Furlough Scheme Changes...And What They Mean For You10th Aug 2020
Job Cuts As Furlough Support Is Reduced
Employees at struggling firms are at a greater risk of redundancy because the furlough scheme is now less generous.
Employers are now having to pay National Insurance and Pension Contributions for staff on furlough.
And from September 2020 it gets tougher still. Employers will have to pay 10% of the salary of employees on furlough. In October 2020 that ratchets up to 20%. Then the scheme ends on 31 October 2020.
This phased withdrawal of help is forcing employers to make tough decisions. That has grim consequences for employees losing their jobs in a shrinking recruitment market.
What Happens After Furlough?
From 31 October 2020, employers with furloughed employees and workers have three options:
- Bring them back to work on their normal working hours
- Reduce their working hours
- Make them redundant – normal rules apply. (Lost your job? Learn about your rights.)
Employers who bring workers back from furlough and retain them in employment until the end of January 2021 will qualify for a £1,000 bonus.
Could The Furlough Scheme Be Extended?
The government does not want to extend the furlough scheme because of the multi-billion pound cost to the economy.
Chancellor Rishi Sunak previously ruled out an extension – but is now saying that it may be possible if a second wave of Covid-19 were to hit the UK.
However, he warned: “We shouldn’t pretend there is, in every case, a job to go back to.”
139,000 Job Losses Announced So Far
Some of Britain’s biggest companies have announced thousands of redundancies ahead of the gradual winding down of furlough support.
Jobs cuts announced in June were at least five times higher than during the same month last year, according to government data released earlier this month.
In June 2020, 1,778 companies in England, Scotland and Wales said they were planning to cut 20 or more jobs.
There will be 139,000 redundancies in total, the data shows. That compares with just 345 firms cutting 24,000 jobs in June 2019.
Highest Numbers of Redundancies
- British Airways (12,000 jobs) – grounding of flights for months has made large-scale jobs cuts all but inevitable.
- Centrica (5,000 jobs) – half these job cuts will fall on managers as the owner of British Gas tries to streamline its structure. Half its 40-strong leadership team will be going.
- Swissport (4,175 jobs) – the airline baggage handler is losing around half its staff in what the GMB union described as “devastating” cuts.
- EasyJet (4,500 jobs) – 30% of the airline’s staff will go.
- Virgin Atlantic (3,000+ jobs) – the airline is pulling out of Gatwick and cutting one-third of its workforce.
- Ryanair (3,000 jobs) – employees who survive this round of job cuts could be forced to take pay cuts of up to 20%.
- Rolls-Royce (3,000 jobs) – plus another 6,000 around the world as the jet engine manufacturer is hit by the impact of Covid-19 on the aviation sector.
- Ovo Energy (2,600 jobs) – the Covid-19 pandemic has accelerated Ovo’s plan to cut jobs after its merger with SSE to become the UK’s second largest energy supplier.
- Airbus (1,727 jobs) – Europe’s largest aerospace manufacturer is cutting 1,116 UK manufacturing jobs and 611 office roles as part of 15,000 redundancies worldwide.
- G4S (1,150 jobs) – the company is restructuring its cash handling operations. We’re all using less cash.
This list does not include all the UK jobs likely to be lost in global redundancy programmes announced by HSBC (35,000 job losses worldwide) and BP (12,000 job losses worldwide).
Nor does it include luxury carmakers Bentley, Aston Martin and Jaguar Land Rover. They will account for a further 2,600 redundancies between them at car plants across the UK.
And then there is the already troubled retail sector...
Thousands of Retail And Leisure Jobs Lost Or At Risk
Covid-19 could not have come at a worse time for Britain’s high street shops as they struggle to compete with Amazon and other online retailers.
Lockdown has further ingrained the online shopping habit. Meanwhile, Amazon’s share price has nearly doubled since lockdown started on March 23.
The fear is that this growing dependence on Amazon makes consumers less likely to return to the high street when the pandemic eventually ends.
Meanwhile, struggling retailers are announcing job losses in droves. They include:
- Debenhams – up to 14,000 jobs at risk (updated figure: announced 15 August 2020)
- Marks & Spencer – 7,000 job losses (update: announced 18 August 2020)
- Boots – 4,000 job losses
- Travis Perkins – 2,500 job losses
- Oasis and Warehouse – 1,800 job losses
- WHSmith – 1,500 job losses
- Hays Travel – 878 job losses
- Clarks – 700 job losses (900 corporate redundancies but 200 hires)
- Monsoon/Accessorize – 545 job losses (but it could save up to 2,400 more jobs that were at risk)
- TM Lewin – 600 job losses
- Mulberry – 470 job losses.
Thousands more jobs across the retail and leisure economy are “at risk”. Companies which have made announcements include SSP, which owns Upper Crust (5,000), DW Sports (1,700), Burger King (1,600), John Lewis (1,300), Pizza Express (1,100) and Dixons Carphone (800).
Small Firms – The Hidden Victims
Many small and medium-sized companies have been forced to lay off staff but these job cuts seldom hit the headlines.
And yet SMEs account for 99% of the business population and 16.6 million workers (three-fifths of the UK workforce), according to the Federation of Small Businesses.
Small firms will be particularly vulnerable without government furlough support because they lack the multi-outlet resilience of the big chains. The average SME’s eggs are all in one basket – or a handful of interdependent baskets.
So they have less room for manoeuvre when the going gets tough. Next time you read about job losses at a national or multinational, spare a thought for the SMEs that supply them – because they too are likely to be struggling.
Little wonder that conciliation service Acas has seen a steep rise in redundancy-related calls to its helpline. They have soared by 160%.
Which Sectors Are Using Furlough The Most?
Arts, entertainment and recreation is the sector with the biggest dependence on furlough in terms of workers receiving retention scheme funding.
Some 64% of workers in this sector were on furlough in the first half of July 2020, according the Office for National Statistics.
Next placed were:
- accommodation/food – 45%
- administrative/support services – 30%
- transportation/storage – 27%.
What Happens If I'm Made Redundant Now Furlough Is Winding Down?
Normal redundancy rules apply. And now employers must base your redundancy payment on your original pre-furlough salary or wages – not your 80% furlough pay.
This protection is enshrined in rules that came into force on 31 July 2020: The Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 SI 2020/814.
The new regulations stop employers from paying severance at the furlough rate of 80% pay (capped at £2,500). They apply to:
- statutory redundancy payments
- statutory notice payments
- unfair dismissal compensatory awards.
But what if your pay isn’t a fixed amount? What if it changes due to factors such as sales commission or variable working hours?
In cases such as these, pay is normally averaged over the last 12 weeks. The new rules apply where this period includes at least one week of furlough.
What if you took a pay cut to help your company through this difficult period? This is different to the government furlough scheme…
If you had your pay reduced – either under the terms of your existing contract or if you agreed to a cut – then your employer can use the lower rate of pay to calculate your statutory redundancy payment, statutory notice payment or unfair dismissal compensatory award.
Can My Boss Force Me To Return To Work?
For many of us lucky enough to still have a job, working from home is the new normal.
And very nice it is too.
The advantages are numerous: lower risk of infection, no commuting, less expense, a relaxed dress code, fewer childcare worries, better work-life balance, all the home comforts, greater productivity…and so on.
So you could be forgiven for being in no hurry to go back to your traditional workplace. Why would you? It makes less sense. Life has moved on. We’re a fifth of the way through the 21st century – we should all be working smarter now.
And crucially, you have the moral high ground on your side because you’re doing the sensible thing: you’re self-isolating at home (while remaining productive if you’re able to work from home).
But what if your boss insists that you return to work? Can he force you to return to work? What right do you have to refuse if you think he is putting your health at risk?
Employers are obliged to keep you safe at work. They must follow health and safety rules. Current strict measures include:
- One-metre social distancing (though cynics say the reduction from two metres owes more to the economy than it does to public health).
- Introducing one-way systems (though some retailers have now either scrapped these or don’t enforce them).
- Frequent cleaning (though that depends on the aptitude and the work ethic of those assigned the extra cleaning duties).
- Storing returned objects for 72 hours before returning them to the sales floor. However, studies of other coronaviruses showed that infections survived on metal, glass and plastic for as long as nine days unless they were disinfected properly.
- Table service only in indoor pubs and restaurants.
- Venues are expected to collect customers’ contact details for the NHS Test and Trace system.
Your employer has the right to ask you to return to work. Many jobs simply cannot be done from home. And if you don’t turn up for work then your employer is not obliged to pay you (if that is what your contract stipulates).
But under the law, you have the right to refuse to attend your workplace if you believe that doing so would put your health at risk.
And if your employer tries to fire you as a result of your decision then you could have a case for unfair dismissal.
If they treat you less favourably because of your reluctance to return – perhaps because you have a pre-existing health condition or disability – then you may have grounds to bring a discrimination claim.
What about parents with children at home because their school is closed? Does their employer have to grant them extra leeway in these difficult times?
And in doing so, does the employer then risk discriminating against employees without children? They may feel their safety is being put at risk while their colleagues with kids are getting special treatment.
Employees and employers are both having to tread a very delicate tightrope when it comes to employment law in these challenging times.
So it pays to get proper legal advice before taking any decisions that could have significant legal repercussions.
Get Expert Legal Advice Here
Contact Coles Miller employment solicitor Hugh Reid for expert legal advice on redundancy, unfair dismissal and discrimination claims.