Life after furlough: Next steps for employers

We are now seven weeks into lockdown and both the focus of the government and media has turned towards the prospect of lockdown being relaxed or lifted, if we are now indeed “past the peak”.

On a positive note, we have already been advising clients in some sectors, including construction and retail, about recalling staff from furlough leave.

What is clear is that a return to business as usual is not expected for some considerable time, because social distancing measures will continue to be required to avoid the prospect of infection rates increasing and a second peak occurring.

For some businesses, notably those in the hospitality and travel sectors, this could result in ongoing business closures and an inability to trade to anything like normal levels.

Will the furlough scheme be extended again? What will the “wind-down” look like?

The furlough scheme has been extended to 30 June 2020 and many business leaders are calling for it to be extended even further, amidst concerns about the sheer scale of the challenge facing economic recovery once businesses are taken off the life support provided by the government’s packages. It is feared that an abrupt end could lead to significant redundancies.

If, as many predict, there is to be a gradual wind-down of the scheme, government is also being called upon to consider changes to the scheme to aid economic recovery, including allowing more regular “rotation” of employees. Whilst the minimum duration of furlough in order to be able to claim is three weeks, in other countries this has been reduced to a matter of days which, within smaller businesses would really help to promote flexibility and continuity.

Are businesses thinking about redundancies? What should I be planning for?

Whilst the furlough scheme was introduced primarily as a means of preserving jobs and avoiding lay-offs and redundancies, simply because an employer has taken advantage of the scheme and placed staff on furlough, does not mean that it is prevented from carrying out structural changes and making redundancies. Furlough does not act as a moratorium on redundancy and many businesses cannot or will not wait; we have seen British Airways announce one of the largest redundancy programmes in peace time and many others are likely to follow suit.

All businesses need to start planning for the next stage and reviewing their resources, both to be prepared and to ensure a leaner, more resilient enterprise for the challenges ahead. Some of the key points that should be on the radar of business owners are:

• The furlough scheme has been extended to 30 June 2020 – there are calls for this to be extended further, but there is also a limit to the Treasury’s finances. Whether we will see this extended for certain sectors who are likely to be more adversely affected, or on some type of means-tested basis, remains to be seen. If it is unlikely that employees can resume work, or return to a full workload, then changes to terms and conditions or redundancies may be inevitable, alongside other measures such as reduced hours or pay, using up accrued annual leave or voluntary redundancies. Planning should be underway on the basis of a staged exit from lockdown.
• If the situation is that roles are no longer required as work levels are unlikely to resume and redundancies are inevitable, in planning for that prospect, can the likely numbers affected be gauged to determine whether the trigger for collective redundancy consultation will be reached (20 or more employees dismissed at one establishment within a period of 90 days or less)? If the number may exceed 100, then consultation will need to begin by 16 May 2020 if it is to be completed to coincide with the end of the furlough scheme.
• It isn’t just a numbers game – some may seize this as a blank page to refine their structure to make it leaner and more efficient. The unprecedented circumstances of the pandemic may well support a root and branch review, but employers still need to plan carefully to ensure that any changes to terms and conditions, selection exercises, and decisions about alternative employment within a new structure are carried out in a fair and non-discriminatory way. A prior agreement to furlough will not of itself be a fair basis for selection.

Managing the return to work for your employees

For those in the more fortunate position of managing a return to work for employees, there are a number of issues to embrace, including:

• How to deal with employees who may be unable or unwilling to return – such as those shielding or others who are risk-averse;
• Which employees to bring back and in what order to prevent allegations of inconsistency or worse, discrimination;
• The extent to which so-called agile working can and should be maintained if a significant number of employees have been able to work from home efficiently. Change can often be forced upon us, and will working from home become a more permanent feature of working arrangements?
• Importantly from a health and safety perspective, how physical features of the workplace can be adapted and working hours changed so as to ensure a safe working environment for staff. Could this mean the end of hot-desking and a move towards shift-working?
• As some of these measures will entail a change to terms and conditions of employment, ensuring that this is documented appropriately.

Further guidance about the journey out of lockdown is expected from government later this week.

Preparation and planning will be key and our team are on hand to provide legal and strategic guidance on employee issues at this most difficult of times.

To speak to an experienced advisor for advice on the Job Retention Scheme and/or a potential redundancy consultation in your business, please call Sally Bird on 0161 838 7818 or email [email protected].

On 4th June our next HR Breakfast Club will be hosted as an online webinar. Delivered by our expert employment law team, our breakfast club webinar will offer you the opportunity to get clear, practical advice on all the latest changes. Register for free here.