August 1st has come and gone, and with it, the Coronavirus Job Retention Scheme (CJRS) Employer Contributions have gone up. This means that businesses are having to contribute even more money towards their furloughed employees, as the government continues to taper their contributions towards the end of the scheme.
Undoubtedly this is putting many businesses in difficult positions, with redundancies, reduced work and even possible business closures on the horizon. We recognise that these are difficult, emotive decisions to have to make – and to help you, we’ll quickly talk you through the changes that have been made and what future changes to the CJRS scheme will affect your business.
What changes have been made?
As of the 1st of this month, the Government will only contribute 60% of salary payments (with a cap at £1875.00 per month), with employers having to top up the shortfall of 20% (up to £625.00). This represents a hike of 10% from last month, as in July, the Government contributed 70% (up to the cap of £2,187.00), and employers making up the other 10% (up to £312.50).
It is also important to note that you can no longer claim payments for employees who are servicing contractual or statutory notice periods.
What will happen in the future?
This new figure will stay in place for 2 months, until September 30th, at which point the CJRS is set to end completely. Rishi Sunak, Chancellor of the Exchequer, has stated he has no plans to extend the scheme again past September 30th, having already extended it three times previously. This means that – unless something drastic changes within the next two months – this will be the final change to the scheme before it ends.
What are your options?
It may be that your business can facilitate the return to work and or the cost implications to cover the tapered contributions and that as a business owner you have factored these over the previous months.
It is safe to say that the pandemic has taken the UK by surprise, and the recent delay in the roadmap will have caused many businesses to now rethink their return to work strategy.
You may want to consider redundancies in this instance. To do this, you need to first identify if a redundancy situation exists. In Employment Legislation, in particular under s139 Employment Rights Act 1996 a redundancy situation can arise as detailed below:
- Business Closure – Where there is a closure of a business or part of it in which the employee is employed.
- Workplace Closure – where there is a closure or intended closure of the place of work where the employee works.
- Reduced work – where there is a reduced requirement for employees to carry out work of a particular kind.
The Redundancy Process
The process of Redundancy is a dismissal and is considered a fair reason under s98 Employment Rights Act 1996. Businesses need to be mindful that a fair process is followed, including demonstrating how the decision has been made (this would include the pool of individuals), the selection criteria, and crucially consulting with individuals.
Businesses can face unfair dismissal claims should they proceed and the process not be followed. The financial impact on business owners can cause ruin, not to mention the time spent, effort, stress, and worry.
How can we help you
We understand the processes that are required, we can help business owners plan for any eventuality and proposed redundancies. We can offer our fully supported HR and Employment Law support, with advice and guidance on hand each step of the way. Our correspondence can either be provided bespoke or as template documentation, and these can be as single items or as a pack.
Why not contact a member of our team to have a free initial discussion? Let’s see how we can support you.
0333 006 9489 [email protected]
Updated 3 July 2021, 19 July 2021, and 3 August 2021