News & Views

The ‘F’ Word: A note on Furlough from Mark Fellows.

A business contact of mine recently posed the question what name they should give to a hamster they had recently purchased. Without any hesitation, I suggested ‘Furlough’.

As an employment lawyer, this tells you what word is at the forefront of my mind. I think I have used the word ‘furlough’ more times this year than any other word in my vocabulary. Okay, that’s an exaggeration but you will get the point I am trying to make, and this is a word that none of us had ever used (or heard of) before March 2020.

It has clearly been an incredibly challenging year and in the context of employment law, the Coronavirus Job Retention Scheme has undoubtedly been the most talked about legal development since the Government decided to abolish Tribunal fees, and of course it will (as it stands) run to 31st March. We will shortly find out more about how it will operate from 1st January, and importantly what the revised cost will be to the employer to continue to utilise the scheme. 

But what else does 2021 hold for employers from a legal perspective?

With the extended Coronavirus Job Retention Scheme, the Government decided to withdraw the Job Retention Bonus, the £1,000 paid to the employer for each employee who was retained by the employer after the closure of the job retention scheme.  The Government have since spoken about an alternative ‘retention incentive’ but further details are pending.

In April 2021, we will have the usual raft of increases to statutory payments (including an increase to the maximum weekly wage for redundancy payments) and also the cap for compensation in unfair dismissal claims, which currently rests at £88,519, will increase.

For those employers who engage freelancers (or operate in the recruitment sector), we have changes to the IR35 rules that come into force on 6th April 2021. These changes apply to the private sector (but with an exemption for small businesses as defined) and were actually changes postponed from April 2020 because of the pandemic. In essence, the effect of this change is to impose an obligation on the company who engages the contractor to account for income tax and national insurance on the payments made to the contractor, if they are inside IR35. It is worth making sure your contractor arrangements are in order before those changes take effect.

It will also be a busy year in the Employment Tribunals.

This year has seen an unprecedented number of employment claims submitted largely due to dismissals arising from the pandemic and many of those will go to trial in 2021. The Tribunals are certainly going to have to grapple with some difficult issues – employers who made redundancies instead of utilising the Coronavirus Job Retention Scheme, employers who dismissed those employees who refused to return to work after lockdown, claims where the employees will assert that they were dismissed for raising health and safety concerns arising from the pandemic. These issues will no doubt be the subject of much legal debate and the appeals will run for several years.

2021 will not therefore represent the end of the ‘F’ word, but let’s hope it represents the end of Covid19.

An article from Mark Fellows, Head of Employment at Sherrards. If you need assistance or information around Furlough, please get in contact.

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