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Changes to the Coronavirus Job Retention Scheme

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Changes to the Coronavirus Job Retention Scheme

Chancellor Rishi Sunak is expected to announce today, changes to the Coronavirus Job Retention Scheme.

At present, the scheme allows employers to furlough staff, with employees receiving 80% of their normal monthly salary (up to £2,500) covered in full by the government.

However, in today’s announcement, the chancellor is likely to outline the tapering of the scheme whereby employers will be asked contribute 20% towards employees’ pay with effect from 1 August 2020.

Whilst the scheme has been a vital support mechanism for many businesses during the COVID-19 pandemic, the requirement to make contributions to employees’ wages, is likely to trigger redundancies and may even cause the business to shut. This is particularly true for those businesses who are still waiting to re-open.

In the event of a sudden closure of a business due to financial difficulty, employees are often made redundant with immediate effect and with little or no consultation.

However, where a company is making 20 or more employees redundant, it must consult with those affected for a minimum period of time before any dismissal takes place.

Where 100 or more redundancies are proposed, consultation must begin at least 45 days before the first dismissal. In cases where more than 20, but less than 100, redundancies are proposed, the consultation must begin 30 days before the first dismissal occurs.

Through consultation, an employer should explain to those affected the number of redundancies, method of selection and the method for calculating any redundancy payments.

If the company fails to consult as required, employees can take an employer to an employment tribunal. Here, you would request the tribunal make a 'protective award' in your favour of up to 13 weeks’ pay.

Even if the employer is insolvent and does not have the means to pay the court award, you are likely to be able to recover your compensation from the redundancy payments service. The redundancy payment service also can pay the following amounts if your employer is insolvent:

  • A statutory redundancy payment
  • Holiday pay
  • Arrears of pay for up to 8 weeks
  • Notice pay

If you believe that your employer has failed to consult with you properly when making you redundant and would like to discuss this with a member of our employment law team, please call us on 0161 696 6170 or complete our online enquiry form.