Good morning, everybody. For those that don't know me I'm a partner in the employment team here, Shakespeare Martineau.
So welcome to today's webinar, which I'm going to consider what's on the horizon for businesses following the pandemic, and particularly looking at the fast approaching end of the Government's job retention scheme.
So, this is a live webinar, so do use your opportunity to ask questions using the Q and A icon at the bottom of your screen. I'll answer as many questions as I can at the end of the webinar, but if we run out of time, I will respond to you directly to answer the question if we don't get a chance to cover it in the live session.
So, as we all know this pandemics had a huge impact on business across the UK and the further scheme was for many businesses crucial to keeping the doors open and keep them afloat.
The asset as social distance measures are now gradually easing. I'm slowly returning to somewhat of an you know when our reflecting on a very turbulent few moments, and it's fair to say that no businesses have really come out of this state. I think looking at the recent figures published just this last couple of weeks is talking about some hundred and 75,000 redundancies. There are still over nine million people who are furloughed and so making the most of the CJR scheme so clearly as we head towards the end of October, we could well see a huge number of further written disease beyond those that have already been identified.
So that being said, let's have a look at, there's also been some positives to take away from this. In that businesses have adapted. We've looked to more flexible ways of working and adopting homeworking as part of the new norm. And it may well be going forward. Businesses will be well shaped to deal with flexible working requests in view of experiences that have now been undertaken through the response to this pandemic.
But if we look at the furlough scheme and the fact that is now coming towards its conclusion, where are we now and what does the future hold? So, by way of a recap as we all know, the CJR arrest was introduced with the government committing to pay up to 80% of wage costs up to a £2500 cat.
For any employees who are designated as furloughed and the correct eligibility requirements were satisfied.
Now, that continues up to the end of August with the employer now having to pay some national insurance contributions and pension contributions, but from September, that contribution is going to be reduced to 70%. So, maximum of £2187.5 patents, and the employer than paying that 10% balance and then finally, in October, down to the 60% maximum 175 per month.
So, with that being so, we're now starting to see more inquiries about the employer having to contribute towards these costs, of course. And, therefore, redundancy advice is starting to pick up, as businesses are looking to re-organize and still make the most of our funding that's available, while making stuff redundant and having their notes is covered by the CJR I Somalis.
Now, it should be said that previously under the third scheme, employees had to be furloughed for a minimum of three weeks before being eligible for job retention rebates. Now there is this concept of flexible furlough. So, from the first of July, there is no minimum amount of time that an employee has to be on furlough.
You can have someone back working for a couple of days a week and further for the remainder of that time, and still they will be eligible to be in the claim for job retention payments going forwards. So that does lead itself to this complicated calculation of how the flexible furlough payments are calculated. Helpfully, HMRC have set up a further calculator, which is definitely a useful tool to look at in terms of what can be reclaimed, where you've got staff working, Flexibly, are eligible still for furlough payments and it's definitely worth looking at that to get a picture of what your claim should look like.
You'll still need to have information about the reference salary, the normal working hours, and I'd say keep records of the print out from the calculator. Speak with your accountant and ensure the correct claim is being put through.
And that being said, it brings me nicely onto the next topic, which is looking at some of the penalties which HMRC could look at in the event incorrect claims have been made.
So of course, any genuine areas which you know may be inevitable in how the scheme is being set up, particularly now with flexible furlough. And this complicated calculation of being carried comes to be carried out. Those claims are made in good faith and gentlemen errors that take place and not going to be penalized.
If you have made a mistake, then HMRC will simply just the amount paid to you in respect to the next claim. So they can just set off that the incorrect payment. And the balance can be adjusted however if you identify that, you aren't going to submit further claims and your further payments effect they've come to an end then. You are going to be required to pay back any over claimed amount to HMRC and HMRC. I've now got a bespoke mechanism for you to be able to do that. So if you identify an error it's worth going onto the portal. Finding this repayment mechanism and effectively hold your hands and repay those monies accordingly is relatively simple process. And so you'll get a reference number from HMRC and then the overpays, some will be paid back using that specified reference number. There'll be no penalty will be. No other issue is simply correcting mistakes. That's been identified.
Again, keep records, keep found notes if you do find yourself in that position. So that in the event of any future audit by HMRC, you've got all your evidence and paper showing that this was correctly dealt with as and when you identified a mistake.
That said, of course, the scheme has been open to abuse, and we've heard various stories already in the press, of employers and individuals being prosecuted for furloughed fraud, largely centering around where individuals who, before flexible, further was introduced. The key requirement was, no work could be done while somebody was furloughed and effectively they have to be sucked at home for that employer that so there was allowed to go and get another job elsewhere with the employees blessing, but for that employer, know, work, and then the third payments could be paid in research. But we've heard stories of employers furthering staff but still having them work from home or doing tasks. And that's now being reported to HMRC three, whistle-blowing reports and what have you. And that has therefore been some first, starting of prosecution under the the anti fraud provisions.
The HMRC have said they're not going to hesitate to take action against those who fraudulently abused the scheme and the possible consequences of that could be so there's auditing claw back. So retrospectively, HMRC, you can come in and audit and clawback improper claims. And again in those circumstances where the employer hasn't held our hands up to a mistake, there is the potential for penalties and additional seems to be recovered accordingly.
The Finance Act has also been updated, giving HMRC the power to raise income tax or charge additional penalties to recipients of CJR Ask Money to work strictly entitled to those sums. So again, you know that's going to lead to potential challenge and further cost being repaid in the event of improper claims. And finally, under the new Finance Act, there is also the potential for company offices to be jointly. and severally liable were deliberately false claims would be made. So that could be civil and potential criminal sanctions for making the improper claims. So, clearly, some very serious consequences. It just emphasize the need of getting the calculation is right.
If mistakes are made being honest and transparent, and keeping your records to show the decisions that are being made, and how you've made the determination, that you have good faith mistakes, good faith claims will be subject to further sanctions.
Thinking about time limits, what we've seen so far, as if mistakes have been made, employees are going to be given a 90 day window to self report. The overpayments monies that they shouldn't have received, and that will then have 12 months within which to repay the money once they get that reference number from HMRC. So it's quite generous timescale to rectify those issues and that's what the mechanism is. That's being put in place.
So as I said, we near the end of the scheme and with the sort of cliff edge of 31st of October, fast approaching.
It remains to be seen whether Ritchie Soon Act is going to extend it any further. But it seemed clear at this stage that it's not going to be. And this is going to be the final line in the sand in terms of where the scheme is going to end. So, that being said, clearly lend itself now to businesses and employers looking at what the future of their organization is going to look like from the end of October and going beyond and what roles they're going to need. And if there are people who are third mode, there is it going to be a position that I'm going forward, how they look at managing that process and potentially moving individuals on making the redundant. First thing I would stress is, obviously, the risk is greater for those with longer than two years service because that's where the unfair dismissal protection will rest. People with less than two years service if there's no other concerns, no whistle-blowing, their health and safety concerns that have been raised, no other issues.
Then, effectively, the risk of an unfair dismissal claim falls away, because they haven't got the service to to bring that, barring any discrimination, or as a whistleblower link that they can make to the reason for that dismissal. It's unlikely they'll have any ability to bring a claim. So the risks so much reduced, if you've got individuals with less than two years service where you got individuals' longer them to your service process is key. So you first need to identify a third reason for the redundancy You can't just cool, So. the redundancy for the sake of it, there are three defined reasons where redundancy will apply.
one is where the business is closing. Lock, stock and barrel, clearly all individuals are then made redundant. And that's one of your classic business closure, redundancies. The second is workplace closure. So, if there's a premises or site where the individuals are working, but the employer is staying afloat overrule that disclosing a designated workspace. Again, the duct is a definition, met redundancy but the third category is where most redundancies are going to fall into. And that's where there's a reduced requirement for the number of employees carrying out work of a particular kind. Now, that can arise into a two scenarios, one, where there's a drop off in work, so you lose and contract, you've lost clients. And clearly there is that a fall off in the work associated and you've got a group of individuals who are servicing that work. And you no longer need all or some of them, and you therefore need to make some redundancies.
But you can also have a redundancy situation for that reduced requirement for employees doing work of that kind, where the work doesn't fall away. You may actually have increased work and go new contracts, but you can do it in a smarter and more efficient fashion. New technologies introduced, you know, re-organizing the workforce or job duties so that the work is absorbed across a number of individuals and departments that can still lead to a definition, satisfying redundancy under that category.
So establishing your rationale for, the reason for redundancy is keyed off the first, ticking the box you need and going through the defense for an unfair dismissal claim based on redundancy. The second part then is all about process. So, identifying your selection pool. So, if you are reducing, say, five rolls down to two of those five, You need to put them into a selection pool, identify some scoring criteria, work out who the two are that are remaining in the pool for redundancy, and then take them through the remainder of the consultation process, explore alternatives before landing on that final decision.
Way. You've got unique positions, So there is no overlapping. Duty is to simply somebody is doing a role, which you can take out of your structure going forward, and it's no longer going to be needed going forward. Then, again, a process is still required. You would effectively put that person at risk of redundancy, invite them to a consultation meeting to discuss the business rationale, to discuss the alternatives, to discuss if any of the vacancies that are available consider bumping. That's often a question we get about, you know, how does something have to be factored into that process? Once you've been through that process, and there's no set time limits of how long that must take in an ordinary redundancy situation, or I'll come on to where there are set time limits in a moment.
It really takes as long as it takes to answer the questions and to deal with the feedback on proposals. But realistically, within a week or two, you should be able to get to a final meeting, whereby you sit down and say, we've heard everything. We've been through your proposals that are not feasible for these various reasons. And we are now at the end of the road and confirming your redundancy. Termination, letting them be issued, detailing the redundancy package, and, obviously, a right to appeal to them be considered.
So we are seeing more and more tribunal claims coming on the back of redundancies, because obviously the number of redundancy dismissals has increased dramatically.
The one thing I would say in terms of tribunal situation is with the lock down and the loss of tribunal time that the judges and tribunal system had to process claims, there is a huge backlog of litigation to clear from early March, early April of claims. I still haven't been heard. We have moved to a virtual platform. So hearings are now starting to take place virtually over Z and equivalent, but that's still for the sort of smaller track cases. The longer cases that are going to be pushed into next year, I think anything logic now realistically enlisted for a hearing until back to late end of next year, possibly even in 20 22, depending on what jurisdiction and what location not hearing is. It's going to take place under the London tribunals are very heavily backlogged and you'd be looking at late 20th and early 22 before the hearing world would be progressed. So, without a doubt, there's gonna be a huge spike in the number of claims coming in.
But as to how long that litigation could take, clearly could take 18 months. Possibly two, he is in view of the current situation and tribunal.
So that's the final partner to look at in terms of the redundancy aspect is obviously collective redundancy. So I said there's no timings for where you're making sort of a small number of redundancies or just about reasonableness and how long you need to feed back home on those proposals. Collective consultation is where you're proposing more than 20 redundancies at an establishment in a 90 day period. So, for example, you see independent of announced 2.5 thousand job losses. If anyone's to 20 or more individuals are effect is that they'll have to enter into collective consultation.
So, whereas 20, or more or less than, 100 is, a 30 day minimum consultation period, over 100 redundancies, In 90 days, you're looking at 45 days. And it's a much, much more involved process because you gotta go through either trade unions if you recognize a trade union. If not, you have to elect an employee representatives to deal with the collective consultation part, first, before you then deal with the individuals. Say you have to go to that minimum timescale before, you're in a position to make redundancies and confirmed dismissals.
You also need to let the government know through this reporting form where you let the Secretary of State know the number of redundancies you're talking about. And that's why these figures are often published in terms of these large employers we've seen making large-scale redundancies. That's because they have to be notified in advance because of the requirement to do. So it's an important process because if you get it wrong, employees can bring a claim for what's called a Protective Award, which is, for 90 days pay for effectively not getting a consultation procedure to incorrectly on top of any unfair dismissal claim they might bring alongside that. So large-scale redundancies, I'd urge you to take advice to ensure you follow the right process and mitigate the risk of that Protective Award claim as far as possible.
So finally, looking at what employers could think about, in terms of when the furlough scheme comes to an end, that may stop short of compulsory redundancy. So there could be freezing. recruitment, obviously, stopping any temporary workers looking at voluntary redundancy. So could you go through a voluntary redundancy scheme where it's shorter, that process with potentially saves you having to go through the full consultation early? Retirement might be an option, then you're looking at contractual variation, so layoff, Short, time working, If there's a further spell of time that you need to basically stand people down, either fault, you know, on a full-time basis, or on a short time working basis that could be agreed by looking at layoff and short time working as an alternative to a redundancy process.
And then you're looking at potential pay reductions. And other variation is two roles, which again, you would need consent for and going through a consultation process to reach agreement on those terms as a variation to their contractual entitlements. If those are measures that could be introduced to stop short of making redundancies then, again, it's all in the consultation with staff and trying to say we're in a difficult position when we're trying to get through this. But we need your support in doing that. And these are proposals So. So, that's what I was going to cover and indulge it. I don't think there are some questions. I'm happy to take those, and we'll chat issues through.
Also, core roles. Oh, OK, so the first one is is there any hope for what needed to confirm the terms of whole flexible furlough retaining employees?
Yes. So the government haven't set out a particular form of wording or a particular template. I'm sure there are templates available, but there should be some written agreement to show the based on which the flexible return to work has been agreed because that would probably be a further agreements in place when the individuals with first furloughed. But now that we're looking at varying that have an element of working and the balance being furloughed, that should be updated or revised agreement should be it puts in place to deal with, flexible furlough.
I'll pull out another one on your view on some businesses considering we poll our Chrome moneys and or not take £4000 famous for employees are kept on until January 2021.
What's your format?
Yeah, so so I think again, it comes down to business circumstances LF employers have actually, you know, written this horrible way.
Well, in the sense of, you know, that work levels have gone up. They've made good profits in the intervening period. We see reports of some employers saying, Actually, you know, we needed a ceremony is, initially because, we need to see how the business was going to production. They didn't far better than we envisaged and therefore, we're going to repay that embodies because we don't feel it's proper use of State funds to claim where we don't need. It is entirely business lead and say, Absolutely. Adler bullet and, you know, those businesses should be given lots of praise and recognition where they do repay those monies because clearly there is no compulsion to do so, but when they're in a position to do so, we're absolutely be a very good thing to do it and looking to try and reduce some of the burden in the States And how to how to suffer. And the same goes for the bonus that for those who retain staff, after the fellow skiing comes to an end, and they meet that three month window where they would qualify for the bonus, clearly there would be eligible for it.
But they've, if they choose to forego it to allow that money to be used for businesses who maybe invest in need of it, then absolutely you know fantastic for those organizations that can do so.
At all called Pole.
someone has asked your best boss as to the amount of redundancies post furlough. With nine million still Furloughed off, I think we must be getting on to half a million redundancies by the time. The scheme comes to an end.
OK, and also, formal notice of redundancy has been given for a member of staff that has been on fire low for the duration. Can we continue to ... at rates?
Yeah. So, so, this has been a topic of constant doing I'm throwing because it was never really dealt with in the furlough guidance, until the latest iteration the last Treasury direction that we had. So, it always felt a little bit savory to be using monies where it wasn't for the continuation of employment. Because that's what the scheme is all about. It was to preserve jobs and to avoid job losses.
Effectively, while someone serving out there notice they are still employed and you are still continuing their employment, just sending out notices. So, I think it has be acceptable once and for all that yes, you can give notice to somebody while they are furloughs and yes, you can still claim CJR as thurlow monies to cover an element of that that notice periods. Now, the notice pay should be at full rates of pay, and I think, again, legislation has been updated and introduced to say once and for all, you can't pay the 80%, 70 or 60% rate of what the governments are paying in terms of that notice period. And likewise, for redundancy pay, it can't be on the reduced salary basis.
It should be on the normal actual rate of pay, but you can certainly claim, if someone's entitled to a month's notice, 80 or 70% back from the government, whatever the timings are, in terms of what they will repay. And an employee would top of the balance. What you can't do, I think, which would be an abuse of the system, where we've had queries about employees trying to be as supportive as possible to staff, and maybe extending notice periods to say, Look, we only have to give you a month's notice. We recognize the impact of this on you, therefore, going to extend your notice period until the end of October. So, effective you get an extra month, pay, you know, which you wouldn't have thought otherwise, and we can get our 60% back from the Government. That wouldn't be in accordance with the spirit of the scheme and it would be an abuse and open to having to repay those monies to provide your paying just in accordance with the contractual or statutory minimum, notice entitlement, whichever is greater than, yes, you can claim CJR S money back.
OK. And, then, supplement agreements and termination payments to these functional redundancy situations of all specific statutory requirements, statutory requirements. For it to be a binding and foremost economic agreement, the individual has to get independent legal advice from a registered practitioner who's not advising the company. But, in essence, is the same way you would do a settlement agreement for a disciplinary situation into to buy out the potential claims that could come on the back of that. It would be, you know, almost, though, clearly needs to be some incentive. Otherwise, the individual may well turn around and say, Well, why would I give you the comfort for waiving all my claims if all I'm getting is basic redundancy in basic notice? But if there is an element of enhancement and maybe tied into a voluntary redundancy scheme, condition could be put in place to say, we'll offer you that extra months pay, or whatever the figure is in return for you, signing a settlement agreement.
You then just send it to the individual. Have them take the advice, Decided it off as normal. So, so, no extra rule or additional bells and whistles that you have to go through in terms of process.
It's all just about, you know, when you issue that and can be taken to enter into the dialog without prejudice basis and not to jeopardize the fairness of the redundancy situation.
We've had performance issues with staff members in the past. Can redundancy now be used as a safe way of bringing their employment to an end in the current circumstances?
Yeah, I think, often, redundancies are used to mask what are clearly performance issues with staff members. And lo and behold, redundancy situation is identified and that individuals then dismissed by reason of redundancy. Clearly, now there is more scope to argue, redundancy and view of the pandemic the impact and all the suffering the businesses will have suffered. But there needs to be very clear distinction that this is linked entirely to that business rationale, the redundancy reasoning and not the fact of their performance is being substandard. It would clearly be open to the individual to challenge that, but if you can show legitimately that the business cases, this is a unique position or we have a reduced requirement for that work. Regardless of performance that's in the past.
This is now we don't totally this work or this role going forward that you would just continue on the redundancy basis and would have a reason to bring unemployment to an end.
I'll call phone call and then fill those businesses worst affected by the pantanal for which redundancies will be unemployed people. Do they have to consider alternatives to ...?
Yes, again, as part of any fair redundancy process, in looking to reduce your exposure to a unfair dismissal claim, less important for those with less than two years service. As I've mentioned, certainly for those longer than to your service, if you don't properly explore alternatives, you just go through the motions you just go through a box, ticking exercise to say, well, we've considered other options, but there aren't any without there being any evidence. If you're doing so. That will be open to challenge is an unfair redundancy unfair selection and therefore, an unfair dismissal to all of that would be tested on evidence at the tribunal claim. That needs to be paperwork to back up what the employer is, saying, The decision maker would have to give evidence on the witness stand. And if that, evidence wasn't credible and not consistent with properly exploring alternatives than the chances are, that would be an unfair dismissal and compensation will be awarded accordingly.
Hopeful And just one final question rolls: off our Employee resigns to furlough. Do we need to ... at 100% or the or the 80% Failure rate?
It will be hundred percent that say that the recent legislation of days where the government is committed they want individuals who are losing their jobs or leaving employment on the back of this pandemic to not suffer any detriment when it comes to redundancy. And, and notice, that will extend to Resignation Distiller, dismissal in the same vein. And so, why that serving out? And notice that should be at the full rate of pay. But the employer can still claim back their contribution from the government where the individual has been furloughed the applicable rate, depending on whether it's in August or September, October.
There are a couple of extra questions which we've run out of time to address, as I say. I will provide answers to everybody who's raised questions, and contact you directly to address those. So we will be following up after the webinar with, with answers to those questions. So I'd just like to say that that brings us to an end of this webinar. I hope you found it useful. And it was relevant. Obviously, in the view of the current circumstances. If there is something you want some further information on or a specific query, do, get in touch and I'll be very happy to follow up with you directly.
Finally, I should just say we're still offering a free helpline which we've been offering to businesses throughout this pandemic. Was a team organized from different legal disciplines to pick up queries and to support businesses as identified on the screen. So do use that. You can get a 20 minute chat, just took any issues through if you want some support. So, no cost issues, just just get in touch and will support you where we can. Otherwise, thanks so much for joining us this morning, and have a very good day. Thank you.