Last week the chancellor, Rishi Sunak, announced that from the 1st November the government will put in place a new Job Support Scheme. The scheme will follow the current furlough arrangements which will end on the 31st October and will be available for 6 months. How will this new scheme impact hiring decisions and how is the new scheme to be addressed with employees?
The Job Support Scheme will apply to employees working at least 1/3rd of usual hours, but are unable to return to full working hours. In practical terms, this means the employer will pay for all hours actually worked with the employer, but payment for the remaining, non-worked hours being split three ways, with payments of 1/3rd from the employer, 1/3rd from the government (subject to a £697.92 per month cap) and the other 1/3rd being unpaid.
Whilst the new scheme may allow for a gradual return to the workplace, the reality is that employers will be paying a minimum of 55% of normal wages, plus contributions for employees who are not working 55% of their hours. The scheme may offer an option where there is a desire to retain talent, or, in the short term, where additional costs can be mitigated by the job retention bonus payment, payable in respect of previously furloughed employees, who remain employed until the end of January 2021 and meet a minimum earnings threshold. However, the scheme is unlikely to be commercially viable for all and therefore tough decisions may still have to be faced.
For some employers, it may still be necessary to consider redundancies, either due to being unable to offer employees the minimum of 1/3rd of normal hours or decisions to streamline in any event. For some, it may be an option to reduce contractual hours and pay only for the time worked, rather than the additional contribution applicable under the new scheme. This would see a reduction in employees pay, so may not be welcomed and could lead to a loss of talent either now or as other opportunities arise.
Any reduction in hours or wages is something that must be carefully considered and agreed with an employee – an employer reducing hours or pay without the employees agreement may find themselves in the Employment Tribunal, facing claims of breach of contract and unfair dismissal, and may result in difficulty enforcing post termination restrictions.
The Lawspeed Employment Team can assist with eligibility and workings for the new schemes, redundancy decisions and/or changes to an employee’s terms and conditions. Contact us on 01273 236 236 or firstname.lastname@example.org