Implications to charities on the ending of furlough

At the date of writing, the Government’s Coronavirus Job Retention Scheme (furlough) has been extended numerous times since its introduction in March 2020.  With the current extension (CJRS-E) of the scheme expected to end on 30 April 2021, charities will now need to start considering what the next steps for their organisation will be.

Are you considering redundancies?

Unlike its predecessor, the CJRS-E meant that anyone placed on furlough from 1st December 2020 could not be served notice, whether that be redundancy, resignation or dismissal.  Consequently, when furlough ends the correct procedures must be followed for those employees previously highlighted for redundancy, i.e. notice period, correct payments and consultation.  Despite the restrictions of Coronavirus it is important to note that redundancy dismissals may be warranted unfair if employers have not properly considered alternatives, which may include retaining any employee who is currently on furlough.

Redundancy schedules and consultation

Before bringing employees back from furlough it would be beneficial to prepare any redundancy schedules, which should include identifying any selection pools, selection criteria and seeking advice on the individual circumstances of those at risk (for example those on maternity leave).  Charities will also need to consider logistical issues. Many employees have been working remotely and the position of the guidance from the Government at the time may suggest that consultations should also be remote.  For this to happen, more flexibility may be required for individual employee circumstances.  Likewise, if there are 20 or more employees at risk then a collective consultation is necessary, so it is important that there can be a ‘meaningful’ consultation process available for all members of staff. 

Is there an alternative – will redundancies damage your reputation?

When financially viable, alternatives to redundancies should be sought.  Alternatives to redundancy should always be reviewed but with the current economic state recovering it could be worth charity leaders asking themselves “Is this just short-term?” If the answer is yes it may be worth looking at a cut-back of costs as opposed to staff.  Some of your workforce may have been loyal through good times and bad and you may wish to see them return at some point in the near future, so reputation is extremely important when reviewing these situations.

Whilst at this point in time we are not sure if there will be a reinstatement of the Job Support Scheme or an extension of the furlough scheme, consultations can take place with employees to temporarily decrease their hours or pay until the charity feels in a more stable position financially.  To explore this avenue, legal advice should be sought regarding any contractual stipulations. 

Before initiating a redundancy programme it would be advisable to put a freeze on recruitment, along with reviewing the use of consultants, agency-workers or sub-contractors. Most importantly, if you have a redundancy policy you must follow it. If you don’t have such a policy, ACAS can provide advice on carrying out redundancies within Government guidelines. Equally, you can contact Stone King for more advice and guidance. In September 2020, Victoria Blake and Lisa Saggers (Principal HR Consultants) presented a webinar on Redundancy: the basics, that provides a wealth of information on the process and items you should watch out for.

What are the costs likely to be?

Statutory redundancy pay can be calculated using the below redundancy calculator:

Clearly this doesn’t include any contractual pay obligation charities may have in place.

Notice pay will need to be paid based on full pay. Even if a charity has reduced pay to 80% during furlough, notice pay will be based on the employee’s full pay arrangement pre-furlough.

Returning to work – what employers should know

Fortunately not everyone will need to make redundancies. This is good news and such cases prove the success of the furlough scheme.  However, if employees have been away from the business for a substantial amount of time, managers will need to prepare for their return appropriately.  In some cases, it may feel like a new employee coming into the business.  Throughout the pandemic the message delivered by Stone King and other experts has been to keep furloughed staff engaged.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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