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Furlough scheme and redundancies

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Some employers are still claiming under the furlough scheme for their workers and can continue do so until the scheme ends in September 2021. 

The furlough scheme has been extended a number of times since it was introduced with the most recent extension announced in March 2021.  The reason for the latest extension is that these extra few months will help businesses to get back on their feet after they reopen in late June 2021 when restrictions are lifted.

No doubt most people are now aware that the furlough scheme allows workers to receive up to 80% of their pre-tax salary up to maximum of £2,500 per month. Up until July 2021 employers are not required to make any contribution towards wages for hours not worked but from July 2021, they will need to contribute 10% and then this contribution rises to 20% for August and September 2021.  By the time the furlough scheme ends it will have been in place for 18 months and for some employers it has been extremely valuable in helping their business to survive and also reduced the number of redundancies. 

As the deadline for when the furlough scheme will finally be phased out is fast approaching we believe there will be an increase in the number of redundancies over the next few months and also an increase in the number of unfair dismissal claims being submitted to the employment tribunal.  In March the Ministry of Justice released its quarterly report on the Employment Tribunal (ET) statistics for the period from October to December 2020 which showed that as unemployment increased there was a corresponding increase in the number of ET claims. This trend is likely to continue.

This increase means that businesses should seriously consider using settlement agreements to reduce the risk of employment tribunal claims, especially if something has gone wrong during the redundancy process.

A settlement agreement is a legally binding contract between the employer and employee, in which the employee is offered an enhanced termination package, and in return, the employee agrees not to pursue the employer, for any claims they believe may have arisen during their employment, its termination or the indeed the redundancy process.

If your business is considering redundancies as part of a wider restructure, then it’s important to contact an experienced employment lawyer, who will advise you on how to proceed safely and effectively. At Talbots we can offer your business this advice and also draft settlement agreements for you to offer to your employees to bring the matter to a swift and amicable solution. If you require advice and assistance on the above contact Reyhana Koser in Talbots Employment Team either by email, or call 0800 118 1500.