The government would then fund up to 80% (to a maximum of £2,500 per month) of the wages whilst the workforce was not working.
The aim of the CJRS was to save jobs and avoid large scale redundancies. However, as we look ahead organisations will be alive to the fact that from August 2020, the amount of money contributed through the CJRS, from the government, will begin to wind down ahead of the CJRS’ final closure in October 2020. Initially organisations will have to contribute the national insurance contributions before having to contribute more to the furloughed workforces’ wages.
Whilst the Coronavirus really has demonstrated the lengths the government and many organisations will go to, to save jobs, it has also demonstrated that many will attempt to circumnavigate the rules. Effectively many organisations have attempted to pay termination payments at the individual’s furlough rate which, in some cases, may be substantially less than their full pay. This has led to the Department for Business Energy & Industrial Strategy (BEIS) announcing on the 30 July 2020 that it was bringing in a new law, the Employment Rights Act 1996 (Coronavirus, Calculation of a Week’s Pay) Regulations 2020 which came into force today (31 July 2020).
The purpose of the regulations is to ensure that those on furlough receive 100% of their normal pay for those termination payments, even when they have been on furlough. This affects payments such as:-
- notice pay;
- future claims for unfair dismissal; and
- future claims for failure to provide written reasons for dismissal, etc.
The rationale behind this can be summed up in the Business Secretary’s statement that individuals should not be ‘short changed’ from being placed on furlough.
If your organisation is making redundancies and want to check whether you are getting the redundancy calculations right, why not click the link below where you will find our TS&P redundancy calculator. Just scroll down once you are on the webpage and you will find the calculator on the right hand side.