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Proposed redundancy figures at seven-year low as furlough scheme winds down

Speculators predicted a surge in redundancies this autumn as the Coronavirus Job Retention Scheme comes to an end on the 30th September. However, this surge doesn’t appear to be forthcoming.

Despite 1.9 million workers still being on furlough at the end of June, recent data from the Insolvency Service (the body employers must notify when they are making 20 or more staff redundant) shows that the proposed job cut figures in August were the lowest they have been for 7 years. The exact number of proposed job cuts stood at 12,687 in August. At the height of the pandemic, this figure stood at 150,000 job cuts per month.

During the month of September, employers are able to recoup 60% of a worker’s wages, up to a cap of £1,875 using the Government’s Coronavirus Job Retention Scheme. The deadline for August claims is the 14 September 2021 and the deadline for September claims is the 14 October 2021. Past September, employers with staff currently on furlough will need to assess whether they can afford to pay 100% of staff members’ wages going forward, or whether they will need to look at making redundancies.

Despite the numbers of workers still on furlough, the dynamics of the job market have been changing significantly. This may explain why the proposed redundancy figures are so low. The combination of Brexit and the pandemic has meant that there is a lower supply of labour in the market, whereas vacancies hit an all-time high over the summer months according to the Office for National Statistics. Demand for labour is especially high in industries such as transport and manufacturing.

During the month of September, employers are able to recoup 60% of a worker’s wages, up to a cap of £1,875 using the Government’s Coronavirus Job Retention Scheme.

If you are an employer who is nevertheless considering making redundancies once the furlough scheme has ended, you must ensure that where you are intending to make twenty or more employees within a single workplace redundant, you submit an HR1 Advance Notice of Redundancy form to the Insolvency Service. You are required by law to notify the Service of potential redundancies in any 90-day period, and a failure to do so without justification could result in prosecution or a fine for you as a company or any one of your officers.

Of course, the submission of an HR1 form is only one part of the wider redundancy process. There are a number of other factors which must be taken into account to ensure a redundancy process is fair and lawful, and to help prevent future tribunal claims being brought by employees.

If you need assistance with any redundancy or furlough related matters, please do not hesitate to contact our Employment team.

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This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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