Are you able to make people redundant whilst they're on the extension to the furlough scheme?

Posted in : Seamus Says - Employment Law Discussion on 5 March 2021
Seamus McGranaghan
O'Reilly Stewart Solicitors
Issues covered: Extension of furlough scheme; Redundancy

Can you explain what the extension of furlough scheme means and are we able if it's necessary to make people redundant whilst they're on the extension to the furlough scheme?

Seamus: Well, look, the good news that we received this week from the budget, there was a bit of a leak of the extension of the furlough scheme just in advance of the budget on Wednesday, but we know that the scheme has now been extended until the end of September, so they've bumped it until September, and that obviously came through with the Chancellor's budget. Same position as we were in really. Employers can claim up to 80% of the worker's salary for time they haven't worked, up to £2,500 a month. But the change is really in and around that from July onwards, the employer has to make contributions towards the scheme, and for the period of July, the contribution is 10% of the 80% and then moving into August and September, it rises up to 20%.

And I think that some of us were surprised, Scott that the Chancellor had moved the scheme right out to September given the indicative dates and given the position of Boris Johnson that he told us about. Now, and I know that specifically deals with people living in England, but there's this idea that we would all be free from the end of June. And obviously, look, I think that the reality is that there's not going to be a situation whereby everything's going to bounce back to normal straight away. It will probably be a gradual approach, and we've heard from the commentators that there may be issues arising for certain particular industries going forward. And maybe worthwhile just to point out that there is a change in respect of the dates that can be claimed under the furlough scheme.

So for periods ending on or before the 30th of April 2021, employers can claim for employees on the 30th of October 2020 as long as you made the PAYE RTI submission to HRMC between the 20th of March and the 30th of October 2020, and you don't need to previously have claimed for an employee before the 30th of October in order to make a claim under the scheme. And then for periods starting on or after the 1st of May 2021, you can claim for employees who were employed on the 2nd of March 2021 and again, provided that you have lodged a PAYE RTI, or Real-Time Information Submission to the Revenue between the 20th of March 2020 and the 2nd of March 2021. So it's just to bring inline some of the maybe more recent employees that have come on board with organisations. Maybe whenever the lockout period was lifted, and then with the restrictions coming back in again, or maybe where there's some recruitment and there's maybe a need to place some employees back on furlough, so I just wanted to flag up those dates.

And in addition to that, we know that there's a government support for the self-employed, and that's extended out to September also. And just a couple of other things to highlight just from the budget I thought might be helpful, would be that the national living wage increases to £8.91 from the 1st of April 2021. So we always keep an eye on April in every year because that tends to be when the increases come around, whether it's statutory awards or whatever it is. But the National Living Wage up to 8.91 from the 1st of April. And Universal Credits, the uplift from that is going to be extended for a further period of six months, and those that are on working tax credits may be entitled to a one-off payment to £500. Just maybe that for some HR advisors, they'll be approached by staff with queries about that, so just wanted to flag it up. And Acas actually have a pretty good, simplistic explanation setting out the extension to furlough scheme on their website and it helps to look at that also. I think the second question there was about whether you could make people redundant during the extended furlough scheme.

Scott: Seamus, just kind of cross you there, sorry. I'm assuming that that's because last year when employees were required to cover National Insurance and so on there was evidence that people were made redundant then when it wasn't all being covered and there were some changes, and I assume this summer when you're making those 10%, 20% contributions if you're keeping people that don't have work, there may be an indication more likely then than now that people are going to be made redundant.

Seamus: Yeah. And, I mean, that would follow through as basically where we would have been at the same point last year also, that there's a bit of the new increases, and I think listening to the various commentaries during the week, I think that businesses are struggling with the furlough scheme. And I certainly heard during the week, Radio Ulster had a lively debate, and the idea now that there would be an increase of the 10% in July and 20%, it might tip some employers over the edge. But I think that the point of all of this is that the government would hope by the time you're getting through to July, businesses can reopen. They maybe can't reopen to the full extent that they would have previously opened, but with the vaccines in place, that it should be, I would've thought, the lesser of the position that you would have to go into that position with some staff. It certainly shouldn't affect as many as it would have perhaps maybe last summer.

But look, the answer to the question is if the business needs to make redundancies, it's entitled to proceed to make redundancies whether those employees are on the furlough scheme are not. And obviously, look, we need to point out that the notice pay can't be claimed via the job retention scheme, so you can't dip into the scheme for the purposes of notice pay. And in addition to that, if you're making redundancies, obviously, look, you have to follow a fair redundancy procedure. You have to follow your policy and procedure. But in addition to that, redundancy should be based on the full salary, as should notice pay, not on the basis of 80% or anything like that. So, look, bottom line is where redundancies need to be made because of genuine redundancy situations, you can still proceed to do that, but you should ensure that you're following a fair procedure, as you would on any other occasion.


This article is correct at 05/03/2021

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Seamus McGranaghan
O'Reilly Stewart Solicitors

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