The Coronavirus Job Retention Scheme and Redundancy - Changes on the Horizon

The recent COVID-19 pandemic has had a significant impact on all aspects of our lives, and this includes a huge disruption to the majority of businesses out there. Ensuring business continuity during these trying times has become priority number one, and unfortunately for many organisations this will involve cutting costs, and most likely reducing the workforce. The Coronavirus Job Retention Scheme (CJRS) that the government introduced has been vital in maintaining job security, however with the format of this provision changing in the near future and considering redundancy consultation requirements and deadlines, it may be coming to crunch time for many employers to make some hard choices.



CJRS changes coming soon…

 

On 20th March, the UK Government announced the implementations of the Coronavirus Job Retention Scheme to help businesses deal with the economic consequences of the COVID-19. To date, over 1 millions employers have chosen to take part in the scheme by furloughing many if not all of their employees. From the 1st of July, the scheme will move into a more flexible phased where employees can be partially furloughed, combining it with part-time working. After the end of July employers will have to start contributing under the scheme as follows:


  • From 1st August 2020, the Government will continue paying 80% of salary up to a monthly cap of £2,500, but employers will have to pay employer’s National Insurance contributions and pension contributions and will no longer be able to reclaim those amounts via the CJRS;

  • From 1st September 2020, the Government will pay 70% of salary up to a monthly cap of £2,187.50, with employers being required to top up salary to 80% up to a cap of £2,500 and pay employer’s National Insurance contributions and pension contributions;

  • From 1st October 2020, the Government will pay 60% of salary up to a monthly cap of £1,875, with employers being required to top up salary to 80% up to a cap of £2,500 and pay employer’s National Insurance contributions and pension contributions.
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Redundancy issues following lockdown

 

The normal rules around redundancy have not changed, however the current situation means there are a number factors employers need to consider such as:


·The actual logistics of redundancy procedures – Obviously with social distancing guidance in place, redundancy consultations will most likely need to be amended. Redundancy meetings will still need to take place individually and/or collectively, but these will have to be arranged and carried out remotely; for example, via video call or conference call or in writing. Employers may need to build extra time into the consultation process to allow for any logistical issues 

which may arise.


·Pooling and selection – In this unprecedented environment, many employers may be required to make redundancies they otherwise wouldn’t have even considered. One of the key factor employers need to think about is their pooling and selection criteria for those to be made redundant. By not getting this point right, an employer may be at risk from establishing an unfair or even discriminatory redundancy process.


·Staff are probably entitled to be paid their full salary during their notice period even if they have only been receiving the relevant percentage of furlough pay during furlough, although this depends on whether the notice period is contractual or statutory. Redundancy pay should also probably be based on full salary not furlough pay. Any outstanding annual leave should also be paid at the full rate of pay.


·Finally, for employers it is vital to stay up-to-date on the latest Government guidance, amendments are being published on an almost weekly basis and fundamental changes have been made even since the first guidance notes were published!




There may be a lot of doom and gloom out there with whispers of redundancies and recessions, however we at Maxwell Stephens are remaining positive. We are seeing the turn of the tide and many companies are regaining their confidence to continue recruiting whilst adapting to the post-lockdown business environment. Some businesses may struggle, but others will seize the opportunities that arise and the team at Maxwell Stephens are on hand to either support you with your recruitment efforts or help to get your career back on track.

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