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Baker Tilly Mooney Moore: Furlough Scheme Update

As summer turns to Autumn, the end of the UK Government’s Coronavirus Job Retention Scheme is also soon to come to an end. We already know that since June 2020, the scheme has been closed to new entrants, and it is currently due to close entirely on 31 October 2020.

There have been some subtle changes to the mechanics of the scheme recently, for example in August we saw that employers are having to share costs with government by meeting the national insurance and pension contributions of furloughed workers. Now from 1st September, employers must further contribute 10% of wages, rising to 20% from October.

As the scheme draws to a close and with no clear signs from government that they will continue to fund the scheme beyond 31st October, there are some key areas that employers need to be mindful of in this last phase of the scheme.

Q1. Can I furlough staff now, or is it too late?

No, it is too late now, and employers cannot furlough new staff at this point.

Q2. Our business levels have not recovered from pre-lockdown levels, so I don’t need to bring all my staff back. Can I furlough employees during the final two months?

Yes. Since 1 July 2020, “flexible furlough” is the facility to allow employers to bring back already furloughed staff on a part time or reduced hours basis.

Q3. It’s beginning to look as though we won’t require our furloughed staff and would like to dismiss them. How should we do this?

As in any change –  you should start by consulting with staff while they remain on furlough – this is highly recommended. There are other factors that you will also need to plan for in this area:

  • Application of collective consultation obligations (if these conditions exist)
  • Selection of employees across furloughed and un-furloughed staff.
  • Liability for notice pay during / after furlough.

…and these are just a few and employers need to be careful on how they handle dismissing employees at this stage.

Q4. Are there any incentives to hold onto staff after the end of the furlough scheme?

In July 2020, the UK Government announced a new measure to encourage employment after the furlough scheme ends. Under this new scheme, the Government will pay employers a £1,000 bonus for each employee who has been placed on furlough who they retain in employment until the end of January 2021. The employee must earn at least £520 each month from 1 November 2020 to 31 January 2021 for the employer to be eligible to receive the bonus.

Full details of the scheme have yet to be released.

The Baker Tilly Mooney Moore team can guide you through all aspects of the Job Retention Scheme and should be your first point of contact for advice and guidance if you are considering changing or reducing your workforce numbers or their hours/contracts. Please contact Donal Laverty by email [email protected]