Five steps towards the end of furlough
The Government’s furlough scheme has saved an estimated two million jobs and helped protect tens of thousands of startups and SMEs from closure. However as the clock ticks down to the end of October, the point at which the scheme will end, many businesses are now understandably concerned about what will come next once this provision is taken away.
In July a major report by the Federation of Small Businesses revealed almost a quarter of small UK businesses have cut jobs in the past few months despite the government’s furlough scheme - which has helped pay the wages of more than 9 million workers.
Many warned this situation was only likely to get worse in the weeks and months ahead.
The challenges for SMEs were made even harder on 1st August - the date employers were asked to start contributing national insurance and pension contributions for furloughed staff.
Now, with six weeks until the scheme closes, many business owners will be trying to work out the impact on their companies during the last quarter of 2020. But the good news is there are a number of things all businesses can be doing now to prepare the best they can.
The team of Employment Lawyers at Harper James Solicitors are able to provide expert advice on how best to navigate the challenges the winding down of furlough will bring. Their solicitors are experienced in supporting businesses from startup to scaleup and provide affordable support at a time when cost effective legal services are more vital than ever.
Today one member of that team, Ella Bond, an employment lawyer based in the Birmingham Office, is sharing five steps she thinks businesses can take now to best prepare.
“The Government’s furlough scheme has been an incredibly important safety net for many businesses, small and large, across the country,” she said.
“But as we move towards the point at which it ends there will be challenges for those businesses who are due to have employees return to work from the scheme and be liable meet their payroll costs in full. There could be difficult decisions to make about whether a business has to make job losses and/or other wider changes.
"Whatever the situation, it is vital to be prepared and to put plans in place now which ensure your business is in the best possible position to manage the winding down of the furlough scheme and the associated impact it may have on your company. Acting now can help ensure you have a stronger business in the future.”
Ella recommends carrying out the following steps:
Conduct a thorough forecasted assessment of your business. The assessment should include the company financials, taking into account sales, income, reserves and liabilities (including the full salaries of those furloughed workers who are due to return). It should also include consideration of business requirements in terms of workflow and staff resources.
If, as a result of the business assessment, it becomes apparent that the company cannot meet its liabilities and/or the business need does not justify the current staffing structure then you will need to consider what solutions may be available to you. In terms of staffing this may include possible redundancies, changes to terms and conditions, redeployment of staff or enforcing a right of lay-off (if there is one present in the contract). There are legal requirements and obligations involved in all of these options so you should seek legal advice to assist you with deciding and implementing any proposals.
Ensure that the working environment and arrangements are adapted to take into account those workers returning from furlough. In terms of the workplace this should include adequate distancing measures being put in place, increased sanitisation of areas and equipment, ensuring that adequate signage is present around the building and making sure that all returning workers have been informed about and provided with copies of any new policies and procedures relevant to them.
Where staff will be working from home, you should ensure that they are provided with any necessary equipment, health and safety assessments have been conducted with regard to their home set-up and environment and that written arrangements are in place with regard to things like ownership of any property those employees will use and payment of expenses such as electricity bills.
Conduct return to work meetings with staff who are coming back from furlough (these could be socially distanced face-to-face meetings or conducted remotely e.g. via video call). Check that the staff are clear on the return to work arrangements and also enquire as to how they are feeling about their return to work. The current health pandemic has had a significant impact on a lot of peoples’ lives, emotional health and wellbeing. As their employer it is important you are alert to any issues and offer support where appropriate.
Ensure that any staff annual leave arrangements are well managed to ensure the operational needs of the business are met. Whilst staff have been able to take annual leave whilst on furlough, many of them may not have done so or will have taken a reduced amount and therefore leaving many accrued days still to be taken.
Whilst the Government has relaxed rules around the carry over of leave into the next 2 leave years, the taking of it should still be managed to ensure stability and prevent further problems arising down the line. Management measures may include requiring staff to take a certain amount of leave on or by specific dates or requiring staff not to take leave during particularly busy periods.
Companies could also introduce other control measures such as limits on the amount of leave that can be taken at any one time and the number of people within particular teams or departments who can be on leave at the same time as each other.
For more details on how Harper James Solicitors can support your business as we move towards the end of furlough click here.