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Exiting furlough – how do we exit and what is next?

July 10, 2020

Given the excellent news of pools reopening on 25 July, our members who have been furloughed can now start preparing for a return to the pool. We ask that members continue to consider the BSCA Guidelines as part of their planning and be cognisant of the information below.

This written from the perspective of the employer so will be helpful to both employees and those with whom they have a contract.

Please contact us if you have any queries.

As we look towards exiting furlough, this is an important time for businesses to plan and implement the measures that will enable them to exit furlough and navigate the coming months.

For the majority of our employer clients, the past month has been a whirlwind of change, absorbing and reacting instantaneously to ever-shifting government guidance, acclimatising to remote working practices, managing the increased anxieties of employees, alongside the usual operational aspects of running a business.

The Coronavirus Job Retention Scheme (better known as the “furlough leave scheme”), launched on 23 March 2020, has been in place for over a month. HMRC are now processing payments lodged via the online portal promptly, and payments to employers are being made within 6 working days of receiving the claim.

As the initial chaos of navigating the scheme has, to an extent, settled down, many employers are now looking forward and reflecting on their next steps over the coming months. The focus for many will now be upon mitigating the economic impact of the pandemic. As the scheme is currently proposed to end on 30 June 2020, this will prompt employers into making challenging decisions and implementing cost saving measures. Some employers will, regrettably, need to commence redundancy exercises in the coming months.

Exiting furlough – key legal questions and practical considerations

We have set out some key legal questions and practical considerations for employers to consider when planning their furlough exit strategy.

How do we exit the furlough leave scheme and what do we need to do?

Once the Coronavirus Job Retention Scheme has ended, the first step for employers will be to notify the relevant employees that they are returning to work and resuming their normal duties.

Broadly, this process will involve writing to the employees to provide reasonable notice of their return to work and clearly communicating the ongoing arrangements. Written records should be kept of all correspondence surrounding this. Assuming that the employee will return to their normal terms and conditions of employment, this will be relatively straightforward from a legal perspective.

Employers should also consider how this transition will take practical effect. Whilst this will ultimately be led by government direction, it is likely that any announced return to work will be phased over several stages. In the same way that some employers have exercised a “rotation” system with employees on furlough leave, likewise, employers could implement a phased shift arrangement whereby different employees work alternative weeks from home and the office.

What steps can we put in place to support employees that are concerned about returning to work?

There will be practical aspects to reintegrating the workforce, as some individuals will, understandably, have anxieties about returning to the workplace. The extent of the impact of COVID-19 on mental wellbeing is not yet clear and is likely to have wide ranging implications. This means that now, more than ever, employers will need to recognise these issues in order to support employees.

Employers should consider implementing wellbeing initiatives and providing mental health first aid provision. Employees will have different preferences and circumstances to take into account. Some employees may be caring for family members and others may have suffered personal financial hardship or bereavement.

Employees will also be concerned about their personal safety when returning to the office. Employers should review their health and safety obligations in light of the crisis, and ensure that appropriate measures are in place. This may involve adapting working practices and undertaking workplace risk assessments to ensure employees are protected when returning to the office environment. This will, of course, be guided by government guidance, but social distancing is likely to be with us for some time to come, and so employers should, wherever possible, introduce social distancing measures into their workplaces. These measures should then be communicated to staff to reassure them that they are returning to a safe place of work.

Can we implement contractual changes e.g. reductions in pay or changes to working hours?

If the furlough leave scheme ends, as currently proposed on 30 June 2020, furloughed employees will then resume their usual duties as normal. Employers will be managing the financial impact of COVID-19 and may need to take steps to reduce their operational costs. Employers will, as ever, want to avoid redundancies if at all possible, particularly if the economic shock is temporary as many are predicting. Therefore, employers are likely to be creative in devising ways of retaining staff. This could involve making temporary reductions to pay, reviewing discretionary benefits and/or reducing contracted working hours for cost efficiency.

Ultimately, a change to an employee’s pay or contractual working hours, will be regarded as a substantial change. An employer will therefore need to obtain the employee’s express consent in writing in the usual way. There may also be collective bargaining obligations to consider.

It may be the case that, whilst on furlough leave, employees have agreed to a reduction in pay and therefore, may be willing to agree to further changes. There may be mutual benefits to a reduction in hours for a temporary period. Employees with childcare commitments, for instance, may have short term difficulties in obtaining childcare cover and a reduction in hours could assist. However, other employees will be less willing to agree to changes and employers need to communicate transparently on the reasons for any proposals being made.

Some employers may temporarily remove discretionary entitlements e.g. suspending bonus schemes or, in other cases, offering company shares instead of cash. If the scheme is discretionary, employers will have greater flexibility here. If the scheme is contractual employers will need to obtain consent, as outlined above.

Employers should also consider whether their decisions are engaging collective consultation obligations. If an employer is proposing to dismiss and offer to re-engage over 20 employees, if they do not consent to the changes, collective consultation will be triggered. This will depend on the circumstances proposed and employers should take legal advice.

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