Electra HR

Furlough… followed by redundancy

At first glance the government’s Coronavirus Job Retention Scheme seemed not only generous but also, considering how quickly it was conceived, a great solution in order to avoid mass unemployment. The numbers are clear about that – there are currently 8.4 million furloughed employees across the country. The harsh reality is that the large majority of them would now be unemployed without the scheme.

So far so good.

However, with the lockdown now in its third month, more and more businesses are making redundancies despite the scheme continuing without any change until July 31. Following the recent announcement that employers will have to start paying something from August onwards, this is bound to get worse – the IoD has said that its members have indicated that even having to pay as little as 20% of their salary bill would lead to redundancies and a recent poll has found that 1 in 4 companies would not have the money to pay more than one fifth of their staff’s salaries.

If large-scale redundancies happen then the critics of the scheme are proven right – all it did was to delay the inevitable, at a large cost to the taxpayer. It is therefore paramount that the next phase is thought through in detail and that support is tailored to where it is required. There is no point supporting large enterprises with cash in the bank because they happen to be in a sector that continues to be affected more than others whilst ignoring businesses which are trying their hardest to adapt and are supportive of their staff.

It is clear that tourism and hospitality will have to put up with restrictions much longer than let’s say a marketing agency where staff can work from home. That doesn’t mean that the agency needs less support. If workload is 50% of what it used to be then then there needs to be flexibility to reduce working hours with the scheme paying for the lost hours while the business pays for the hours actually worked.

While it probably is not feasible to change the rules retrospectively it may well be worth forcing companies to pay back money claimed for furloughed staff if they make them redundant within a certain amount of time. The PM said “People should not be using furlough cynically to keep people on their books and then get rid of them” yet this is happening with a number of companies.

Of course there can be good reasons why some furloughed staff end up being laid off, but mass redundancies straight after furlough defeat the point of the scheme entirely.

Let’s hope for some smart, flexible amendments to scheme at the next announcement. Unfortunately, according to news reports citing “No 10 sources” it looks like the government is about to make matters worse. While it appears that flexibility to allow furloughed employees to work part-time with the government footing the bill for up to 60%/£2,500 of the wages for the hours not worked is on the cards, the updated rules will disallow the rotations of staff on furlough. Rotation has been used by companies up and down the country, alternating Team A, Team B and often Team C every three weeks (the minimum period someone must be furloughed).

There are a number of good reasons why businesses have chosen to do this –

  1. It shares the burden fairly
  2. It enables everybody to spend the least amount of time away from work
  3. It is good for mental health
  4. It safeguards against damage to the business by the virus as the staff only interact with a small and constant group of colleagues (in fact this is actually something businesses are advised to do in the “Covid-secure” workplace guidelines).

I hope that, as so often, the “sources” are wrong.

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