The coronavirus outbreak has not only caused thousands of deaths around the world but has caused untold damage to the economy: on 7 May the Bank of England warned the pandemic will push the UK economy towards its deepest recession on record.
As a result of the economic climate many businesses have struggled to maintain revenue and are now relying on the government furlough scheme to pay staff. This means they can keep employees on payroll but temporarily delegate payment of wages to the state.
The furlough, or job retention scheme, sees employees paid 80 per cent of their salary up to a maximum of £2,500 per month, but means they cannot work for their employer.
The scheme has seen massive uptake: on 5 May the government reported nearly one in four UK workers has been furloughed since the scheme began on 20 April.
But what happens to those employees when the scheme is wound down? Will they be entitled to have their old job back or should they prepare for potential redundancy?
When will the scheme end?
When the furlough scheme was first announced by Chancellor Rishi Sunak on 20 March it was only made available to businesses until 31 May.
It has since been extended to the end of October, the chancellor stated on Tuesday 12 May.
Reports previously suggested it would be wound down in July (and reduced to 60 per cent salary before then due to spiralling costs estimated in the region of £40bn).
On 17 April, a statement from the Treasury said: “Future decisions on the scheme will take into account further developments on the wider measures to reduce the spread of coronavirus, as well as the responsible management of the public finances.”
The Chartered Institute of Personnel and Development (CIPD) said “employers need to plan now for what is likely to be staged return to the workplace over what could be prolonged periods”.
What happens to ‘furloughed’ employees when the scheme ends?
For the millions of people now relying on the scheme to pay rent and bills, it is obviously concerning thinking about what will happen to your income when the scheme is wound down – whenever that might be.
Lucy Lewis, partner at HR law firm, Lewis Silkin, tells The Independent: “The idea is that employees will be able to come back to work. The scheme is designed so that employers don’t need to make redundancies and then recruit a new workforce once the crisis is over – their existing workforce will be ready and waiting to resume work.”
But of course this relies on the business being in a stronger position than a few months ago, and for many this will not be the case.
CIPD says that when the scheme ends businesses will either be able to bring employees back full-time or choose one of three options: agreed reduced working hours with some or all staff, furlough staff for a further period (at the expense of the business not the government) or consider redundancies.
What do these options mean for me?
Lewis says of bringing employees back: “This is easiest but most expensive option. It is likely to be used by employers who anticipate that they can get back to near-normal trading conditions in the relatively short-term.
“There is no prescribed mechanism for bringing employees back to work, but we would anticipate giving no less than 48 hours written notice.”
CIPD says if employers are in a position to take staff back full-time employers will need to ensure that payroll staff are aware furlough has ended and they should return to full pay (taking into account the national minimum and living wage rates increases from April for any staff employed on those rates).
If your employer wants to reduce your hours, CIPD says this will need to be in writing. They should also be clear about the reasons for reducing your working hours.
If your employer wants to keep you furloughed then they must consider the terms set out in your original furlough letter. A CIPD spokesperson says: “If [the] letter did not include a specific end date, then you can continue to keep staff furloughed on the same terms as the CJRS [coronavirus job retention scheme].
“It would be sensible to write to employees to explain that you are continuing furlough (with an estimate of how long for if you can give it).”
If the letter did include a specified end date then employers and employees will need to come to a secondary arrangement before further furlough can go ahead.
However if trading conditions have not improved and staff cannot be taken back, Lewis says the usual redundancy rules will apply including a formal giving of notice and reasons why you are being made redundant.
“This is significant because other European countries that have similar schemes in place are imposing restrictions on employers making redundancies. No such conditions are being imposed in the UK,” she adds.
The CIPD says: “Remember that redundant staff are entitled to receive notice (or payment in lieu); holidays and other contractual entitlements; and a redundancy payment if they qualify. This is a cost your business will have to pay.”
If your business is making more than 20 people redundant (but fewer than 100 people) they must start collective consultation on the redundancies at least 30 days before giving notice to employees.
Can I be made redundant before then?
Citizen’s Advice says that employees should be aware they can also be made redundant during the period of furlough before the scheme is officially over.
“If you’re entitled to redundancy pay, it will be calculated using the amount you earned before you were furloughed,” it says.
But the guidance is clear that furlough pay cannot be used to pay redundancy packages.
When will I know what is happening?
Employment lawyer Gareth Price of Parklane Plowden Chambers says: “A good employer will maintain good communication with their employees – so it is fair and reasonable for employees to want to know the likely status as soon as possible.”