Associate solicitor Laura Binnie, in Blandy & Blandy Solicitors’ leading Employment Law team, explains the support available for employers and employees, including the Job Support Scheme, and the new furlough scheme for businesses forced to close due to Coronavirus restrictions.
We are now midway through October, the final month of the Government’s Coronavirus Job Retention (“Furlough”) Scheme, which was introduced in April (with claims backdated to 1 March 2020).
With the Scheme estimated to have cost more than £35bn and 9.4m workers having been furloughed, Chancellor Rishi Sunak recently reiterated that the Scheme will end as planned on 31 October 2020, with other measures being introduced to support both employers and employees.
Since 1 August, there has been a winding down of the Scheme, with employers required to contribute towards furlough pay on a sliding scale. From 1 October 2020, the Government’s contribution reduced to 60%, with employers required to contribute 20% and to also cover NI and pension contributions.
The differing levels and the introduction of ‘part-time furlough’ since July are outlined in our earlier blog article, ‘What is Flexible Furlough?’
With salary costs again increasing, but many organisations still faced with uncertainty, restrictions and reduced demand, employers will undoubtedly be facing some difficult decisions in the coming weeks and months.
The Government has sought to protect what it describes as “viable” jobs, with the introduction of the new Job Support Scheme, as explained in our recent blog article, ‘The Government’s ‘Winter Economy Plan” Explained’.
It will apply between 1 November 2020 and 30 April 2021 in relation to staff who have been employed since at least 23 September 2020. In short, employees will need to work a minimum of 33% of their usual hours (averaged over the first three months of the scheme) for the employer to be eligible for the support. In relation to their ‘non-working’ hours (66%, if they are working the minimum of 33%), this Scheme will see employers and the Government each then paying one third of that 66% balance (of a worker’s usual pay), with the Government’s contribution capped at £697.92 per month. On the above basis, this means that the employer pays a total of 55% and the Government 22% (subject to the cap). The employee will not be paid for the remaining one third of unworked hours (i.e. 22% in this scenario). After three months, the Government will consider whether to increase this minimum short-time working threshold.
On Friday 9 October, the Chancellor announced an expansion of the Job Support Scheme in relation to those businesses that are legally required to shut their premises at some point over the winter, due to Coronavirus restrictions (whether national or local). Employers of affected employees – i.e. those who are off work for a minimum of seven consecutive days due to the closure – will be able to obtain a grant to cover two thirds of the employee’s salary from the Government, up to a maximum of £2,100 per month (with employers needing to cover NICS and pension contributions). Again, this applies between 1 November and 30 April 2021, with a review in January. The aim is to protect jobs and enable businesses to reopen quickly once restrictions are lifted. Cash grants for businesses required to close in local lockdowns will also be increased to up to £3,000 per month.
Announced in July, there is also the Job Retention Bonus, which offers a £1,000 bonus to employers for each furloughed employee they bring back into continuous employment until 31 January 2021.
Despite the above, and further support including through Bounce Back Loans, Coronavirus Business Interruption Loans and VAT reductions for the hospitality and tourism sectors, a recent YouGov survey found that one third of UK employers plan to make workers redundant before the end of the year.
Our specialist Employment Law team is experienced in advising organisations on restructuring and redundancy programmes, as well as other options. If you are an employer and require advice in relation to the above Schemes and/or about the costs, merits or risks of implementing restructuring plans or a redundancy programme within your organisation, please contact us for helpful and strategic Employment Law advice.
What next for employees?
We understand that this autumn represents a worrying and uncertain time for many workers. The Job Support Scheme may well provide help for many although it is yet to be seen how many businesses will take it up. There is no requirement that you were previously furloughed in order to be eligible.
If you are an employee and faced with redundancy, you may find our blog articles, ‘Redundancy FAQs – A Guide for Employees’ and ‘What is a Settlement Agreement and What Should It Contain?’, helpful.
If you are concerned that you have not been treated fairly and lawfully by your employer, you may find our blog article, ‘Unfair Dismissal and/or Unlawful Discrimination – Can I Claim Compensation If I am Dismissed Whilst on, or at the End of, Furlough Leave?’ of interest.