Some relief for employers as the Coronavirus Job Retention Scheme is extended

By rotide
Created 08/06/2020 - 18:16
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March saw millions of businesses across the country shut their premises as coronavirus swept through the UK. With rent and bills to pay, but suffering reduced or no income, these businesses faced a fight for survival. On 20 March the Coronavirus Job Retention Scheme (CJRS) was announced to provide businesses with alternatives to the potentially stark alternatives of mass redundancies or closures. On 12 May the Chancellor announced that the scheme would be extended until October - albeit with some changes on the horizon.

Breathing room in troubled times
Under the CJRS, or ‘furlough' scheme, the government is currently reimbursing businesses for 80% of salary costs for furloughed workers, up to a cap of £2,500 per month per employee. By ‘furloughed', the government refers to employees a firm would otherwise have had to lay off or make redundant due to a lack of work. Under the scheme in its present form, furloughed staff are not permitted to undertake any work for their employer.

The Chancellor's announcement on 12 May has indicated that businesses will be asked to "start sharing" the costs of the scheme from August. It is anticipated they will be granted the ability to bring furloughed workers back part-time and share their salary costs with the government (e.g. employers might pay 20%, with the government topping up the remaining 60%).

Using the CJRS will help companies get back on their feet as soon as possible once lockdown measures are lifted. The extension hopefully means that businesses are less likely to have to resort to other options (e.g. redundancy), or able to do so on a more limited basis, thus allowing them to resume business gradually without the immediate burden of full salary costs and, hopefully, save jobs. Further details of the revised scheme are yet to be published by HMRC at the time of writing.

Redundancies during a national crisis

While the extension is likely to mean more employers will be able to avoid or minimise redundancies, some may find the CJRS unsuitable for their circumstances, or have employees who aren't eligible. Pressures on business may mean that even with using the furlough scheme, some redundancies are still inevitable - something which the current scheme allows. 

To minimise the risks of claims for unfair dismissal or other legal issues with employees, employers should be able to demonstrate that they have first taken appropriate steps to avoid compulsory redundancies. That may, in due course, include consideration of the extent to which the employers made use of the furlough scheme. 

It is also essential that employers follow a fair redundancy process and communicate effectively with affected employees at all stages in order to avoid legal action. The redundancy process will usually include:

Preparing for a post-coronavirus world

With the CJRS extension now confirmed, companies have a grace period in which to take stock and make detailed plans for how they will resume business over the coming months. With 7.5m people currently covered by the scheme, it
won't be an easy task and some employers may find that, despite their best efforts, redundancy remains the only way forward.

In these circumstances, employers will need to begin the consultation process as soon as possible, especially if they will be making more than 100 redundancies. This is because employers are required by law to have a consultation period of at least 45 days if redundancies of over 100 employees are contemplated within 90 days (a 30 day period applies for 20-99 redundancies contemplated within 90 days).

Thus, employers should take care to plan early and carefully for how they wish to organise their businesses effectively and follow their legal obligations in the process of resuming work under the next new normal.

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