What to do about Furlough?

So, the Coronavirus Job Retention Scheme, as it is officially known, or Furlough, to use the more common parlance, is coming to an end on the 31st October 2020.

Unless the Chancellor extends the scheme, which he has been asked to do, but has refused to consider, then it finishes on the 31st October 2020.

What does this mean in practice for the coming months?

In August 2020, as an employer, you must now start to pay the Employers National Insurance contribution for each employee as well as paying their pension contribution.

In September, you must do the above, plus top up the Furlough payment by 10% of the wages cost, as the government will only cover 70% of the cost and you must make this up to 80%.

From the 1st of October, you must top up theFurlough payment by 20% of the wages cost, as the government will only cover 60% of the cost and you must make this up to 80%.

These changes are mandatory and there is no choice about this, irrespective of if the employee is working or not, and irrespective of it your business is open or not.

So, if you can’t afford this or have an issue with this, what can you do?

Furlough ceases no matter what come the 1st of November 2020 and you as a business owner, are back to covering everything for employee costs, their entire wages (100%), their pension (at least 5%) and employers NI (12.9%).

You can look at redundancy, but this is not a simple choice.

If you attempt to make 20 or more employees redundant (and it doesn’t matter if they are full time, part time or even zero hour employees, they all count) at the same time (and remember the key total is 20 employees, they don’t all have to be employed at the same site) then you must enter into an official period of consultation with them, which is typically 90 days and involves consultation with the affected employees, either via a trade union official or an “elected” representative.

At present (23rd August 2020) there are not 90 days left prior to the end of the Furlough period.

If it is less than 20 employees (even over multiple sites) there is no formal consultation required.

You are still best advised to follow the ACAS Code of Conduct in dismissals however.

As a business owner (which is why we are posting this advice) you can use the existing period of Furlough to pay notice required if you are making staff redundant. This must be paid at 100% of their pre Furlough wages. If they are part time or zero hours, the rules changed in April 2020, and it must be their previous 52 week rolling average wages that you use to calculate this.

You can never use Furlough wages to pay redundancy, that should be clear and is a complete no no.

If you want or need any further advice, based on your own company, please contact us for advice.

We excel at providing up to date, practical and commercially focused and led no nonsense HR and Employment Law advice which is relevant and bespoked to each client’s own situation.