It’s crunch time. The Government is phasing out the furlough scheme, which has protected millions of jobs during the coronavirus crisis. Since 1 August employers have had to pay the National Insurance and pension contributions on furlough pay. The cost varies depending on what the workers were paid, but it will be between 7% and 14% of their fulltime pay. Step two begins this week. From 1 September, firms have to pay 10% of the wages of furloughed staff. That is 10% of their full pay, not their furloughed pay. From 1 October, that rises to 20%. The furloughed workers continue to get 80% of their pay, but their employer now pays some of it. At the end of October the Coronavirus Job Retention Scheme, which has kept 9.6 million people in work, ends.
In August, many employers looked at whether they could afford to pay even some of the cost of furloughed workers and had to reassess how many staff they needed. In September and October, as their share of the cost rises, more will begin to see that they cannot carry on a reduced business with the same number of staff. Redundancies are inevitable.
Many employers will want at least some of their staff back to work, and many are already operating a flexible furlough with people in work for some days on full pay and other days on furlough on 80% of pay. But those costs of part-time furlough are also rising. The furlough scheme is voluntary. Employers do not have to be
in it and can pull out at any time. If they want staff to return, they should inform them in writing, but there is no minimum notice.
An employer has every right to make staff redundant if the business cannot sustain them. They must give them at least a week’s notice and technically must consult
them. They must also select who they lay off in a fair manner and must not break discrimination laws such as picking people on maternity leave or with children, or those with a disability. People who have worked there for more than two years must get longer notice and some redundancy pay.
For more information, go to acas.org.uk and search “furlough” and “redundancy”.
Paul Lewis presents Money Box on R4