The end of furlough is approaching: How should payroll teams be preparing?

Originally introduced in March 2020, the Coronavirus Job Retention Scheme (furlough), has been extended several times, most recently until the end of September 2021.

However, with guidance around the scheme providing no indication that a further extension is on the horizon, what does this mean for businesses still using the scheme, and how should payroll teams be preparing for the possible end of furlough? Our payroll team provide some guidance below…

Top priorities for payroll professionals

Do not miss any deadlines

As there are only a few opportunities left to make a claim, make sure that you stay on top of submissions. New claims for days in August 2021 must be submitted on or before 14 September 2021, and new claims for days in September 2021 must be made on or before 12 October 2021.

Ensure you have paid the correct contributions

Ensure you are topping up salaries where required, if you haven’t already done so. Whilst there has been a gradual decrease in Government support, any furloughed employees must still receive 80% of their usual wage for hours not worked up to a cap of £2,500 per month. However, be aware that only 60% is claimable in this final stage of the scheme (up to a cap of £1,875). Employers are required to make up the remaining 20%.

Consider employment options at the end of furlough

There are limited options for employers with previously furloughed employees:

  • Furloughed employees return with the same employment contract
  • Furloughed employees return under a different contract (for example, reduced hours / redeployment)
  • Furloughed employees are put through the redundancy process

Employers must ensure that team members are given the correct amount of notice in any of the above instances. If contracts are subject to change, this must be agreed with the employee and any necessary documentation provided well in advance of the change(s) coming into effect. There is no statutory notice period for ending furlough, however, notice periods do apply in instances where you wish to end employment or change a contract.

Where redundancy is being considered, the correct process must be followed to treat employees fairly and within their legal rights.

Failure to adhere to this guidance could leave the employer subject to tribunal claims. Therefore, we recommend reviewing your furloughed employees as soon as possible to decide your options and notifying the impacted employees.

Communication is key

It is important that furloughed employees understand what the business will be doing for them to ensure a smooth transition back into the workplace, rather than just in terms of payroll.

Be ready for change

As we look ahead, it’s important that businesses remain flexible, adaptable and prepare for the possibility of ongoing change. COVID-19 remains and an ongoing issue, and hence the possibility of the CJRS returning in the future shouldn’t be fully ruled out.

Many businesses have made changes to their payroll systems through the pandemic to incorporate furlough and provide all the relevant information to their employees. If this applies to you, we recommend that you keep these measures in place and back everything up so that you are prepared if it needs to be used again.

Get in touch

Having supported businesses and their employees through the changing furlough landscape, our payroll team perfectly placed to assist and guide your business as the CJRS comes to an end. For advice specific to your business or support with any other payroll matter, please contact Julie Mason using the button below.

For more information about anything in the above article, please get in touch using the button below.
Julie Mason
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