You are likely to be aware that, after 18 months of helping employers cover the wages of employees where the availability of work was affected by Covid-19 (Covid), the Coronavirus Job Retention Scheme, commonly known as the furlough scheme, comes to an end on 30th September 2021. This scheme has enabled employers to retain their workforce and support the retention of job during times of economic uncertainty.
With the scheme ending soon employers will need to consider what this will mean going forward for the close to 1 million employees still on furlough. Some employees may have worked on reduced hours whilst on flexible furlough and still maintained their productivity throughout. For some employers, demand for products or services may remain lower than pre-pandemic levels thereby reducing the required number of hours from their workforce. Some employers may be seeing an increasing need in their services and may be struggling to attract new employees in a tough recruitment market (our next blog will focus on recruitment and selection).
What are your options?
Changing terms and conditions, including hours of work
Should you require employees to work fewer than their contracted hours of work this would be considered a change to their terms and conditions of employment.
To enact such a change your first step should be to check whether your employment contract allows you to make reasonable changes, which may be headed as a flexibility clause. Should such a flexibility clause exist you should meet with the affected employees, or where appropriate, their representatives and explain your proposed changes. To increase the likelihood of buy-in from the employee, it is strongly recommended that you explain the reason behind the need to reduce hours, usually referred to as your business case. You should undertake a period of consultation to ensure that employees can ask questions and raise concerns before a final decision is made. It’s recommended that you check your current HR policies to see if they set out any required duration of a consultation period in these circumstances.
Provided that there were no objections, or that objections were dealt with satisfactorily during the consultation period, you should write to the employee to seek their agreement to the changes in writing. Depending on how many terms and conditions are being varied you may want to issue a new contract of employment. Do make sure that you receive the employee’s agreement to the changes in writing and this is stored in their personnel file, in accordance with data protection legislation.
Reduction of contracted hours of work should only be done if you have an objective justification within your business case and that the reduction is hours is a proportionate mean of achieving this legitimate aim. You must ensure that employees are not disadvantaged, either directly or indirectly, on the grounds of a protected characteristic, as set out in the Equality Act (2010), as this could lead to claims of discrimination.
Lay-offs or short-time working
Laying–off an employee means to send them home temporarily with no work; short-time working is to reduce an employee’s working hours. In both cases the employee would be entitled to a “statutory guaranteed pay” as a minimum; this is currently £30 a day (or actual daily rate, whichever is lower) for 5 days within any 3 month period.
Employers can only lay-off employees, or place them on short-time working, if there is a clause within their contract of employment allowing this, through clear custom and practice or with agreement – such as agreement with a Trade Union or agreed as a change to the contract of employment.
Employees can apply for redundancy and claim redundancy pay if they’ve been laid off or put on short-time working and receive less than half a week’s pay for:
- 4 or more weeks in a row
- 6 or more weeks in a 13-week period
These restrictions will likely make lay-offs and short-time working unattractive to employers unless the reduction in required levels of work is perceived to be very short-term.
Depending on the required reduction in work of a particular kind within the organisation you may propose redundancies (reducing the number of roles). In a redundancy situation there is a statutory minimum process that must be followed, regardless of the number of redundancies proposed. More information can be found in our FREE factsheet Minimum Redundancy Process, but this can be summarised as:
- Create a written business reasons for the change
- Consider who is affected by the proposal
- Brief those people on the situation and give them a letter placing their role at risk of redundancy
- Hold “meaningful” consultation with them. Consultation would include discussing factors such as reasonable suitable and alternative work, re-training and the redundancy package. Allowing them to make suggestions about how the redundancy might be avoided
- Where necessary, identify reasonable selection criteria and apply fairly to all employees at risk of redundancy
- Consider suitable alternative employment possibilities
- If unable to redeploy, after the consultation has ended give notice of dismissal on the grounds of redundancy.
Employees who have at least 2 years’ continuous service (including those on fixed-term contracts) and who are dismissed on grounds of redundancy are entitled to a statutory redundancy payment.
There may be other options available to employers, for example:
- Agreeing, or giving notice to employees, to take annual leave
- Agreeing to requests for flexible working requests for employees
- Agreeing to periods of unpaid leave.
We are happy to provide further advice and guidance. Please do ring us on 01562 840060 or email firstname.lastname@example.org in the first instance.
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