For such reasons, the government’s announcement to end the scheme from 31 October 2020 has been met with a mixture of opinions; the National Institute of Economic and Social Research described the decision as “a mistake”. This is mainly due to concerns that the scheme is ending prematurely when compared to the continuing impediments that the virus has had on the economy. On 6 August 2020, the Bank of England predicted that unemployment is expected to almost double from the current rate of 3.9% to 7.5% by the end of the year.
From August, the rules on employer’s financial contributions to furlough change. For the month of August, the government will continue to pay 80 per cent of wages (up to a cap of £2,500) for the hours an employee is on furlough, although employers will be required to pay National Insurance Contributions (NIC) and make pension contributions for those hours. In September, employers will have to continue paying for employee’s NIC and pension contributions, as well as 10% of furloughed employees’ salaries. This rises to 20% in October.
From 31 October 2020, what will the government do to protect my job from redundancy?
The government have announced that, once the furlough scheme is concluded, employers will be paid a ‘Job Retention Bonus’ of £1,000 for each employee they bring back to work from furlough and who remains employed through to 31 January 2021. To be eligible, the employee must also earn at least £520 a month on average between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). The employer will be able to claim the bonus after they have filed PAYE for January and payments will take place from February 2021.
It is worth emphasising that an employer will not be entitled to the bonus if an employee is serving a statutory or contractual notice period that started before 1 February 2021, even if they remain employed on 31 January.
The key question here is whether the bonus constitutes enough of a subsidy to make employers reconsider any prospective redundancies? This is a highly circumstantial question, but it is one you should be able to gauge if you consider the following:
- What is your salary? As previously stated, to qualify for the bonus, the employee would need to earn an average of £520 per month between 1 November 2020 and 31 January 2021. Although it is worth noting that the bonus is to the employer, and is not a wage subsidy for employees (like the furlough scheme), if the bonus is directed towards the wages of someone in the lower earnings limit, the bonus would cover nearly two thirds of their wage costs over the three month period. This could make the difference between redundancy and continued employment for an employee. With that being said, the bonus may not be large enough to retain higher paid employees.
- What sector are you employed in? If you are employed in the industries hardest hit by the pandemic, such as retail, hospitality and tourism, the bonus, coupled with the government’s decision to cut VAT from 20 to 5% on food, accommodation and attractions until 12 January 2021, may be the lifeline that protects a number of jobs.
What alternative avenue may I take, instead of relying on the Job Retention Bonus, to protect my job from redundancy?
Given the limited, if any, consultation the government has had with businesses as to the efficacy of the Job Retention Bonus, it is worth assessing the alternative options that an employee or employer may have to reduce the possibility of a redundancy process.
If possible, agreeing to a variation of the terms of employment may be an appropriate route. Varying an employment contract can be remarkably easy, especially if there is mutual agreement amongst the parties.
Changes that may support continued employment include those related to pay rates, bonus and commission structures, contractual benefits, job duties and the place where an employee is required to work (mobility clauses). As an employee, it may be advantageous to consider how much you are prepared to change your working practices to accommodate the needs of your employer. Ask yourself whether you can afford to go down to fewer hours, work different hours, undertake different job duties, or whether you can assist cost-cutting by working from home, if possible. You may also negotiate how long these varied terms may last.
If you are being asked to accept new terms that you do not agree with, remember that a contract may only be amended in accordance with its terms or with the agreement of all parties. If the desired change is not authorised by the employment contract itself, there are three ways in which the employer may vary the contract of employment:
- Seeking the employee’s express agreement to the new terms (either on an individual basis, or through a collective agreement which is binding on the employees concerned).
- Unilaterally imposing the change and relying on the employee’s conduct to establish implied agreement to the change.
- Terminating the employee’s employment and offering re-employment on the new terms.
If you wish to agree to new contractual terms make sure that, before you communicate your agreement, you request that the terms are put in writing to you. This is necessary in case there is any future disagreement as to the interpretation of those terms. If the change involves any reduction in pay, it is particularly important for the employer to obtain your written consent to the change, as, if they fail to do so, you may have claims for unlawful deduction of wages and constructive dismissal.
The Hanne & Co employment department is experienced in providing comprehensive, specific advice for clients at affordable rates. We have a strong history of representing employees and advising on employment issues, to achieve preferential outcomes for employees.
Should you require employment advice tailored to your circumstances, do not hesitate to contact the Hanne & Co Employment Law Team on 020 7228 0017.