Before March last year, ‘furlough’ was a word buried in the dictionary and was scarcely used in a modern day employment or HR context outside of the United States.
Look it up and it’s more commonly referred to as “a leave of absence, especially that granted to a member of the services or a missionary.” Fast-forward 18 months and the term has been etched into the mind of every employer and employee in the UK, regardless of whether they’ve had to resort to using the Government’s Coronavirus Job Retention Scheme or been a beneficiary of it.
There’s little doubt that it’s been a real success in helping businesses to stay afloat, while retaining their best people. But, as they say, all good things must come to an end and 30 September marks the end of the furlough scheme that has undoubtedly helped to save thousands of jobs across many sectors.
It’s not come without a price, however. The emergency support measure is reported to have cost the Government £68.5 billion, with millions of jobs on the scheme. The British Chamber of Commerce warned last month that the end of furlough would create a wave of redundancies. A survey by the organisation found that one in five employers plan to make redundancies as the furlough scheme winds down. The coming weeks and months will serve to test those results, as employers welcome back staff during an ongoing period of recovery.
As the economy continues to reopen and the vaccination programme proves a huge success in protecting many millions of people, it seems like the most appropriate time to withdraw the support measure and allow companies to get back on their feet. But as businesses lose thousands of pounds in employee funding, what will the post-furlough landscape look like and what do employers need to consider as workers return?
COVID-19 has undoubtedly changed the shape of the workplace – some say for good. Despite the progress that’s been made in recent months, it’s still a complex landscape. Many businesses will not have returned to pre-pandemic levels of profitability, making the end of furlough fraught with economic and, in some cases, health and safety, problems.
A recent survey conducted by CIPHR revealed that of the 150 business leaders and organisations asked, more than two-thirds (68 per cent) currently paying location allowances are considering cutting pay for staff who opt to work from home, despite 53 per cent reporting savings made through home working. 86 per cent had already suspended, temporarily reduced, or removed payments such as the London Living Wage and other location premiums.
The task of making the numbers work and the bottom line tally is still a difficult one for employers to achieve and this will become even harder when employee costs suddenly rise from 1 October. It’s essential for management teams to address the thorny issue of redundancy as soon as possible, to help minimise redundancy dismissals or make sure that if post-furlough redundancies are inevitable, they’re carried out in a fair and transparent way.
Assessing all options
With the cost of doing business increasing overnight, the desire to cut costs, and cut costs quickly, is understandable. However, business owners need to ensure that any action is undertaken appropriately, in consultation with staff, and with their full agreement. There are many options on the table, including:
- Agreeing to a full return to work. If this is the case, employers should consider a re-induction for affected employees, reasonable adjustments, clear communication of changes to procedures, policies and duties, training, as well as addressing any concerns over their time away from the workplace and health and safety fears.
- Private furlough, which will need to be negotiated with employees and funded by the company.
- Changes to employment terms and conditions, including rates of pay, reduced hours, and altered benefits and bonuses. Again, this should be raised in a clear and open manner with employees.
- Secondments – through discussions with complementary businesses, employees could be temporarily moved to another company for an agreed period of time, to ensure they remain in employment while the parent business continues to get back on its feet.
Duty of care
The return to work will be a difficult transition for many workers who have been disconnected from the workplace for a significant period of time. Employers need to remember that they have a duty to take responsible care of the health and safety of staff and to provide a suitable working environment, including adhering to COVID-19 workplace guidance.
The Government has produced six sector specific guides, which are all subject to review if the infection and/or hospitalisation rates increase. It has also outlined nine priority actions around workplace safety, including undertaking health and safety assessments; making sure that indoor spaces are properly ventilated; and providing training and awareness on health and safety.
In recent months, there have been an increasing number of COVID-related cases that have come before Employment Tribunals, demonstrating that the pandemic provides no excuse to bypass standard legal requirements and that adequate consultation is key when avoiding any potential claims. This was certainly so in the case of Khatun v Winn Solicitors Ltd, which followed the dismissal of a solicitor for refusing to agree to changes in salary and hours – changes which were proposed in response to the COVID-19 pandemic. The law firm was judged to have ‘got it all wrong’ by the Employment Tribunal in the way it handled the process, which ultimately led to unfair dismissal.
While new data published by the Insolvency Service shows a continued decline in the number of notified collective redundancies, with figures currently at a seven-year low – suggesting that redundancy and unemployment levels may be lower than anticipated when furlough ends on 30 September 2021 – the following weeks and months will be a challenging period for both employers and employees in adjusting to post-furlough life and only time will tell if redundancies and tribunal claims will increase as a result.