Returning To Work From Furlough

Following the publication of the Governments Road Map to Easing Lockdown Restrictions and the publication of the Covid-19 Secure Guidance many of you will now be starting to think about how your business will trade for the foreseeable future.

The Coronavirus Job Retention Scheme will enter its winding down phase on 1 July 2020 so if you remained open but with a reduced workforce and/or with some employees working from home you will now be thinking about increasing the numbers and if you closed completely and furloughed your entire team you will be starting to think about how to safely restart the business and does that mean bringing everyone back at the same time or would a phased return be more appropriate. Giving employees’ confidence that your workplace is safe will be key to a successful return.

Coronavirus Job Retention Scheme Timescales

The UK Government has announced that the Coronavirus Job Retention Scheme will continue in its present form until the end of June 2020. From 1 July the Scheme will begin it’s winding down phase and will eventually close on 31 October 2020. More flexibility will be available to employers as furloughed employees will be able to undertake a phased return to work while remaining furloughed for the balance of the week.

More information can be found here:

To Recall or Not Recall

The primary message for employers continues to be that if an employee can work from home they should continue to do so. If that is not possible then employers must ensure they are providing a safe working environment. This means carrying out a suitable and sufficient risk assessment of all work activities to identify both hazards and the degree of risk, and these will have to be updated regularly. Employers are also legally required to provide employees with specific information about health and safety risks and how they are protected from those risks.

Where you are considering recalling staff there will be a number of employment law and administrative issues that you will need to consider:

Recalling Staff

The HMRC Guidance and Treasury Direction both state that written agreement should be sought with staff who are to be furloughed. Some agreements contain a clause allowing for an immediate recall, but even were this is present a reasonable period of notice should still be provided to enable the employee to plan their return to the workplace. This is particularly important given that many people will have additional childcare or other caring responsibilities, which they will need to make alternative arrangements to manage.

If your furlough agreement did not contain any return to work clause you will need to write to each employee and give them appropriate notice that they are required to return to work.

What criteria will you use to recall staff? Will it be simply business need? Will you consider individual personal circumstances? Remember not to use discriminatory criteria; be fair and inclusive and keep in mind your organisational values and any diversity and inclusion aims.

What if an employee who is not in a vulnerable category refuses to attend work?

The first step would be to discuss with the employee why they are refusing to return, and see if their concerns can be adequately addressed. If reasons are health related – either physical or mental – risk assessments and/or reasonable adjustments may be required. Where relevant, medical input could be sought.

There may be some cases where it appears the employee is failing to follow a reasonable instruction but you should be cautious about taking disciplinary action on that basis in the present climate. The Employment Rights Act 1996 protects employees who are dismissed because, in circumstances of danger which the employee reasonably believed to be serious and imminent and which the employee could not reasonably have been expected to avert, the employee leaves or refuses to return to the workplace. Whistleblowing and discrimination is also a risk as is reputational damage.

See my article How To Manage Employees Who Are Reluctant To Return To Work for more information.

What about employees who cannot return because there is no childcare available?

Schools are attempting to reopen but only to limited year groups and to a very limited number of students at any one time. Therefore an employee who has no alternative childcare should be dealt with sympathetically by employers. While the World is changing, in the majority of cases, the main burden of childcare still falls to women. Placing a requirement to return to work on employees with childcare obligations could result in indirect sex discrimination claims. Communication will be key as will looking at flexible working options. Some parents may be willing to look at unpaid parental leave but for others that will not be financially viable. This is not going to be an easy problem to solve and advice should be sought as reputational damage is a risk.

See my article How To Manage Employees Who Are Reluctant To Return To Work for more information.

Can pay or working hours be changed on return from furlough?

Yes they can if a proper process is followed. The changes can usually be agreed by a process of individual or collective consultation. If you are in this position please get in touch with me for advice before proceeding.

£1k ‘bonus’ For Every Employee Brought Back From Furlough
On 8 July 2020 the Chancellor of the Exchequer, Rishi Sunak, announced during his summer statement that employers will receive a £1,000 “job retention bonus” for every worker they bring back from furlough and continue to employee until January 2021.

For every employee who:

  • has been furloughed at some point during the lifespan of the scheme,
  • remains employed by you between November 2020 and January 2021, and has
  • must have earned at least the Lower Earnings Limit for national insurance (£520 per month) between November and January.

you will receive a bonus of £1,000 bonus from the Government.

What If You Don’t Need To Recall Everyone Immediately?

If you don’t have enough work for everyone immediately then my recommended approach would be to start by exploring who would be willing to come back to work.

  • If too many employees volunteer, you may need to implement a rota system or make selections on an objective basis. If you are implementing a rota system, try to match employees with the same team each time they come into work and split employees into smaller, contained teams if possible.
  • If not enough employees volunteer, you may need to have a mandatory system. Remember that employees with caring responsibilities may be unable to return at all, particularly single parents and those whose partners are key workers so cannot share caring responsibilities. Vulnerable employees, employees who live with vulnerable people, pregnant employees and employees with anxiety or similar health conditions may not want to come back. It will generally be safest if you can avoid calling on these categories of employee and leave them on furlough or other types of leave if possible.

If employees are on furlough, and you are selecting just some of them to come back, remember that employees who are unhappy about being kept on furlough (because, for example, they are on reduced pay) could raise grievances about not being selected. Equally though, where employees on furlough are receiving 100% of their pay, it may be difficult to incentivise those who are returning to work.

When the government furlough scheme ends (currently set for 31 October) you may still not need to bring all your existing workforce back. In this case you have essentially three options:

Extend The Period Of Furlough Without Government Support

If the Coronavirus Job Retention Scheme (CJRS) ends as currently scheduled on 31 October, that may not necessarily fit in with your own business timescale. It may be that you would prefer to keep some staff furloughed for a further period as you implement a phased return to normal working.

If your furlough letter to individual employees did not include a specific end date, then you can continue to keep staff furloughed on the same terms as the Coronavirus Job Retention Scheme, although your business would need to bear the full cost of their 80% payment and other employment costs. It would be sensible to write to employees to explain that you are continuing furlough for them (with an estimate of how long for if you can give it) as many will expect the end of the government scheme to mean a return to more normal working.

If your furlough letter did include an end date or linked furlough to the Coronavirus Job Retention Scheme, you will need to seek further agreement from staff to continue being furloughed. Again, you will bear any employment costs and it would be sensible to give an estimate of how long the further period is likely to be.

If you have an unpaid ‘lay-off’ clause in your contract you will be able to use it provided staff are given correct notice. Remember, however, that unpaid lay-off still requires you to pay minimum guarantee payments for some of the period, and that an unpaid lay-off exceeding 4 weeks in length entitles an employee to consider themselves redundant and claim a redundancy payment from you, so this is only a short-term solution. Seek advice even if you do have such a clause.

Reduce Working Hours

If your business has work for all your staff, but not at the level before restrictions, you may want to consider asking staff to reduce their working hours on a temporary basis. From 1 August the furlough scheme allows for a combination of part time working and part time furlough, in that situation you would pay normal pay for the worked hours and 80% of pay for the furloughed hours.

If you introduce a reduced working week for furloughed employees after 31 October you would need to agree in writing the temporary contractual change. It is legally possible to impose a change but this is a complex and timeconsuming approach which is also likely to destroy any goodwill with employees, so should only be considered as a last resort and following proper advice.

You’ll need to be clear about the reasons for reducing working hours and be prepared to respond to questions from staff. You also may need to consider how you ‘sell’ the idea when furloughed staff have been receiving 80% when not required to work – you may be asking them to do work and receive a smaller amount; and staff who have been working normal hours may feel demotivated at being asked to take home less pay when they have kept the organisation running at a difficult time.

Redundancies

Your business may not be able to continue trading, or you may only have enough business to require significantly fewer staff. In such a situation, the end of the Coronavirus Job Retention Scheme may require you to make redundancies. While you need to follow the correct legal process take any steps you can to support employees through this process. Redundancy will be a crushing blow to many people, at a time when they have been through a very challenging time – be very mindful of how you communicate, continue to support them and treat their health and welfare as a priority.

You must consult with staff, even if there is no option but to make redundancies, before formally giving notice. This should include the reasons why they are being made redundant. Consultation during furlough will be more challenging than usual but it must be done.

Some key points you need to remember are:

  • If you are planning to make 20 or more people redundant (but less than 100 people) you must start collective consultation 30 days before giving notice of the first redundancy. If you want to make this number of redundancies as soon as the Coronavirus Job Retention Scheme ends on 31 October you will need to start consultation no later than 1 October 2020. If you are planning to make 100 or more people redundant then consultation must begin 45 days before giving notice of first redundancy.
  • Pay and other benefits accrue up until their date of termination.
  • Consultation with an employee may not be quite so straightforward during the current pandemic and extreme working practices. Never the less, redundancy still means that the position is no longer viable or sustainable from a cost point of view and the position is redundant, if the position is re-instated too soon your former employee may have a case for unfair dismissal with the burden of proof resting on your shoulders, not on those of your former employee.

Redundant employees are entitled to receive:

  • A redundancy payment based on age, length of service and gross weekly pay, if they have been employed for at least two consecutive years.
  • A notice period, either worked or paid in lieu; the notice period will either be as described in their contract of employment or the statutory period on one week’s notice per year of service to a maximum of 12 weeks.
  • Payment for accrued but unused holiday entitlement.

The redundancy payment and accrued holiday costs will all be paid by your business, the Coronavirus Job Retention Scheme can not be used to claim the costs associated with redundancy payments.

Statutory redundancy pay must be calculated based on an employee’s pre-furlough pay.

Notice Pay

Where notice is served and the employee continues to receive pay as normal through the notice period and leaves at the end of the notice period then this would be regarding as normal pay and would therefore be reimbursed (subject to the usual caps for furlough pay) through the Coronavirus Job Retention Scheme upto 31 October 2020. Therefore if you are considering serving notice it makes sense to complete the consultation and squeeze as much of the notice period in before 31 October 2020 as you can. The pay for the notice period would need to be “topped up” to 100% of the employee’s normal pay but that is still significantly cheaper to you than paying the full amount from 1 November onwards.

Example
Employee A has 12 years continuous service so is entitled to 12 weeks notice. If the contract was to terminate on 31 October 2020 the 12 week notice period would need to start on Monday 10 August 2020. The employee would be furloughed for the period 10 August to 31 October 2020. Pay would be topped up to 100% for the whole period. The claim through the Coronavirus Job Retention Scheme would be for 80% from 10 to 31 August, 70% for the period 1 to 30 September and 60% for the period 1 to 31 October.

Where you serve notice and ask the employee not to work the period and agree to pay them in lieu of notice you would not be eligible to reclaim the costs through the Coronavirus Job Retention Scheme.

Example
Employee B has 12 years continuous service so is entitled to 12 weeks notice. Notice is served on 10 August and the employee is asked to leave immediately. A lump sum payment in lieu of notice is made to the employee. There would be no entitlement to claim reimbursement of notice pay through the Coronavirus Job Retention Scheme.

UPDATE 7 JULY 2020
A new paragraph in the third and most recent Treasury Direction dated 25 June 2020 has caused some confusion and led to newspaper headlines suggesting that the Coronavirus Job Retention Scheme could not be used to finance notice pay. This is not true.

The new paragraph states:-

“2.2 Integral to the purpose of the Coronavirus Job Retention Scheme is that the amounts paid to an employer pursuant to a Coronavirus Job Retention Scheme claim are used by the employer to continue the employment of employees in respect of whom the Coronavirus Job Retention Scheme claim is made whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”

The interpretation reached by some was that the government was proposing to limit furlough claims to employees whose employment the employer intends to continue, not to those whom the employer intends to make redundant. Therefore, furlough pay will not be available to the employer who is planning to make the employee redundant at the end of furlough.

That interpretation would be a U-turn on previous government policy statements that “furlough pay can be used during notice periods”. Rather, all this paragraph is saying is that money claimed under the furlough scheme must be used to continue to pay employees. During a notice period, the employees are continuing to be employed (as opposed to being dismissed without notice). Nothing in the fact they are under notice means that their employment is not continuing during their notice period. So an employer can pay notice using monies reclaimed under the Coronavirus Job Retention Scheme.

A consequence of paragraph 2.2 is that it is now clear beyond dispute that claims cannot be made under the furlough scheme to pay in lieu of notice, or to pay statutory redundancy payments. But that was pretty clear anyway.

HMRC’s telephone helpline have clarified that paragraph 2.2 is not intended to prevent employers claiming furlough pay for employees working their notice.

Holiday Pay

Furloughed employees who are made redundant are entitled to be paid for any accrued but untaken leave (bearing in mind that annual leave continues to accrue during furlough leave). This will be a full cost to the business as it cannot be reclaimed through the Coronavirus Job Retention Scheme. However, if you ask your employees to take some of their outstanding holiday during the notice period that wouldn’t cost you any additional money as you would be “topping up” their pay to 100% of their normal pay anyway and would continue to claim the grant as usual for 80% (or 70% or 60%) subject to the relevant monthly cap.

I can provide step-by-step guidance about when the consultation period should begin and exactly what a redundancy procedure involves. See my Fixed Price HR Project: Provide Support While You Manage a Redundancy Situation

If you have any questions please call me on 0114 360 0626 or simply email me at enquiries@kea-hr.co.uk.

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Returning To Work From Furlough