Until 30 June 2021, the UK government will continue contributing 80% of an employee’s wages for furloughed employees, capped at £2,500, but from 1 July this contribution will reduce on a sliding scale until the scheme ends at the end of September.
For July, employers will only be able to claim 70% of wages for furloughed staff, up to a maximum of £2,187.50
For August and September, employers will only be able to claim 60% of wages for furloughed staff, up to a maximum of £1,875
This means that employers who intend to continue to rely on the furlough scheme will need to make up the difference between what they can claim and what they are required to pay furloughed employees (80% of their wages, up to a cap of £2,500 per month for the time they spend on furlough) if they want to remain eligible for the CJRS grant.
With many employers still not able to fully reopen and many still struggling to generate revenue to cover existing operating cost, this additional uplift in costs may cause them to reconsider their position.
The long-awaited exit from lockdown has been delayed, with Prime Minister Boris Johnson warning a spike in cases of the Delta (Indian) variant could lead to a surge in hospitalisations.
COVID-19 Restrictions Continue to Impact UK Businesses
On Monday 14 June 2021, Prime Minister Boris Johnson announced that the full easing of all lockdown restrictions planned for 21 June 2021 in England has been potentially delayed by a period of 4 weeks, subject to a further review in 2 weeks’ time.
The devolved administrations of Scotland, Wales and Northern Ireland had previously announced an easing of restrictions which brought them closely in line with those restrictions set out at step 3 of the roadmap in England but considering the PM’s announcement on Monday it looks increasingly unlikely that any further easing of restrictions will be announced any time soon, or at least before the end of June.
A Disjointed Four Nations Approach to Lockdown Restrictions
Since the devolved administrations of Scotland, Wales and Northern Ireland decided to break lockstep with the UK government in favour of adopting their own approach to lockdown restrictions, many have been left confused and uncertain about what is or isn’t permissible.
In England, where a four-step roadmap out of lockdown is in place, more businesses were able to reopen when England moved to step 3, but the decision to delay the full easing of lockdown restrictions and remain at step 3 will create serious implications for employers who had hoped all COVID-19 restrictions would end on 21 June 2021 as originally planned.
In Scotland, where a five-tier protection system (0-4) is in place and which can be applied separately to each local authority area, more businesses were able to reopen from 5 June 2021 when many areas moved from level 3 to level 2 and from level 2 to level 1, subject to remaining social distancing restrictions, but soft play, nightclubs and adult entertainment venues must remain closed and many businesses in the tourism, hospitality and events sectors remain adversely affected.
In Wales, where a four-level alert system is in place (1-4), some restrictions were eased from 7 June 2021 when Wales moved from level 2 to level 1. Many more businesses were able to reopen, but skating rinks, nightclubs and adult entertainment venues must remain closed.
Covid-19 Restrictions in Wales
In Northern Ireland there has also been a slight easing of restrictions and many businesses have been able to reopen, but the overriding message is that working from home where possible should remain the default position and that employers should take every step possible to facilitate home working.
The Delay on Easing Lockdown Restrictions – Implications for Employers
The Prime Minister’s announcement was in response to a notable rise in the R number across all regions of the UK and continuing concerns over the impact of the Delta (Indian) COVID-19 variant.
For those businesses with employees currently working from home, the default position across all regions of the UK is that employees who can work from home should continue to do so.
There is no change to the guidance in respect of employees who cannot work from home – in these circumstances, employees continue to be permitted to work in their usual workplaces, and the working safely during coronavirus guidance continues to apply.
The delay in any further easing of lockdown restrictions is impacting all businesses, but those in the tourism, hospitality and events sectors appear to be affected most, not least due to continuing restrictions on how many people venues can safely accommodate with social distancing measures in place.
Practical Considerations for Employers
Many employers may also need to reassess their staffing requirements and quickly decide what this means for any recent job offers and current furlough arrangements and the cost implications of extending furlough beyond 1 July 2021 will need to be carefully considered.
Although the furlough scheme was previously extended until 30 September 2021, the level of grant available to employers will be reduced from 80% (up to a max. of £2,500):
From 1 July 2021 the grant available to employers reduces to 70% (up to a max. of £2,187.50).
From 1 August it will reduce again to 60% (up to a max. of £1,875).
Can an employer withdraw offers of employment or delay start dates for new recruits in light of the COVID-19 outbreak?
The first point to consider is whether a contract of employment has been entered into with the new recruits.
If the new recruits have accepted an offer of employment without conditions, and there is therefore a binding contract of employment, then notice would need to be served in order to terminate the contract before they commence employment. If there is a binding contract in force between the parties then any change in the start date will constitute a change in contractual terms. In this case, an employer would only be able to make a change to the start date either with the express consent of the new recruits or if it has an express contractual right to do so.
How should an employer go about making redundancies?
It may not always be possible for an employer to avoid making redundancies, even where alternatives are considered first. There are five principles for employers to follow when considering redundancies as a result of the COVID-19 pandemic:
Do it openly. The sooner people understand the situation, the better for everyone.
Do it thoroughly. People need information and guidance so ensure that you have trained staff representatives in how the redundancy process works.
Do it genuinely. Listen to people’s views before making a decision, be open to alternatives from individuals and unions and always feed back to them.
Do it fairly. Any redundancy procedure should be conducted fairly and without any form of discrimination.
Do it with dignity. Consider ahead how to handle the conversation and whether it will be face-to-face or remote. The way an employer makes redundancies says a lot about the organisation’s values.
On 26 May 2021, Kemi Badenoch MP, the Minister for Equalities, made a statement outlining that the gendered impact of the pandemic has not been clear cut. In summary, the Government confirmed that more men were made redundant during the pandemic than women.
Although women were furloughed at a disproportionate rate than men, she stated that the latest employment figures indicated that more men were made redundant than women. As a response, the government is working to address both men and women with its economic support measures.
Redundancy and the Impact of COVID-19
Despite the various resources intended to support businesses and protect jobs, an increasing number of employers are finding it difficult to retain current staff levels as COVID restrictions continue to impact.
With the CJRS ending in Septmber, many employers are now looking closely at redundancies.
Correctly identifying the circumstances that give rise to redundancies is the first step to ensuring any subsequent redundancy dismissals are fair.
A recent survey from Acas has found that over a third of employers (37%) are likely to make staff redundancies in the next 3 months. The poll found that:
6 out of 10 large businesses said they were likely to make redundancies in the next 3 months
for businesses that are likely to make redundancies, over a quarter (27%) said they plan to do this remotely over video chat or a phone call
1 in 4 (24%) bosses are unaware of the law around consulting staff before making redundancies – this increases to 1 in 3 (33%) where businesses have fewer than 50 workers
Circumstances That Can Give Rise to a Redundancy Situation
There are various circumstances that can give rise to a redundancy situation, including:
Diminished need for employees to do work of a particular kind.
Changes to terms and conditions where more than 20 employees are affected, and dismissal is a possibility.
Reduction in the numbers of employees doing a particular role.
Removal of a role or group of roles.
Closure of a department, site or entire business.
Many Employers often conflate the aforementioned circumstances with other reasons when considering redundancies, but they do so at their peril. For clarity, the following reasons do not give rise to a redundancy situation:
Issues of performance, conduct.
Where an external company could do the work better or more cheaply.
The same work could be done under different terms and conditions e.g. less qualified.
Where the employee is required to do additional work, but it remains “work of the same particular kind” and they refuse to do that.
Transfers of employment.
Before considering redundancies, it’s important that employers review the situation carefully before deciding to progress with redundancies. Key points employers should consider include:
Issues that need to be addressed in a redundancy situation:
Alternative to Redundancies
Employers have a legal obligation to consider how they might avoid compulsory redundancies. Some of the alternatives they should consider include:
Short time working and/or temporary layoffs – the new Job Support Scheme is intended to facilitate this.
Voluntary redundancy.
Temporary reduction in pay or hours.
Permanent reduction in pay or hours.
Redeploying to alternative roles and providing retraining (if reasonable).
Dismissing short service employees (where no risk and T&Cs allow).
Reducing/removing benefits.
Stopping/limiting overtime.
Other considerations include:
Is there a job that would be a suitable alternative within any associated business or alternative sites?
Does ‘Bumping’ apply? This is where an employee not previously at risk is put at risk to ‘save’ other employees.
Are any affected employees pregnant?
Are any affected employees on maternity leave?
Are any senior roles affected?
Employers will need to proceed with caution if any of the above scenarios apply.
If Making Less than 20 Redundancies
Under 2 years’ service:
If under 2 years’ service, and no risk of discrimination, a shorter process can be followed if the contract/handbook allow that.
No entitlement to redundancy pay, just notice pay.
Risk of discrimination or over 2 years’ service:
A minimum of three meetings (at risk, how can we avoid, if no ideas, dismissal).
If pools of candidates, objective criteria will need to be used relating to that particular role.
Scoring needs to be fairly done.
Right of appeal.
If Making 20 or More Redundancies
Where 20 or more employees to be made redundant at one establishment within 90 days:
Need to collectively consult with appropriate representatives.
Representatives are recognised trade union or employee representatives elected through a ballot.
Must provide prescribed information via HR1 to BEIS.
Must consult for at least 30 days before the first dismissal or for 100 days if more than 100 employees.
Right of appeal.
Protective award for a failure to consult = 90 days gross pay.
Where Most Employers Go Wrong With Redundancies
Employee Consultation
To avoid the risk of being deemed not to have consulted properly, employers need to consider the consultation process carefully and ensure:
Consultation is meaningful, with a view to getting agreement, not a means to an end.
It includes those off on long term sick leave, family friendly leave, fixed term (funding).
They involve a recognised union or collective consultation body (if authorised to consult on such matters), where required.
Letters are issued at each stage and 48 hours’ notice between meetings and the right to be accompanied is made clear.
Minutes are taken at each meeting.
The Implications of Getting Redundancies Wrong
Unfair dismissal claims
Not genuine redundancy (the real reason for dismissal).
Advice on Settlement Agreements
Employment Tribunal Representation
Covid-19 Employment Claims
