HPC Law – Furlough updates, kick start scheme and more
HPC Law – Furlough updates, kick start scheme and more
End of Furlough (Coronavirus Job Retention Scheme)
They often say that as one door closes another one opens. This could be said of the CJRS (furlough scheme). The new door is the new Job Support Scheme which is as follows:
The scheme will be introduced from 1 November 2020 to support viable UK employers who face a lower demand due to COVID19 and to keep their employees within the workforce. The Government will pay the wages of people in work, giving businesses who face a reduction in demand the option of keeping employees in a job on shorter hours rather than making them redundant.
- The employee will need to be working at least one third of their usual hours, of which the employer will pay their wages as normal.
- The government will then, along with the employer increase those wages by covering two thirds of the pay that they have lost out on as a result of their working hours being reduced.
- The employer and government will pay one third each of the employee’s usual pay.
- This is capped at the government contributing £697.92 per month.
- This scheme ensures that employees will receive at least 77% of their pay, where the government contribution has not been capped.
This scheme is available to all SMEs and businesses are eligible, even if they did not use the furlough scheme. Larger business may be eligible to apply if their turnover has dropped by over a third.
As an example, if a staff member earns £2,000 per month and works 50% of their hours, they will receive £1,000 for the 50% they work from their employer. They will also be paid £333.33 from the Government and £333.33 from their employer.
I can however see some difficulties with this. If a business is struggling to give a staff member full time hours because there is not enough work for them to do, they will still have to make up one third of the remaining salary which may cause them significant financial problems if this principle applies across the whole work force.
Rishi Sunak, the Chancellor of the Exchequer announced a new ‘kick start’ scheme with a range of financial incentives for businesses which are designed to help businesses re-build and grow now that restrictions have been lifted.
The incentives are as follows:
- £1,000 for retaining staff. Must be employed at the end of January and earn at least £520 per month;
- £1,000 for taking on ‘trainees’ aged 16-24 (which is not defined) & wages covered for six months and must be a minimum of 25 hours per week;
- £2,000 per month for six months to create new apprenticeships;
- £1,500 for new apprentices taken on if they are 25 or above;
If we take number 1 above, businesses will have to consider whether it is financially viable to continue to employ staff until the end of January to receive the £1,000 bonus. Therefore, businesses will have to evaluate the cost of keeping staff for that period and whether it would be worthwhile continuing to employ the member of staff. The scheme is now open for applications at the following address:
Businesses will no doubt be considering their future and whether they need the headcount which they currently have. As such, businesses may be considering the following:-
- Probation reviews / extensions;
- Business restructures / change of roles;
- Reduced working / change of terms & conditions;
Businesses must follow a fair process when considering their restructure. In particular for redundancies, businesses can no longer adopt the ‘last in first out’ rule.
Businesses must take account of protected characteristics when deciding on any of the above and must ensure that they are not discriminating against anyone who has a protected characteristic. As a reminder, the 9 protected characteristics are:-
- gender reassignment;
- marriage and civil partnership;
- pregnancy and maternity;
- religion or belief;
- sexual orientation.
Increase in ET Claims
We have already started to see an increase in ET claims. Some of them have been fairly small such as for underpayment of wages but others are due to discrimination. This could be put down to the current employment climate and that people are fighting for their jobs or for every penny which they believe (rightly or wrongly) is owed to them.
It is important (particularly at the moment) to make sure that you are following the correct processes and ensuring that you are paying the correct amounts including any untaken but accrued holidays. Here is a quick guide to getting it right:-
- Even if an employee has been on furlough, notice pay has to be paid at 100% of their salary;
- Holidays also need to be paid at 100%. You can force staff to take holidays during their notice period but you need to give double the amount of notice of the amount of time you want them to take off. For example, if you want them to take a week off, you would need to give them two weeks’ notice;
- Keep on top of probation dates. It is very easy to let this slip by with everything else that businesses have to consider at the moment. But if someone has been on furlough and their probation is coming up, you may want to consider extending this as otherwise if you have to dismiss that employee, you may have to give more notice than if they are in their probation;
- Keep notes of all meetings as this will be the key as to whose case is believed if it ends up in an Employment Tribunal.
If you have any concerns or would like to discuss anything further, please get in contact with the HPC team today.
T: 0844 800 5932