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Managing furlough and redundant staff

Makbool Javaid, Partner - Simons Muirhead & Burton

What are the pros and cons to keeping key staff given that the furlough scheme keeps being extended at the last minute and an end to COVID-19 is in sight due to the rollout of the vaccines? These are difficult times and there are difficult decisions to be made by employers.

Personnel Today writes that the government’s furlough scheme permits employers to re-employ staff and put them on furlough if they were made redundant or stopped working for the employer on or after 23 September 2020. Where businesses anticipate a return to pre-COVID-19 business levels in the coming months and a consequent need to re-hire for some roles, re-hiring key staff that were made redundant on or after 23 September 2020 could avoid that talent finding a home elsewhere. Taking advantage of this requirement may result in positive publicity both in terms of employee relations and as an employer, in a similar way to the positive headlines for firms which have returned furlough payments to the government.

Potential risks, however, include the following – employment costs – although the government contributes 80% of an employee’s usual salary for hours not worked up to a maximum of £2,500 per month, employers are still required to pay employer National Insurance Contributions at around 13.8% plus pension contributions.

Holiday pay – employees will continue to accrue holiday during furlough. Notice pay – any notice pay on furlough (i.e. if re-dismissal is needed because the business does not fully recover) would need to be at full pay. Employment risks (unfair dismissal) – if employees previously received statutory redundancy pay then this will break their continuity of service and any re-hire will be a new period of employment. Employment risks (discrimination) – employees can bring discrimination or whistleblowing claims regardless of their length of service.

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