End of furlough scheme means businesses must start serious planning | Employment Law

Businesses must start serious planning on what the winding down of the government’s furlough scheme means for them.

Lisa Kemp, an associate director, in the Employment and HR Law department at Thursfields Solicitors was commenting about the Job Retention Scheme grants which have paid 80 per cent of furloughed staff’s wages since the beginning of March because of COVID-19, up to a maximum of £2,500 a month.

But the grants tail off from the end of July, with employers paying National Insurance and pension contributions for furloughed staff in August, and the government’s contributions dropping to 70% of wages in September, and 60% in October.

Lisa said: “The Job Retention Scheme has been one of the government’s more successful interventions during lockdown, with nearly nine million staff furloughed.

“This has almost certainly saved hundreds of thousands, if not millions, of jobs which may have had to be made redundant without such swift action.

“But now the government is winding the scheme down, businesses should take full advantage of the advance notice they have been given to start thinking and carefully planning what this means for them.

“For some businesses, the end of furlough will simply mean their staff starting to return to work, as with the lockdown easing the economy is starting to move again.

“For certain sectors, such as the events industry, the continuation of strict social distancing measures may mean that businesses want to extend their furlough periods, albeit without the assistance of the government’s grant after October.

“However, for some employers, they may have to consider other options such as restructuring if they feel that revenues and trading forecasts can no longer support the same number of staff.”

Lisa added: “In short, certain businesses will have to consider redundancy programmes, and if they do they will need to plan these meticulously, ensuring full consultation and the correct methods of selecting which staff may have to lose their jobs.

“Business leaders would be strongly advised to seek professional advice as soon as possible to make full and legally sound plans, and here at Thursfields we have a whole team of skilled employment and HR lawyers who can assist.”

For more information on employment and HR law issues, you can contact Lisa Kemp on lkemp@thursfields.co.uk or via 0345 20 73 72 8.