements for their return.

What if my employee refuses to return from furlough?

If the employee refuses to return then you should listen to their reasons and see if there is a way to alleviate any concerns, for example can you offer more PPE or agree to a temporary change of hours to fit around childcare.

If following discussions an agreement to return is not reached then you could suggest placing the employee on a period of unpaid leave or asking them if they want to use their holiday. Ultimately you can issue a reasonable management instruction for the employee to return to work and if the employee does not comply then you could discipline them and they may not be entitled to be paid. There are however difficulties with this approach:

  • If the employee is refusing to return to work on the grounds of health and safety then they could argue that they reasonably believed there to be a danger which was serious and imminent. If you dismissed them for refusing to return to work in these circumstances then the employee may succeed with a claim for automatically unfair dismissal (an employee does not need two years’ service to bring this type of claim);
  • The reasons might revolve around childcare, in which case they might be entitled to unpaid leave and to discipline someone for exercising their statutory rights to leave could again lead to unfair dismissal claims. It might also pose indirect discrimination issues. The position around childcare remains unclear, particularly given the Prime Minister’s suggestion that employers should be “sympathetic” to workers who do not have access to childcare (although the reopening of schools has alleviated some of these issues);
  • The reasons might be based on shielding an employee themselves who is identified as medically vulnerable or is living in a household with such a person. (The Government is advising that people do not need to shield at the moment. However, there is specific guidance on what will happen if there is a local lockdown in an area, and of course advice to shield could return if cases rise again). Disciplinary action for not returning to work on these grounds could potentially lead to unfair dismissal claims and on the basis of disability discrimination; and
  • You need to consider any potential reputational damage which could harm relationships both internally with employees and externally.

In light of the above issues if an employee is refusing to return to work we recommend that you seek advice based on the specific facts of their refusal, as we can then provide tailored advice factoring your needs and balancing up the risks.

Can I un-furlough someone and ask them to work but on reduced hours and pay?

The simple answer is yes, you can ask them and this is fairly simple if they agree. They may do so on a temporary basis while this crisis is continuing. If they don’t, then you would need to consider whether you would want to start a re-organisation to force through a more permanent change. This can be daunting but provided your reasons are sound and you follow a proper process this is perfectly possible.

Details of the support we can provide to you in this situation can be found here.

To soften the blow for employees, you may instead prefer from 1 July to instead flexibly furlough them. This allows them to do some work for you (which you pay them in full for), but they are maintained at 80% / £2500 per month for the rest of the time. For further details see our article here.

I may need to make redundancies in the future. Can I make someone who has been furloughed redundant, even though the Scheme is continuing?

There is no provision in the Coronavirus Job Retention Scheme rules that prevents this. Many businesses are starting to consider it as they realise that it is unlikely that some of those furloughed will ever be needed in the business again.

(Note however that under the Jobs Support Scheme (JSS) there is going to be an important difference from the CJRS. In the CJRS, it has been possible for employees to be on notice and for their wages to be claimed through the CJRS. This is not going to be permitted under the JSS – employees cannot be made redundant or put on notice of redundancy during a period when their employer is making a claim for them under the JSS.)

A question is being asked in employment law circles: ‘will it be unfair dismissal if an employer makes someone redundant rather than keeping them on furlough’? This has arisen since the ‘spirit’ of the Scheme was to preserve jobs and as a Tribunal can look at all factors when considering fairness.

Currently we have no legal guidance on this. It helps if there are structural reasons behind the redundancies (e.g. predicted ongoing downturn in orders, closure of sites) that exist now and will persist after the Scheme ends. The financial position of the business is also likely to be relevant – so if you could not afford to keep the employee on furlough that would be important – although the extra cost to employers of keeping people on furlough is relatively low. You should certainly consider this before starting a redundancy process and deal with any questions around ‘why not just keep me on furlough’ carefully. In addition, you should now weigh up the financial position of the business in context of the options available under the JSS, before making redundancy decisions.

It is very important with redundancies that you get the process right to avoid claims. Details of the support we can offer with restructuring and redundancies is here.

Can I consult with my employees on our works council/staff forum even though they are furloughed?

Yes. This may be helpful and legally necessary depending on the proposed changes.

I know I need to follow the Government rules for social distancing and hygiene, but what other legal issues are there around my staff returning to work after the lockdown?

This is a big topic – so please see our article on Returning to Work after lockdown here.