Furlough planning thoughts and redundancy

As an update to our blog earlier last week, I wanted to emphasise the importance of planning with regards to possible future redundancies.

Most of you will now know, the covid job retention scheme (CJRS) is changing again such that:

  1. Employers will start contributing to furlough wages from 1st August.
  2. Only people who have already been on furlough can be furloughed after 1st July. This means that any new people to be furloughed must go on furlough before 10th June. The idea must be to furlough people who haven’t yet been on furlough so that you can rotate as many furlough employees as possible and thus give yourself maximum flexibility going forward.
  3. The number of furlough employees you have on 30th June/1st July will be your maximum number. You cannot then exceed this limit for the remaining period of the scheme.

Part time furlough and possible redundancy planning 

The CJRS is a fabulous intervention by Government. Without doubt it has massively helped employee retention, allowed employees to earn money and also saved many businesses who would not have made it through this quarter with full labour costs.

Clearly the start of the gradual reduction in furlough grants will be a key time for employers as payroll costs will slowly but surely become a real cost again. Any real or perceived future loss of business revenue will impact your employee needs going forward and you need to start to review this now.

The extension of the scheme to allow part time work from 1st July is another hugely welcome intervention and will no doubt be widely used as businesses seek to bring more employees back to work at the same time as their revenue returns toward pre-covid levels.

However, for some businesses, employee redundancy programmes will be a sad but necessary feature of the next 12 months and although it is a desperate and emotionally difficult measure, such programmes will be the difference between their survival and failure.

Following all the requirements of a redundancy process is very awkward at the best of times and very costly if you get it wrong. It is also very expensive once you factor in holiday pay, notice periods of up to 12 weeks and redundancy pay itself of up to 1.5 times statutory weekly pay for older employees. Proper planning for any employee restructure is therefore essential.

Early planning is needed. I believe, being on furlough counts towards an employee’s period of notice for redundancy purposes and as such this may massively ease the cost of a similar restructure programme that is undertaken once the CJRS ends on 30th October.

No doubt there will many hoops to jump through in convening meetings etc with employees identified as being involved in the exercise and business owners should be very careful to follow the guidance of their HR team in running the process.

We all know the CJRS was introduced to help retain jobs and in this respect it has been extremely successful. However – it will come to an end and businesses will then have to stand on their own two feet. Ensuring they can do this is also paramount so that over time they can grow and return to full pre covid levels of employment as soon as they can.

As always should you need any advice and assistance during your planning process do please contact us.

 

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