As part of its response to the COVID-19 pandemic, the government introduced the Coronavirus Job Retention Scheme (CJRS). This temporary grant scheme was designed to help employers whose operations have been severely affected by COVID-19 to retain their employees (prevent redundancies) and protect the UK economy. It allowed all UK employers with employees on a PAYE scheme to designate those employees as ‘furloughed workers’ and receive a grant to cover 80% of their wages (up to a cap of £2,500 per month). The scheme, like most of the government’s response to COVID-19, has been a constantly evolving, never-ending story. Cllr Hilary Bruce investigates.
Announced by the Chancellor Rishi Sunak on 20th March 2020, it opened for claims on 20th April 2020 and was originally scheduled to finish at the end of June, but – to avoid spiralling job losses – on 17th April 2020 it was extended until the end of June and on 12th May 2020 it was further extended until the end of October. The latest changes were introduced on 12th June: here
From 1 st July, the scheme will finally become more flexible, allowing employers to bring furloughed employees back to work for any amount of time and any shift pattern, whilst still being able to claim the CJRS grant for the hours not worked. It is a welcome change, although the guidance issued last Friday night has been described as “complex” and “horrible” by legal experts.
From 1 st August 2020, employers will be required to pay ER NICs and pension contributions
From 1 st September 2020, employers will also be required to top up employees’ wages as the grant will cover 70% and then 60% of their wages.
Labour Councillor for Bridgwater Fairfax, Hilary Bruce says “As a furloughed employee, I am thankful to have retained my job and my (slightly reduced) income, but the worry about what may have to be faced when the furlough scheme ends has never really left me and I suspect I am not alone. I am lucky, I work for a good company that has kept my colleagues and I informed of the process at every stage and I know that redundancies would be the very last option on the table, however I am also realistic, so I know that redundancies remain a very real possibility.”
A ‘Waiting Room for Unemployment”
In April, the Chartered Institute of Personnel and Development warned that unless the scheme became more flexible and was extended until at least the end of September, the furlough scheme could prove to be a “waiting room” for unemployment. Now that these changes have been announced, Cllr Bruce is concerned that they might not be enough to prevent the risk of large-scale redundancies pointing out that “On Monday 8 th June, British luxury brand Mulberry said it plans to cut 25% of its global workforce of about 1,500, with some job losses expected to affect its Somerset factories, whilst BP expects to cut 10,000 jobs globally, with about 2,000 of those expected to be in the UK.”
Yesterday, Nigel Costley, Regional Secretary of the TUC South West also weighed into the debate saying “Unions are already receiving HR1 forms to start consultation over redundancies. It is hitting the private sector and Unite mainly at the moment. We fear a tidal wave of redundancies unless the government offers significant job subsidy and job creation schemes”.
Cllr Hilary Bruce added “From August, an employee on furlough will cost their employer. Therefore, if it looks likely that an employee’s job will no longer be viable from October, the employer will probably aim to make them redundant from August. If an employer intends to make 20 or more employees redundant, it must inform and consult the recognised union or employee representatives at least 30 days before notice is given of any dismissals. This rises to at least 45 days where 100 or more redundancies are involved. So today, 16 th June 2020, marks a ‘cliff-edge’ date for employers to start conducting the minimum 45 days collective consultation period prior to the changes coming into effect from 1st August 2020. That said, there remains some doubt over whether effective consultation is possible while workers are furloughed.Workers faced with redundancy can find some generic advice on their employment rights on the Worksmart web site but the main message from the TUC to workers in that situation is to join a union.”
More Focus on Job Creation
The hospitality and leisure industry, which represents a major employment sector in Somerset, is particularly at risk of redundancies as some operators will have to remain closed because the 2 metre rule prohibits them from being able to open safely and/or it is not financially viable for them to do so. Cllr Bruce said “Closed doors means no customers and no cash, making it impossible for them to top up wages for staff on furlough.”
Labour yesterday called on the government to support the reopening of the hospitality sector (here) , stating “The economic support for businesses needs to sit in tandem with their ability to trade. For hospitality this is going to take a lot longer than other sectors”.
Cllr Bruce said in conclusion “As things stand, with the support schemes coming to an end this autumn, redundancies are to be expected. If the government wants to keep the UK workforce out of that “waiting room” and in employment, moving forward we need to see a much stronger focus on job creation, skills training and targeted financial support. We need jobs for the future.”