End of furlough: Low levels of redundancies and the highest starting salary in 24 years

13 October 2021 | Thoughts and Opinions

The government’s furlough scheme (also known as the coronavirus job retention scheme) ended on 30 September, after being in effect for 18 months. Leaving almost 1million people left in limbo and not knowing if they would have a job to return to.

End of furlough: Low levels of redundancies and the highest starting salary in 24 years

Initially, there were concerns that many employers who had relied on the scheme to financially support their employees would not be able to pay wages when the scheme ended and would have to cut jobs as a result. However, early data suggests that the wave of redundancies many expected to see due to the end of furlough have not happened. In fact, several businesses with large numbers of furloughed workers have stated they have taken all furloughed employees back, and trade unions have not noted any major redundancies.

Simon Gilmour, Employment Law Partner at Harper James says ‘It’s great news that early data is showing that businesses are not needing to resort to redundancies now the furlough scheme has ended. To maintain this, it’s time for businesses to start getting their affairs in order, making sure their contracts of employment are up to date, including their policies and procedures, and they have precautions in place if they need to protect their business in the future. It’s still too early to tell.’

As a result, there have been fewer people out of work than expected. This combined the reduction of EU workers following on from Brexit and a surge in staff demand has led to starter salaries and temporary wages seeing an ‘unprecedented increase’ with starting salaries and temporary staff wages have risen at the sharpest rate for 24 years.

Simon says ‘Labour shortages have affected lives up and down the country over the last few weeks, empty shelves in shops, shortages of petrol and delays with goods of services. The rise in wages will be a welcome relief for many sectors that have been negatively affected by the crisis as it will give a welcome boost to the quality of talent recruited and will hopefully help sustainable growth in the economy. However, employers need to make sure they are not using this as a short-term solution to fix workplace shortages’

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