Furlough (or to use its legal title, the Coronavirus Job Retention Scheme (CJRS)) comes to an end on 31 October and staff who are currently wholly or flexibly furloughed will return to their former contractual arrangements (and salary) unless new agreements are made.
Two replacement Job Support Schemes (JSS) have been announced. You do not need to have used the furlough scheme to access either of the new JSS schemes. One scheme is designed for organisations that are required to close their premises due to coronavirus regional or national lockdowns. The second scheme is designed for organisations that are not required to close but are experiencing a lower level of work.
Under the first scheme, the Government will pay two thirds of an employee’s salary, up to a maximum of £2100 a month. Employers will not be required to contribute towards wages. Claims can only be made if the organisation is subject to regional or national restrictions and the employee must be off work for at least seven consecutive days.
Under the second scheme, an employee must work at least 33% of their usual hours and be paid for those hours at their normal contracted wage. For every hour not worked, the employer must pay one third of the usual hourly wage, the Government will pay one third (up to a cap), and the employee will forgo one third: effectively, employees must accept a reduction in wages to preserve their job. As with the furlough scheme, you must agree the new short time working arrangements with employees and make changes to their contract in line with usual employment law principles. You must evidence that agreement in writing as HMRC can ask to see it.
The schemes are very new, and further guidance will be released in due course, but at this stage the Government have said that the process will be monthly, online, and be paid in arrears – employers will have to pay wages first and then reclaim the grant portion. The grant will not cover any Class 1 NIC contributions, or pension contributions, but these must still be made, and organisations will need to consider that when they budget for using either scheme.
What does that mean for the creative and cultural sector? If you are able to conduct some activities in a Covid-19 secure manner, and you have work for employees to do, then making a reduction in staff hours across the workforce may be a viable option. Organisations will need to consider which essential skills they need to retain in order to survive, and how their income/the JSS can be applied to achieve this.
Where organisations are not currently able to operate, but no regional or national restrictions are in place, then you may need to consider redundancies.
Redundancy occurs when a business ceases to operate, ceases to operate in a particular location, or has a reduced requirement for employees to carry out work of a particular kind. Even though it may be the last thing a business would wish to do, in law a redundancy is treated as the employer choosing to dismiss the employee. This means that the terms of each employee’s contract must be followed for the termination to be lawful, and the statutory protections against unfair dismissal all still apply. For employees with more than 2 years’ continuous service, a statutory redundancy payment will be required to be made. Organisations must consider carefully what is the nature of the work that has reduced, to identify which employees are at risk of redundancy, and consider what alternative roles (if any) remain into which staff can be redeployed. Note that you cannot give notice of redundancy to an employee, or make an employee redundant, at the same time as claiming a grant for them under the JSS.
Redundancy processes can be difficult, particularly in a sector where collegial working relationships blur line management boundaries, and longstanding colleagues and friends may find themselves having to compete for any remaining posts. Counterculture has a close understanding of the sector and we can support you to develop new operating models for short time staffing, and give specialist HR and employment law advice where necessary. We’re here to help if you need us.
Photo by Maksim ŠiŠlo on Unsplash