As you will know furlough is due to end on the 30th September 2021, and barring something drastic happening between now and then (like an announcement of another lockdown!) it will not be continued beyond this date (certainly not in the current format at least).
What will happen to currently furloughed or flexibly furloughed staff?
The end of the scheme means that if you have any staff who are currently on furlough or flexibly furloughed you will need to make a decision about what will happen to them from the 1st October 2021 as the top up of pay for periods of furlough will no longer be available.
You have several options depending on the circumstances of your business/organisation.
- Return to work on their pre-furlough contract terms.
- Consult and agree an amendment to their contract terms on a permanent basis, for example if you need to reduce hours.
- Consult with staff about redundancies if you need to reduce staff numbers and costs.
- Agree to keep them furloughed or flexibly furloughed for a further period. You will of course have to agree a payment for the period of furlough and fund this yourself, but it is still possible to agree with staff to only work part of their contracted hours and receive reduced pay for the remaining time.
What happens if you have to close the business and are unable to provide work for any period in future?
In recent weeks a number of businesses have had to close due to the fact that there has been a covid outbreak amongst staff or because they have not had sufficient staff to safely cover the work required.
Whilst the furlough scheme has been available, employers in this situation have been able to furlough staff and claim a percentage of the pay from the scheme.
It is important to consider what you will do and what arrangements you will make in the event that you have to close after the 30th September and are unable to provide staff with work.
If your contracts with staff include the relevant short time working and/or lay off clauses, then you can legally reduce their hours and pay for a temporary period with limited risk of a claim.
In the absence of any contractual agreement that allows you to reduce hours and pay, you would be obliged to continue to pay staff during a period of closure at their full contractual rate of pay or run the risk that they seek to enforce their employment rights and make a claim against you. This could prove costly if you have a large workforce or must close for a long period with no income.
What are your options?
Reach an agreement with staff now about what will happen.
For example, you could agree that if you must close for a short period and are unable to provide work that you agree to pay them 50% of normal pay.
Another option is to agree that they are required to take annual leave during this time.
Check your contract terms and if necessary, amend the terms across the workforce.
Depending on the nature of the changes that you are making this may not be an easy and quick fix, but it is certainly worth checking and updating contracts and considering a full consultation process with staff to amend across the business/organisation.
Make a contingency plan so that you are able to operate and reduce the possibility of a forced closure.
This may seem obvious, but it is important to consider what the possibilities are that could cause you to have to close for an extended period.
Are there any ways you can mitigate the risks, and if it happens is there any contingency you can put in place? Can you collaborate with another local business and agree a staff share? Could you create two bubbles of staff so as to reduce risk of a covid spread? Could you ensure key personnel do not work together, thereby limiting risk that you take out the staff needed to safely operate the business?
Get advice and plan now
We would be happy to talk through the options with you and help you come up with a plan, in case the worst happens, and you do have to close in future.