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The impact of furlough ending: settlement agreements and more

The UK government’s Coronavirus Job Retention Scheme, otherwise known as furlough, is set to end on 30th September 2021. This means that employers will no longer be able to keep staff on their payroll without working with the government paying up to 80% of their wages (up to £2500 per month). Since 1st July 2021, the scheme has started to wind down, with the government contributing 70% of wages and then 60% from 1st August.

After numerous extensions, it looks as though the final end date for the scheme is on the horizon. While this is a mark of hope that more and more businesses will start trading fully again after the COVID-19 restrictions, this is not always the case. Some companies will no longer have the means to keep all of their furloughed employees on, leading to redundancies and settlement agreements.

Do you want to prepare for furlough ending and the possibilities this could bring? This article aims to answer your questions about what employers need to do and what employees can expect if facing the prospect of redundancy or settlement agreements.

What happens when furlough runs out? What employers should do

If an employer intends to bring an employee back to their regular work after furlough, they should give them reasonable written notice of their intention to do so. There are no set guidelines for what’ reasonable notice’ entails, although from an employee perspective, the longer the notice period, the better. Although, currently furloughed employees should now prepare to return to work by the end of September at the latest. 

Employers should also consider employees’ personal situations, which may have changed since the furlough scheme began. This may include childcare commitments, mental health, protected characteristics, physical vulnerabilities of the employee or the people they live with, and journeys into the workplace, to name a few. The employer and each employee should work together to find a solution that works for everyone.

Whilst the government officially removed restrictions such as compulsory face coverings and social distancing on 19th July 2021, employees will still expect their workplaces to have sufficient measures in place to ensure their health and safety. Employers should conduct a risk assessment and implement any appropriate measures before employees return to work.

Can I work from home when furlough ends?

Employees may wish to conduct their role remotely upon furlough ending. There are plenty of reasons why they may want to do so, from childcare commitments or a long commute to health and safety concerns. But do they have a legal right to do so? What should employers and employees do in this situation?

In most cases, employers have no legal obligation to allow employees to work from home, even if they can do their role entirely remotely. As such, it is ultimately up to what each employer prefers to do. If you’re an employee who wants to work from home for any reason, your first steps should be to informally approach your employer with your request and try to work out a solution that will benefit everybody. Many employers see the benefits that remote working can bring and are looking into permanent ways employees can work remotely, either all or part of the time.

However, certain situations may be in an employer’s best interests to allow an employee to work remotely upon furlough ending, even if it is not their usual policy.

Under the Equality Act, many people with underlying health conditions may meet the definition of a disability. This is a protected characteristic. So, employees may request to work from home as they have concerns about their health and safety in the workplace due to their health condition as the pandemic continues. Employers must make reasonable adjustments for employees with disabilities, which could include working from home or transferring to a different role. Any employee that lives with somebody who is clinically vulnerable may also be protected from discrimination in this way.

Suppose you are an employee who falls under one of these definitions, and you are dismissed for refusing to return to the workplace after furlough ending despite the scope for remote working. In that case, you may be able to take your employer to an employment tribunal. We recommend that you seek legal advice on your specific situation.

Can you be made redundant after furlough?

The furlough scheme’s primary purpose was to help businesses avoid redundancies. While the scheme is ending, many companies predict that they will unfortunately still not be back to pre-pandemic trading levels. In this case, redundancies may be necessary. Before making an employee redundant upon furlough ending, an employer should consider all other options, such as moving the employee to a different department or role that is more in-demand or offering reduced hours.

Employers are still within their rights to make you redundant after furlough, as long as there is a genuine need for the redundancy and all other appropriate avenues have been explored. Several other procedures need to be followed if redundancy is required. These are as follows:

  • Suppose more than one employee conducts the role(s) at risk of redundancy. In that case, they must be placed in a ‘pool’ to decide who is made redundant using fair and objective criteria based on work completed before the pandemic.
  • Employees need to be informed that they are at risk of redundancy and the selection criteria, if applicable and invited to a consultation meeting.
  • After this meeting, the employer should take time to digest the comments made by the employees. Afterwards, a second consultation meeting should be set up where employees are informed about their provisional score against the selection criteria and highest and lowest scores, if applicable. The selection criteria must be discussed before anything is finalised.
  • After consultation, employees must be informed as to whether their role has been made redundant. They must then have the opportunity to appeal this decision. If they want to appeal, an appeal meeting and process must occur.
  • If 20 plus roles could be made redundant upon furlough ending, collective consultation is required before individual consultations.

I’ve been offered a settlement agreement; what does that mean?

Instead of redundancy, it’s expected that some employers will offer settlement agreements to employees whom they cannot keep on after furlough. This means that the employee is let go from the business, but they don’t have to go through a lengthy consultation procedure. These agreements also prevent employees from bringing a tribunal against their employer for unfair dismissal or other claims but often offer a better package than redundancy. This is the preferred option for some employees compared to redundancy, but for others, it is not, depending on the situation.

What should you do if you’re offered a settlement agreement after furlough?

After furlough ending or otherwise, a settlement agreement can only go through if both the employer and employee agree to it. So, you have the right to refuse the terms if you wish. You should be offered at least ten days to decide whether to accept, during which time you will remain employed, even whilst furloughed.

As a first step, you should weigh up the package compared to redundancy. Often, settlement agreements offer a larger package, as the employer gets the benefits of the employee not being able to claim them. However, you may be better off taking redundancy due to the lengthy consultation process. You will still be paid during this consultation, so it could work out in your favour.

Also, ask yourself if the process is fair. Do you believe there is a genuine need for you to be made redundant or accept a settlement agreement? If you sign a settlement agreement, you waive your right to claim unfair dismissal. So, you must be aware of the genuine business need for it before you sign.

Negotiating your settlement agreement upon furlough ending

There may also be scope to negotiate the agreement that you have been offered. For example, if you have the potential for a legal case, including when:

  • You have been selected unfairly, such as only having been chosen because you have been on furlough.
  • There is not a genuine need to make your position redundant.
  • You believe that you are being discriminated against.

In these cases, you may be able to negotiate a higher package with your employer by threatening legal action. A lawyer will be able to advise you on the specifics of your case.

You may also be able to negotiate based on the goodwill of your employer. For example, you could attempt this by mentioning how positively your work has impacted the business or how negatively the situation will affect you and your family.

When negotiating, always ask for a protected conversation with your employer. This means a conversation where nothing said can be used as evidence in any potential tribunal claim.

How much should you expect?

When being offered a settlement agreement, upon furlough ending or otherwise, you should expect at least as much as you would receive if you were made redundant. This payment is based upon several factors, including a week’s service (on full pay, not the furlough rate), your length of service, and age. This amount is always tax-free. You should also expect some form of termination payment on top. The amount will depend on your salary, whether your employer feels vulnerable to you claiming against them at an employment tribunal, and how generous they wish to be.

Legal advice

A settlement agreement only becomes binding once you have received independent legal advice. Your employer can recommend a solicitor, but you are entirely free to use one of your choosing. Your solicitor will need to sign a certificate confirming that you have sought legal advice on the matter.

What happens if I refuse a settlement agreement after furlough?

If you decide not to accept the employer’s settlement agreement, you will remain employed by them. However, in most cases where an agreement is being offered after furlough ending, it is only provided as an alternative to redundancy. So, the likelihood is that the redundancy consultation process as outlined above will begin.

Do you need a solicitor for settlement agreement advice?

At Setfords, our solicitors are here to help you with your settlement agreement or any other employment concerns you may have. To get in touch with a solicitor today, please click here.

This note is not intended to substitute legal advice from your instructed lawyer. You should always consult with your lawyer directly regarding any specific queries you may have

Call us on 0330 058 4011 or email info@setfords.co.uk.

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