Employees
Coronavirus: How employers can plan for the end of the furlough scheme
The Job Retention Scheme has been extended to 31 March 2021. Employers are able to bring workers back on a flexible basis too, creating opportunities to manage costs while demand is reduced.
This article provides an overview of how to bring people back effectively, working out what a sustainable workforce looks like and the Coronavirus Job Retention Scheme.
It includes links to related resources that provide practical advice on the steps you need to take to implement these decisions. For more useful resources, see our furlough scheme resource roundup.
We have updated this article to take into account the extension of the Job Retention Scheme on 5 November 2020.
What support is available through the extended Job Retention Scheme?
The extended Coronavirus Job Retention Scheme allows employers to furlough a staff member and claim 80 per cent of the employee’s salary up to £2,500 per month.
Employers previously had to contribute a share of what employees were paid while they are not working. However, this is no longer the case and the grant covers the entire amount.
The government plans to review the scheme in January 2021 to decide whether economic circumstances have improved enough to ask employers to contribute more.
Employers claiming under the Job Retention Scheme are still liable for National Insurance contributions and pension costs, and have the option to top workers’ pay up to their usual salary.
There are a number of key differences between the extended Job Retention Scheme and existing furlough arrangements that take effect from 1 November 2020:
- Employers do not have to contribute to the 80 per cent salary payments that an employee receives
- HMRC will publish details of employers who make claims under the extended CJRS scheme starting from December
- The period during which you can claim has been updated (see the government’s How to claim guidance for the details and dates)
From 1 November 2020, you can flexibly furlough employees. This means they can work for any amount of time and work pattern but they cannot do any work for you during hours that you record them as being on furlough.
The ability to bring workers off furlough temporarily or agree a working pattern through flexible furlough creates opportunities to manage fluctuating demand and cope with lockdown restrictions.
For example, Cheshire-based live events company Keyteq has diversified into online events, building two studios in their warehouse to support customers that have taken their events online. Flexible furlough has allowed them to bring staff members back on a part-time basis to manage the events.
The announcement of the extension of the Coronavirus Job Retention Scheme means the Job Support Scheme has been postponed until at least 1 April 2021.
Related resources:
- How three business leaders are dealing with the end of the furlough scheme – from redundancies to disengagement
- FAQ: The Job Retention Scheme and bringing furloughed staff back to work
- Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme
How should I bring people back from furlough?
Employees need to be available to return at any time, but you should give reasonable notice where possible.
Speaking directly with employees isn’t a legal requirement, but provides an opportunity to discuss any childcare commitments or health concerns (the requirement to return to work should also be confirmed by letter or email).
You should have already carried out a risk assessment to ensure your workplace is COVID-19 secure, but they may have additional concerns.
Talking to them also lets you make the first step in re-engaging employees, some of whom may not have worked for months, and preparing them to come back to work.
The process is analogous to onboarding a new employee. Furloughed staff need to be brought up to date with changes in processes, safety rules, how projects and products have evolved and made to feel comfortable and excited about returning to work.
Do not expect people to get up to speed immediately. Radioactive PR founder Rich Leigh made a point of telling staff coming back from furlough not to put pressure on themselves.
“We’ll put them on projects that are new to the agency and therefore new to them, so they don’t feel left out of anything and aren’t working backwards. Also, I tell them ‘I don’t expect you to be at 100 per cent capacity’. When I employ someone I say that exact thing,” Rich said.
Related resources:
- Video: How Radioactive PR is helping furloughed employees settle back in
- Video and article: Leading a worried workforce: Are you supposed to be counsellors now?
Dealing with redundancies
Redundancies may be necessary if you expect a long-term reduction in demand or do not have the resources to sustain employees after the furlough scheme ends in March. The consultation period can start while employees are on furlough, once other alternatives have been exhausted.
In this scenario, you need to understand your obligations as an employer. Normal, fair redundancy procedures must be followed, using your organisation’s procedure if it exists.
This includes the communication and consultation aspects of a normal redundancy process; employees with over two years’ service can present unfair dismissal claims if the law isn’t adhered to.
You need to ensure the redundancy pool and selection criteria are fair and not select staff for redundancy on the basis they are furloughed.
Staff are entitled to be paid their full salary during the notice period even if they received lower pay during furlough.
It’s important to consider legal advice if you have to go down this route.
Related resources:
- Advisory, Conciliation and Arbitration Service’s guide to creating a redundancy plan
- How three business leaders are dealing with the end of the furlough scheme – from redundancies to disengagement
What does a sustainable workforce look like?
The coronavirus crisis is one of the largest economic and societal upheavals of our lifetimes and it’s had a major impact on the way people work and spend money.
Forecasting the medium and long-term demand for your product or service is key to understanding what your workforce should look like.
Consider the following key internal and external factors:
- How your product has evolved and whether you established any new revenue lines during the crisis
- The contribution different elements of your business make to profitability and the level or risk they have
- The impacts of the government rules to slow the spread of coronavirus and how these are likely to evolve
- The long-term impact of the coronavirus crisis on consumer behaviour
- Your company’s cash position and the availability of government support
Deciding what to do when people’s jobs are potentially on the line is a stressful process. You need to give yourself the time and headspace to think.
Start by collating the information you need to make the decision. Here are three sources that are likely to play a key role in the process:
- Cash flow forecasting for the base case and upside of the main scenarios you consider
- B2B businesses should speak to key customers about their 2021 plans. B2C can carry out surveys and customer interviews
- Available sales data. The strength of your sales pipeline and trends in conversion rates are important
Create a shortlist for your available options and set a decision-making timetable.
At this point, it’s helpful to seek expert advice. Speak to a small number of people that can give you a different perspective, such as non-executive directors or a trusted advisor. If redundancies are a possibility, it’s important to consider legal help.
Related resources:
