The Furlough Scheme – what have we learnt?
With the Coronavirus Job Retention Scheme, or as it is better known the Furlough Scheme, coming to an end on 30 September 2021, what have we learnt from the Furlough Scheme apart from introducing an entirely new concept into the language of UK employment law:
- It lasted longer than anyone anticipated. The scheme was first announced on 20 March 2020, backdated to 1 March 2020 and due to end on 30 May 2020. However, as lockdown continued and the impact of the Coronavirus continued to impact on the economy, the furlough scheme was extended six times with the final extension due to expire on 30 September 2021. There has been no hint or suggestion from Government that the scheme will be extended beyond this date even on a sector specific basis. As such employers should prepare for life beyond the furlough scheme from that date.
- The scheme has changed over time. Initially, for those on furlough, they were unable to carry out any work for their employer and there was much debate about what was and wasn’t work for these purposes. However, recognising that such an all or nothing approach could cause issues, the scheme introduced the concept of flexi furlough allowing employees to work part time and claim furlough pay for the balance.
- As the scheme changed over time, it became more complex with multiple guidance notes being published to assist employers and employees on claiming under the scheme. Calculating furlough pay and what could be claimed from HMRC under the scheme became an ever more detailed process with the calculation of flexi furlough pay for employees with variable hours causing particular challenges. Also as the scheme carried on, we started to get answers to various questions that employers needed, for example, does holiday continue to accrue during furlough? can you make an employee redundant during furlough? and what agreement needs to be put in place to put an employee on furlough?
- It’s take up was significant with Government support for employers provided at an unprecedented level. The last statistics showed that since the start of the scheme a cumulative total of 11.6 million jobs have been supported by the scheme at various times with a cumulative total of 1.3 million employers making claims under the scheme at a cost of £68.5 billion. Without that scheme, many employers would have had no option but to look at widespread redundancies and salary cuts.
- With 1.6 million employees still furloughed as 31 July 2021, questions have been asked as to what will be the impact of the expiry of the scheme and whether it will lead to a spike in unemployment. The overall picture is not clear, as the number of people furloughed doesn’t necessarily take account of those that may have found work with another employer whilst on furlough from another employer. There is also of course a record number of job vacancies but perhaps requiring different skills to those roles that are furloughed. Some spike in redundancies seems inevitable but it will take some time to assess the overall impact of the end of the furlough scheme; and
- We are starting to see the fall out of the furlough scheme with a steady stream of Employment Tribunal decisions looking at various issues arising out of furlough, such as the accrual of holiday and the interplay between redundancy, furlough and unfair dismissal. We will be taking a closer look at some of these cases at our free Employment Law webinar on 10 November 2021.
If you have any queries on the furlough scheme or how the end of the scheme may impact on your organisation, please contact our employment team.