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As furlough comes to an end, what are the key challenges for employers?

With the end of the Coronavirus Job Retention Scheme (CJRS) coming into view, the truth is that this development is just one of the many challenges facing employers in the next few months. Here, Nick Wilson, partner in our Employment team takes a look at some of the biggest issues that will arise for many businesses and employers.

  1. Employers should be aware of CJRS winding down, as of 1 September 2020, when they are required to contribute 10% of the 80% furlough pay with the Government picking up the tab for the remaining 70%. Businesses are already paying employer’s pension and NI contributions for furloughed employees but now they will really have to dig deep into, very possibly depleted, reserves to cover part of their furlough pay. And it doesn’t stop there, as from 1 October 2020, employers will be required to cover 20% of furlough pay, with the Government subsiding the remaining 60%.
  2. The CJRS ends on 31 October 2020 leaving employers with sole responsibility for covering their workers’ contractual pay. That said, the Government is developing something of a reputation for making u-turns when it comes to Covid-19 policy. As the end of the CJRS draws near, will the Government follow the lead of other nations and extend the scheme into next year? It’s impossible to say at this time but it’s certainly a question that will be front of mind for employers.
  3. With hundreds of thousands of redundancies made already due to the impact of the pandemic on businesses, it is estimated that there are many more to come. If they have not already done so, employers should start considering whether they need to make redundancies and when. Timing can be crucial here. A fair redundancy procedure requires sufficient time for meaningful consultation with ‘at risk’ employees to take place. This means weeks rather than days. Short or non-existent consultation is evidence that a subsequent dismissal is unfair or, in specific cases, will lead to a failure to comply with requirements on collective consultation. Perhaps more pressing is the fact that furlough pay can be used to cover notice pay. For those employees with long notice periods, this leaves employers with only two months to subsidise notice pay with furlough pay. Remember, furlough pay cannot be used towards redundancy pay or pay in lieu of notice either.
  4. It has been reported that HMRC are investigating thousands of fraudulent claims for furlough grants by employers. Common issues are employees continuing to work but their employer still claiming furlough grants. This has led HMRC to introduce measures whereby employers can ‘correct’ claims if they have been overpaid under the CJRS. Those measures involve a 90-day reporting window where employees can confess overpayments that they have not yet repaid. Additionally, employers can declare overpayments, which are then offset against future applications for furlough grants. So, it really is time for businesses to get their houses in order and also a good opportunity to make sure that those all-important furlough and flexible furlough agreements are in place with copies retained.
  5. The threat of being quarantined upon returning to the UK does not appear to be a strong enough deterrent for people leaving the UK in search of sunnier climes. With a growing number of popular holiday destinations appearing on the ‘quarantine list’, employers will need to consider how they deal with workers who must quarantine because they went to a non-exempt country and possibly those who travelled anyway, knowing that they would not be able to attend work when they got back to the UK.

The employment team at Andrew Jackson is on hand to help with a wide range of matters including dealing with redundancies and reducing the risk of unfair dismissal claims.

If you are looking for specialist advice for your business, or you could benefit from a no obligation chat with any member of our dedicated team, please contact us by calling 01482 325242 or email Nick directly on: nick.wilson@andrewjackson.co.uk

Correct as of 3pm 28.08.2020

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