Ending Furlough & Lockdown: FAQs for employers

As details of the plans on easing lockdown and the future of the Coronavirus Job Retention Scheme start to be published, the following FAQs look at the main issues for employers. 

Contents

Ending furlough: the options
Health and safety
Notice of termination
Redundancy
Annual leave

How long is the Scheme going to last?

The Coronavirus Job Retention Scheme ('the Scheme) opened on 20 April 2020. It was set up to reimburse a proportion of 'furloughed' employees' wages i.e. employees on a leave of absence who are kept on your payroll. See Furlough: Coronavirus Job Retention Scheme for FAQs on eligibility and the terms of the Scheme.

The Scheme was originally in place for four months, from 1 March 2020 until 30 June 2020. However, it was announced on 12 May 2020 that it would be extended until 31 October 2020 across all sectors and regions. Employees will continue to receive 80% of salary (up to £2,500 per month) while furloughed - but a new taper requiring employers to contribute to furloughed salaries will be brought in from August. From the start of July furloughed employees will be able to return to work part-time with employers claiming under the Scheme for their normal hours not worked. For more information see Furlough: Coronavirus Job Retention Scheme and the government fact-sheet.

How do we end a period of furlough?

Neither the HMRC Guidance nor the Treasury Direction provide a mechanism for ending furlough. Therefore, if you want to end a period of furlough leave and bring an employee back to work, look at the terms of the furlough agreement you have with your employees. For example, our template letter provides that furlough leave will end on the earliest of the following events:

  • the date the government ends the Scheme;
  • the employee or the employer ceasing to be eligible for funding under the Scheme; or
  • the employer notifying the employee of a decision to end furlough leave.

The notification of a decision to end furlough leave should clarify which terms and conditions of employment will apply; highlight the health and safety issues arising from returning to work (including whether any reasonable adjustments are required for disabled employees); and make it clear that you are reserving the right to put the employee back on furlough at some point (unless you are ending furlough at the same time as the Scheme is closing).

There is no minimum period of notice required to end furlough (unless it was agreed as part of the furlough agreement), although you would be expected to give reasonable notice of the change: contact us to discuss this.

See our template notification of end of furlough letter.

How do we choose which employees to take off furlough?

You might end furlough for all your employees at the same time. However, you may wish to end furlough for just a section of your workforce - particularly as the social distancing guidelines are likely to restrict the number of individuals who will be able to attend the workplace at one time. In this case, identify which areas of the business you need people back at work in first.

You might initially want to ask for volunteers from this group. If you do, reserve the right to refuse applications; and ensure that the reason for any refusal is fair and documented.

If you then need to move to a selection process, follow a fair and transparent exercise. Select returners using objective criteria such as skills / experience, based on the needs of the business at that time. The usual protection against discrimination will apply. Contact us to discuss what a fair process might look like.

It is a good idea to engage with employees about selection at an early stage of the process so that you are made aware about any individual concerns about returning to work. Despite the financial advantage in returning to work it is likely that some employees will be more reluctant than others to come back e.g. because they are living with someone who is shielding / need to commute and have concerns about using public transport. See below in relation to employees who are themselves shielding or in the vulnerable group.

The same principles would apply when deciding which employees to select for 'flexible furloughing' - permitted in terms of the revised scheme from July.

What about employees who are shielding, or who have an underlying health condition?

The government advised individuals with certain underlying health conditions, who are most at risk from coronavirus, to stay at home for 12 weeks - referred to as 'shielding'. The advice in England changed on 31 May and this group is now 'strongly advised to stay at home as much as possible and keep outside visits to a minimum, until at least 30 June 2020'. The Scottish government's position on shielding has not changed. You cannot ask these individuals to attend work at least until the 'shielding' advice changes - and at that point, what is appropriate will depend on the new advice they are given. For now, our advice on managing these individuals is in a table here

At present, you can also use the furlough scheme for those who need to stay at home with someone who is shielding.

For individuals who are not 'shielding' but who may otherwise be vulnerable due to a health condition, see the table here.

What can we do if an employee refuses to come off furlough and return to work?

If an employee refuses to return to work after you have ended their period of furlough leave, or refuses to work part-time while furloughed - as permitted under the scheme from July, potentially they could be subject to disciplinary action for unauthorised absence / refusing to comply with a lawful instruction. However, exercise caution and don't jump straight to a disciplinary process. Engage with the employee and find out why they are unable to return to work. It may be, for example, because:

  • They are required to shield. Insisting that someone required to shield returns to work risks breaching health and safety and discrimination (disability) legislation - read more here
  • They have health and safety concerns. Bear in mind that if an employee refuses to attend work, because (i) they reasonably believe that there is a 'serious and imminent danger' – which could be the case if you have not taken suitable steps to protect against coronavirus; and (ii) the employee cannot reasonably be expected to avert the danger (for example, by wearing appropriate PPE that you have provided and maintaining social distancing), then it would be automatically unfair for you to dismiss them, and unlawful for you to subject them to a detriment (such as a disciplinary sanction) as a result. See: What if an employee refuses to come to work, but they are not covered by Government or medical advice to self-isolate, and are not in a high-risk category? Employees might also be protected under the whistleblowing legislation. Whistleblowing is the disclosure of information by a worker which relates to some danger, fraud or other illegal or unethical conduct in the workplace, including for example health and safety risks.
  • There is no available childcare. In this case, engage with the employee and discuss the potential options with them e.g. flexible working, parental leave, period of unpaid leave.

Contact us to discuss the options and risks if there is a challenge from an employee who does not want to come off furlough. 

What are the options after the Scheme is closed?

In addition to using the Scheme, you may have already taken some steps to minimise staff costs (recruitment freezes; varying benefits e.g. discretionary bonuses; reviewing contractor and agency staff arrangements; not renewing fixed term contracts; using cheaper outsourcing / secondment arrangements). However, when the Scheme comes to an end this may not be enough. Potential options when furlough has come to an end include:

  • Ending furlough - employees work on their existing terms and conditions
  • Ending furlough - employees work on new terms and conditions e.g. reduced hours and pay / reduced pay / new shift pattern
  • Extending furlough without the HMRC grant
  • Making redundancies
  • Other options – a full list is set out below
Ending furlough - employees work on their existing terms and conditions

This is straightforward but the most expensive option. You would notify employees in writing of their return to work date and clarify the issues highlighted at How do we end a period of furlough?. There is no minimum period of notice required to end furlough (unless it was agreed as part of the furlough agreement), although you would be expected to give reasonable notice of the change: contact us to discuss this.

Ending furlough - employees work on new terms and conditions 

There are a number of different types of change you might want to introduce before employees return to work, for example:

  • Reduced hours and pay
  • Reduced pay
  • New role
  • Introduction of new or varied shift / rota pattern
  • Adjusted start and finish times
  • Varied commission or bonus terms
  • Varied pension or insurance entitlement

First, check whether the employee's contract gives you a right to vary the relevant term (Changing Ts & Cs: do we need consent?). For example, if you have a contractual right to impose short-time working (reducing hours so that remuneration for the week is less than half a week’s pay), you could rely on this to reduce hours and pay without having to get employee consent. Employees with two years' service can resign and claim statutory redundancy pay after being on short-time working for four consecutive weeks, or six weeks in a rolling period of 13 weeks. Read more at Lay-off and Short-time working .

If there is no express contractual right to make the change, seek the employees' consent - seeking consent. This could be either directly with employees, or via collective bargaining if there is a validly incorporated collective agreement in place. Record anything which is agreed in writing.

Employees may be willing to agree if this will avoid redundancies. However, if you cannot get consent, your options are to:

See Changing/Harmonising Terms & Conditions and contact us to discuss the best approach in your circumstances. 

The collective redundancy consultation obligations could apply, depending on your approach. If you plan to force through the changes by dismissal and re-engagement if employees don't consent, or the offer is an alternative to making redundancies, then the collective consultation obligations may be triggered (if 20 or more dismissals are proposed at one establishment within 90 days). Information on collective consultation is at Redundancy: Consultation but you should contact us to discuss your obligations and an appropriate process.

Extending furlough without the HMRC grant

It may be too expensive to continue with furlough without the HMRC grant. However, it might be an attractive option if there isn't enough work for everyone, but you anticipate that this may be temporary.

Doing so would require a new 'furlough' agreement with employees. It could be on the same or amended terms as applied during furlough under the Scheme – in particular, the government furlough scheme meant that workers received 80% of salary, however, you could offer furlough on less than this (e.g. 60% of salary). Some furlough agreements may need to be revised to avoid referring to the government scheme to ensure that the agreement is accurate.

It would be essential for you to obtain employee consent for this option, and it will be difficult to predict employee take-up. However, if the alternative is redundancy, employees might be prepared to agree to an extended period of furlough.

The collective redundancy consultation obligations could apply, depending on your approach. If you plan to force through the changes by dismissal and re-engagement if employees don't consent, or the offer is an alternative to making redundancies, then the collective consultation obligations may be triggered (if 20 or more dismissals are proposed at one establishment within 90 days). Information on collective consultation is at Redundancy: Consultation but you should contact us to discuss your obligations and an appropriate process.

Lay-off: If you have a contractual right to 'lay off', you could rely on this to enforce a period of non-work with no pay without having to get employee consent. Lay off occurs when an employee is not provided with any work and so receives no pay for a week. Employees with two years' service can resign and claim statutory redundancy pay after being on lay-off or short-time working for four consecutive weeks, or six weeks in a rolling period of 13 weeks. Read more at Lay-off and Short-time working

Making redundancies

Despite the significant costs involved in making redundancies (in terms of redundancy and notice payments) it might be the only option for some businesses. As explained in the FAQs below, employees on furlough can be made redundant. It might, therefore, be appropriate for you to carry out consultation during furlough and make redundancies when the Scheme ends. If the collective consultation obligations apply (Redundancy: Consultation), factor this into your timeline.

Detailed guidance and templates are available at the Workbox pages on Redundancy. Also, see below in relation to:

  • Can we make furloughed employees redundant?
  • Can we consult with furloughed employees?
  • Will the exception to collective consultation which is permitted for 'special circumstances' apply to COVID-19?
  • How can we elect representatives for collective redundancy consultation?
  • Are representatives involved in collective consultation 'working' while on furlough?
  • What statutory redundancy pay are furloughed employees entitled to?
  • Can notice pay and redundancy pay be claimed under the Scheme

Other options include:

Contact us to discuss any of these options in further detail.

Insolvency: If this is a risk, please contact us and we will put you in touch with our Restructuring and Advisory team.

Health and safety for workplaces: what do we need to consider?

If your workplace is open, or you are planning ahead in terms of reopening your workplace, consider our advice at: Health and safety for workplaces that are open, or planning to reopen.

Reasonable adjustments

You will also need to think about whether you need to make reasonable adjustments for any disabled employees returning to work. See Disability: Reasonable Adjustments.

Homeworking

If you are taking employees off furlough but moving them to working from home, have a look at the issues at: What should we be doing to ensure an employee's health and safety when they are working from home? 

Key worker template letter

Here is a template key worker letter to issue to employees who are permitted to attend work, explaining why they are permitted to leave the house, in case they are stopped on their way to or from work. 

Do we need to consult on health and safety issues?

Yes, there is a duty to consult about changes in work practices in respect of health and safety for when people return to work - depending on your circumstances, consultation should be with either with trade union safety representatives, employee appointed safety representatives, or directly with employees. Contact us for more information or go to the page on Health & Safety: Consultation.

Can we issue notice of termination during furlough?

Yes. Although there is nothing in the Guidance specifically on this (other than a reference to the fact that employees can be made redundant while on furlough) it seems you can give employees notice whilst they are furloughed. You can reclaim sums paid to a furloughed employee during the notice period via the Scheme.

If, however, you make a payment in lieu of notice, you cannot reclaim this via the Scheme.

If notice is served during furlough, how much notice pay is due?

Is 100% notice pay due, or are furloughed employees only entitled to whatever they have agreed to receive during furlough (usually the lower of 80% of salary or £2,500 per month)?

This is a tricky question, and not something dealt with in the Scheme guidance. Unless it is specifically covered in the furlough agreement (which would be unlikely), it seems that the answer depends on the reason the employee is on furlough (for example, is it because there is not enough work, or because the employee has to shield?); the length of the employee's contractual notice period and particularly whether it is at least one week more that their statutory minimum entitlement (See How much notice?); and whether the employee has normal working hours (see Pay during the notice period).

The safest approach is to pay the full 100% as notice pay. If you are thinking of taking a different approach, contact us to discuss the options and risks involved.

Can notice pay and redundancy pay be claimed under the Scheme?

Payments made to employees while on notice can be reimbursed under the Scheme (as discussed above). However, you are not able to claim for payments in lieu of notice or redundancy payments.

Can we make furloughed employees redundant?

Yes, although the Scheme is intended to keep people in employment, the Guidance specifically states that employees can be made redundant whilst on furlough. You might conclude during the furlough period that you need to make redundancies for the long-term survival of the business.

The normal rules on redundancy would apply so that employees with at least two years' service would be entitled to a statutory redundancy payment (see What statutory redundancy pay are furloughed employees entitled to?). They could also claim unfair dismissal if, for example, there had been an unfair selection process; a failure to consult; or a failure to consider alternatives to dismissal.

If there is a proposal to make 20 or more redundancies at one establishment within a 90-day period there would be an obligation to consult collectively: see below. The fact that consultation would be required for 30 / 45 days (and notice of termination can’t expire until after the consultation period has ended) should be factored into your redundancy timeline. If you don't already have trade union or elected employee representatives in place, think about electing some now - so that you are well placed to start consultation if and when you propose to make redundancies.

If you are proposing to make redundancies before the Scheme comes to an end, think about whether it would be reasonable to maintain employees on furlough as an alternative to dismissal. See: Does the furlough option mean that redundancies are potentially unfair just now? and contact us if there is a challenge from an employee who is suggesting that they should not be made redundant because furlough is still running. 

Does the furlough option mean that redundancies are potentially unfair just now?

If you are considering redundancies just now, you should consider whether the furlough scheme is a possible alternative for your business. If you are proposing to dismiss an employee as redundant, be prepared to consider and document why that route was reasonable rather than placing the employee on furlough - consider furlough as an alternative to redundancy dismissal before arriving at the decision to dismiss.

Can we carry out redundancy consultations with furloughed employees?

Yes. If you are going to consult with furloughed employees, advance plan for the practical issues. Can you set up conference calls / Skype to facilitate discussions? Is all the information required for selection / redundancy payment calculations readily accessible?

The statutory right to be accompanied does not apply to redundancy consultation meetings but is often offered in the interests of fairness. If you want to allow this, it should still be possible in a virtual consultation exercise by allowing companions to join the phone or video call.

If there is a proposal to make 20 or more redundancies at one establishment within a 90-day period there would be an obligation to consult collectively: see below and at Redundancy: Consultation.

Will the 'special circumstances' exception to collective consultation apply?

If you are proposing to dismiss as redundant 20 or more employees at one establishment within 90 days, you must consult appropriate representatives of affected employees (for 45 days before the first dismissal takes effect if 100 or more redundancies are proposed within a period of 90 days; 30 days if there are between 20 and 99 proposed redundancies within the relevant period). A failure to do so can lead to a protective award of up to 90 days' gross pay per employee.

There is a limited exception to the obligation to collectively consult where there are 'special circumstances' which render it not reasonably practicable to comply. Whether this is engaged will depend on the particular facts and circumstances. Insolvency is not in itself necessarily a special circumstance, however, a 'sudden disaster' (physical or financial) can be and it may well be that the impact of coronavirus would fall into this category (certainly at the start of the outbreak before the Coronavirus Job Retention Scheme was introduced, and particularly for businesses which were closed with immediate effect). Advice should be sought on this: contact us.

Even if the exception applies, you should take steps to comply with the collective consultation obligations as far as possible (e.g. by consulting for a shorter period) – the fact that there are 'special circumstances' does not mean that the requirements can be ignored completely. For more information go to: Redundancy Collective Consultation.

How can we elect representatives for collective redundancy consultation?

If collective redundancy consultation is triggered, you must consult with appropriate representatives of the affected employees - for who should be the 'appropriate representatives' see Redundancy: Consultation - who do we need to collectively consult with?

If you need to elect employee representatives, see Electing Employee Representatives, which provides a step-by-step guide, including information on voting for those who are not in the workplace.

Are representatives involved in collective consultation 'working' while on furlough?

The guidance on the Scheme now confirms that acting as an employee representative will not break furlough.

Furloughed employees who are union or non-union representatives are able to carry out duties and activities for the purpose of individual or collective representation of employees or other workers, provided that in doing so, they do not provide services or generate revenue for, or on behalf, of your organisation or any linked or associated organisation. This means that they will be able to undertake duties as a representative during collective redundancy consultation.

There is nothing to suggest that you would need to pay employee representatives anything in addition to their furlough pay.

What statutory redundancy pay are furloughed employees entitled to?

Redundant employees with at least two years' service are entitled to a statutory redundancy payment. The amount of statutory redundancy pay due depends on age, length of service and salary (based on the employee's weekly pay, as at the calculation date, capped at the current statutory maximum rate). How to calculate a week's pay depends on whether or not the employee has normal working hours, as explained at How do we calculate a statutory redundancy payment?.

There has been no government guidance on calculating statutory redundancy pay for furloughed employees. However, looking at the usual statutory rules in this context suggests that employees with normal working hours would have their statutory redundancy entitlement based on their usual non-furloughed weekly pay; but that the position is less clear for employees with no normal working hours. A week's pay for employees with no normal working hours is calculated as an average of all sums earned in the previous 12 weeks in which remuneration was earned – assuming that furlough pay is remuneration for these purposes, then furlough weeks (and therefore the reduced 80% weekly pay) would be taken into account when calculating redundancy pay. Contact us for help with calculating redundancy payments.

Can notice pay and redundancy pay be claimed under the Scheme?

Payments made to employees while on notice can be reimbursed under the Scheme (as discussed above). However, you are not able to claim for payments in lieu of notice or redundancy payments.

How should we handle annual leave after employees return to work?

 There are a number of potential issues around the handling of annual leave after employees return to work:

Contact us to discuss any of these issues in more detail.