Restructuring your Business following Covid-19
The furlough scheme may have been extended to September 2021, but employers will need to look at cost-saving measures in readiness for the end of the Furlough Scheme. There are various options available to employers,
Keeping employees on furlough when the government scheme has ended
The Coronavirus Job Retention Scheme created a form of agreed lay off even where there was no contractual lay-off provision. As a result, provided employees continue to agree to being on furlough, it would be possible to extend the period for they are furloughed. This could reduce pay below the current furlough grant, or even implement furlough on no pay. Employees may be willing to agree to this as an alternative to redundancy. However, you will no longer be able to reclaim salary or other wage costs from the furlough scheme after it has ended.
Changing terms and conditions
You may change an employee’s terms and conditions with consent and have written confirmation. Alternatively, if there is a contractual right to impose short-time working this could be used (subject to consultation and notice).
Reducing pay for employees but require them to work the same hours
Employers may be in the position whereby they require employees to work the same hours for less pay. This is a possibility, but it will be difficult to persuade employees to agree to this. You will need to ensure you explain the reasons and business cost in detail to minimise employee discontent. You also need to ensure for low paid employees that, if their pay is reduced but their hours are not, you still continue to comply with minimum wage legislation.
It may be the case that you need to consider a redundancy process due to the economic climate. Redundancy is a potentially fair reason for dismissal, but it must also be reasonable in the circumstances to dismiss for that reason. There is an argument that it is unfair to make employees redundant when the furlough scheme is available as an alternative. However, if employees agree to reduce their pay to the amount of the furlough grant, the employer will still need to bear the costs of employer’s National Insurance Contributions, pension contributions, holiday pay top-ups and any other benefits.
If you would like to discuss reorganise your business following Covid-19 or discuss any of the above options, please get in touch with our Employment Solicitor Sasha Brine by calling 07475069698.