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The end of furlough | What happens now?

After 18 months of multiple updates and extensions, the ground-breaking furlough scheme (Coronavirus Job Retention Scheme) is coming to an end. The scheme has been a lifeline for many businesses impacted by the pandemic but with many still struggling to survive, hard decisions will need to be made when the scheme ends on the 30th September 2021.

Businesses may need to re-organise and restructure whilst some will need to make the difficult decision to reduce staff numbers.

There are many options for companies to consider:

  • Bring furloughed employees back on their pre-furlough terms and conditions:  Employees should be given reasonable written notice that they are being brought back from furlough.  Consideration should also be made for those employees who have been furloughed for a significant period of time and what support they may need on their return.
  • Ending furlough and bring employees back on reduced pay and/or reduced hours:  Reducing hours and pay is a change of terms and conditions and so will need employees’ written consent.  Agreement may be able to be reached through a Trade Union if recognised which can aide individual agreement.  Employees may be more likely to agree to a reduction in hours or pay that is time limited or conditional on something happening as opposed to open ended.  However, employees may take the broader view that it is better to have a job in the current climate than none at all, even on less hours and/or less pay.
  • Ending furlough and asking employees to take unpaid or part-paid leave:  If a company wants to retain their workforce but needs time for trading conditions to return to normal, employees could be asked to take unpaid or part-paid leave.  This would usually be on a voluntary basis and should be set out in writing.
  • Extending furlough without the government grant:  For employers who may not have enough work for all employees but do not want to make redundancies, furlough could be extended.  The employer would have to bear the full costs of the furlough payments though.  This would essentially be the same as reducing an employee’s hours and/or pay and new agreements would need to be put in writing
  • Offer a settlement agreement:  By signing a settlement agreement, an employee waives the right to bring a claim against their employer in an employment tribunal, in return for a financial payment.  A settlement agreement is a legally binding, voluntary contract between an employee and their employer. They are typically used when ending employment on mutually agreed terms.  For more information on settlement agreements, please click here.  
  • Make redundancies:  Many companies will have no choice but to face the difficult decision of making redundancies.  All employers should ensure employment law is complied with, the redundancy process is fair and employees are treated with dignity and respect.  It is important to note some specific points relating to furlough and redundancy:
  • Furloughed employees are not prevented from being made redundant
  • Furlough grants cannot be used to substitute redundancy payments
  • Redundancy payments should be calculated on the basis of the employee’s pre-furlough salary (not the 80% reduced rate).
  • Employers cannot claim a furlough grant for any employee serving a contractual or statutory notice period.
  • The redundancy selection pool should follow the usual process of identifying those employees carrying out the same or similar work.  Selecting furloughed employees, just because they have been furloughed runs the risk of the process being unfair as well as potentially discriminatory.

For further information on redundancy, please see our article here 

How we can help

Our specialist employment solicitor, Lisa Aitken understands the challenges that businesses are currently facing and finds solutions to HR problems whilst ensuring employment law is complied with.  Her wealth of experience reassures business owners that if the redundancy process if the only option that the process is carried out lawfully and with minimal risk to the business.

To find out about our HR fixed fee packages or how we can help your business, please call Lisa on 01926 491181 or email:


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