The Government’s Coronavirus Job Retention Scheme (CJRS) – known as furlough – has acted as a lifeline to millions and runs until the end of September.
More than 11.4 million jobs have been supported by the scheme, and it has been used by an estimated 1.3 million employers.
To date, the price-tag attached to this level of support stands at some £57.7 billion.
From the beginning of July 2021, employers were asked to contribute 10% towards the wages of furloughed workers for hours their staff do not work, rising to 20% in August and September.
Employees will continue to receive 80% of their current salary, capped at £2,500 per month, until the scheme ends.
With the scheme now due to end on 30 September 2021, employers will no longer be able to designate employees as on ‘furlough leave’.
While another extension is possible, given the current status of the Government’s roadmap, it is hoped that by September 2021, things will have returned to a state closer to our pre-pandemic ‘norm’.
Therefore, it would seem an appropriate time for the scheme to come to an end.
So with this coming over the horizon – what should business owners and employers be doing to prepare themselves?
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We have already started to hear the stories where HMRC has investigated errors and fraud.
Almost 26,000 investigations have happened so far, almost entirely due to employees whistleblowing on their employers.
Employers and agents are starting to see 20-page letters sent from HMRC requesting information on employers’ furlough calculations, Real Time Information (RTI) submissions and employee details with only a 2-week deadline to collate it all.
In the Budget 2021, the Chancellor Rishi Sunak announced the creation of a ‘taskforce’ to tackle fraud within the furlough scheme and revealed a £100 million investment in the HM Revenues and Customs’ (HMRC) Taxpayer Protection Taskforce to crack down on those who defraud Covid-19 (Coronavirus) government support initiatives, including the Coronavirus Job Retention Scheme (CJRS).
Penalties can be issued by HMRC for up to 100% if the overpayment was considered ‘deliberate and concealed’, so anyone who thinks they have calculated furlough incorrectly should re-visit the calculations and repay any overclaim as soon as possible.
As previously stated, the scheme is currently due to end on 30 September 2021. There is no guarantee that there will not be a further extension; however, it seems unlikely, so employers should plan for the eventuality that the scheme will finish on this date.
The furlough scheme has provided businesses with significant financial support to cover their wage bill over the time in which it was in force.
However, notwithstanding this support, many businesses may find themselves in a position where they have not fully recovered by the end of the scheme in September 2021 and are therefore forced to consider further cost-saving measures.
It is therefore critical that in advance of 30 September 2021, employers should prepare a business plan to outline any changes that need to be made, both in the short and medium term, and their strategy regarding any employees that are still on furlough.
Such a plan should include cash flow forecasting particularly given the intended cessation of the furlough scheme.
As part of the planning process, businesses will need to look to the alternative options in play before the scheme launched in March 2020.
Here are some to consider:
- Bring the employees back into work, whether on the same or different terms. Timing will be a key concern for employers when ending furlough, to ensure there is sufficient work for the employee, while ensuring health and safety considerations have been addressed for the return to work plan. If any changes are being sought to the employment terms, these will need to be managed and implemented correctly within the employment documentation. For staff that are returning to work, employers should give notice in writing. There’s no prescribed minimum notice period for ending furlough, unless the issue of notice has been previously agreed as part of any furlough agreement.
- If there is still insufficient work, but an upturn is expected soon then short-time working and lay-offs are more temporary measures that can be implemented to try and help stabilise the business. These involve reducing the number of hours employees work for you – potentially even to zero hours for a while. Whilst there is no limit to how long employers can lay off employees or place them on short-time working, it is worth noting that if employees are laid off or put on short-time working for four weeks in a row or six weeks over 13 weeks, employees are able to apply for redundancy and claim redundancy pay.
- Redundancies may be needed where the business does not believe there is sufficient work, and the level of work is unlikely to increase for some time. If redundancy is the only option, a fair dismissal process has to be followed. If the employer mismanages any aspect of these changes, they risk tribunal claims.
MAD-HR can help with all aspects of workforce management, including adapting to the challenges of the COVID pandemic on employment terms and employee engagement.
We deliver comprehensive advice on the options open to you as an employer and provide practical support through any process to vary contractual terms or to draft new employment documentation adjusted to post-pandemic conditions and requirements.
For help and advice with a specific issue, speak to our experts.