Counting down to the end of Furlough

02 Jul 2021

Whilst employees can remain on furlough until 30 September 2021 we are now seeing decreasing numbers of furloughed employees. The levels of furlough use will decrease further with the expected easing of restrictions on 19 July and the requirement for employers to contribute 10% towards the furlough payment from 1 July and 20% from 1 August, as well as the existing employer obligation to make auto enrolment and NICs contributions.
 
There are a small number of employers who have started in the last month to use furlough for the first time, as even 3 months of government wage support will help their final transition to what we all hope will be a return to pre pandemic levels of business activity.
 
Continuing use of furlough, including flexible furlough, is still a lifeline for employers who are still not operating at full capacity due to government restrictions, such as those in the hospitality, leisure and tourism sectors. A combination of public confidence, Covid Safe assessed events and workplaces and continued success in vaccination take up will be needed to ensure businesses are able to operate at close to pre pandemic levels.
 
Without these factors employers will be fearful of a cliff edge scenario from 1 October when furlough support ceases. If there is insufficient work for employees to do from October 202 employers will need to consider redundancies, but they will need to ensure employees are paid during any redundancy consultation periods and then paid their notice period. For some employers finding themselves without critical furlough support that had been in place for 18 months will be a daunting prospect.
 
If employers are concerned about levels of available work from October then they should not wait until furlough ends to look at how they deal with that. Redundancies require prior consultation, with mandatory time limits for 20 or more proposed redundancies. Proposals to reduce salary and hours require employee consent and other alternatives to redundancy such as career breaks will need to be planned and agreed with employees.
 
Employers also need to ensure that employees furloughed for lengthy periods have the capability to return. Re-training could be required where skills have not been regularly practiced, and for some employees, furlough isolation from colleagues will have had a negative wellbeing impact.
 
Putting in place measures now to address both return to work and non return to work should be a priority for employers.

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