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With just nine weeks to go until the furlough scheme is set to be withdrawn for good, employers now need to decide how to handle those employees that have been placed on it. Nick Hine and Ben Payne remind organisations of what they should be thinking about when considering redundancies.
The Coronavirus Job Retention Scheme (the furlough scheme) has provided support to thousands of businesses during pandemic, despite originally being only intended to be in place for three months. However, with the recent lifting of nearly all coronavirus restrictions in England, it appears unlikely that the scheme will continue beyond 30 September 2021.
The scheme has enabled employers to retain employees with a view to them returning to work as business and the economy picks up. Many furloughed employees have now returned to work, but for those who haven’t, businesses should decide whether they can afford to have them return. If not, organisations need to know how to handle a possible reduction in headcount. We set out some of the key considerations below.
Claims for notice periods
Under previous iterations of the furlough scheme, employers were able to still claim for those employees serving their notice periods ahead of redundancy. This was a significant saving for employers, with many acting quickly to make redundancies to take advantage of the generosity of the scheme. However, the rules of the scheme changed on 1 December 2020, meaning it is no longer possible for an employer to claim furlough money for any employee serving their notice. In addition, it is not possible to claim any money from the scheme towards redundancy payments which may be due.
Employers need to factor in the length of notice periods when considering headcount reduction.
Payments to staff
Employers should note that all employees who have two years or more service are entitled to a statutory redundancy payment and can claim unfair dismissal if the reason for dismissal is not a genuine redundancy. Some employers have put poor performing employees on furlough and now do not want them back even if there is work for them to do.